Blockchain by Mark Van Rijmenam Philippa Ryan & Philippa Ryan

Author:Mark Van Rijmenam,Philippa Ryan & Philippa Ryan
Language: eng
Format: epub
Publisher: Taylor & Francis (CAM)
Published: 2018-07-24T16:00:00+00:00

5.12 Conclusion

Corruption corrodes public trust, undermines the rule of law, and ultimately delegitimises the state [182]. Rules and regulations are circumvented by bribes, public budget control is undermined by illicit money flows, and political critics and the media are silenced through bribes forcing out democratic systems of checks and balances. If basic public services are not delivered to citizens due to corruption, the state eventually loses its credibility and legitimacy. Removing large denomination bills from circulation is an essential step towards combatting shadow economies, corruption, and money laundering, and ultimately closing the tax gap. The challenge for regulators will be to harness the power of Blockchain to trace digital transactions. Permissioned blockchains can ensure that users are reporting income and meeting their tax obligations. These blockchains could also interact with other blockchains, so that agencies and departments can automate cross-checking of related transactions. Indeed, running discrete blockchains to manage different functions would ensure that the scale of each network remains manageable and would reduce the incidence of blockchain bloat.

Thinking back to the TelexFree scam and the US$20 million hidden inside Mr Rocha’s mattress, one can see how a trust rating system would have quickly undone his Ponzi Scheme. Ponzi Schemes rely on new money to pay out previous investors. The fraud lies in the promise that payments are being made from profits generated by the business in which shareholders or customers have invested. With a transparent distributed ledger, it would be possible to see that new money into the scheme was being used to pay investors. This would indicate to other participants on the network that there is no successful business scheme generating profits and the payment of dividends. And with all cash removed from the economy, Mr Rocha’s bed filled with US$100 bills would be worthless.

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