According to a senior advisor at consultancy firm McKinsey, John Straw, blockchain could make the City of London irrelevant in the near future.
He made the claim at a Computing.co.uk Live Event on Oct. 24. Straw added that this could result in a breakdown of the United Kingdom’s tax system, and ultimately the demise of the country’s National Health Service.
The straw that breaks the camel’s back
Straw sees a huge potential for disruption if a scalable blockchain-based financial system gains popularity:
“Let’s say that somebody actually does produce a working blockchain peer-to-peer system. It’ll be a lending system that actually scales, we won’t need banks anymore.”
Without banks, there will be no need for central clearinghouses, and the whole business model of the City of London will collapse, taking with it perhaps the biggest tax contributor in the country.
So who is paying for services?
Alongside the reduction in tax revenue through the loss of the banking industry, Straw warns that anonymous payments could increase public tax avoidance.
He backs France and Germany’s calls to ban global stablecoin projects like Facebook’s Libra, calling blockchain, “the killer of democracy in many ways.”
If nobody is paying taxes then funding for institutions like the NHS grinds to a halt.
Blockchain: not all bad
Straw did, however, sing the praises of blockchain-based smart contracts, calling them, “a bit of a joy.”
The ability to carry out fast automated transactions while cutting out the need for services such as escrow and lawyers is a huge benefit, he explained.
For its part, the City of London is finally making moves to reinvent itself before its banking industry is potentially disrupted by cryptocurrencies and blockchain.