Abstract
This paper explores opportunities arising from blockchain technology for postal operators (POs). Blockchain technology has lately received a lot of interest by the media and the industry, especially in financial services. In the past years an entire ecosystem of new companies has developed, offering hundreds of different blockchain applications. Blockchains are a new kind of decentralized, secure and fast means of record-keeping. The first application of blockchain technology are cryptocurrencies like Bitcoin, which have become an alternative to commodity money and fiat money, but POs may be able to exploit this technology in a number of different ways.
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Notes
- 1.
National incumbents and their competitors.
- 2.
- 3.
Further applications will be outlined in Sect. 5.
- 4.
In Bitcoin, there are two kinds of incentives for miners: The first is new bitcoins. The reward started at 50 bitcoins per block; this value halves every 210,000 blocks, such that the total supply of bitcoins asymptotically approaches 21 million. Users can also attach fees to their transactions (the fee typically amounts to the equivalent of a few USD cents). Miners use the fees to decide which transactions to include in a block and collect the fees (see Jaag and Haller 2016). Currently, the miners’ revenue from fees is much lower than the block reward. Since there is a maximum block size, block capacity becomes scarcer with increased usage. As a result, transaction fees become a more important source of revenue for miners (unless the maximum block size is increased—which would require a change in the consensus protocol).
- 5.
The settlement time of 10 min on average is much faster than with any non-cash financial transaction which may take days or—in the case of credit cards—even weeks.
- 6.
By participating in the network, nodes know of all transactions and blocks. Therefore, operators of nodes do not rely on third parties for checking whether a payment to them is legitimate and can be trusted. This is the incentive to run a node.
- 7.
Especially with credit card payments, this creates the risk of theft.
- 8.
The success of blockchain-based transactions systems suggests that the cost of processing a transaction is less than the cost per transaction of the equivalent effort by the banking sector and, if need be, monetary authorities, or that additional costs are outweighed by the benefits in speed, security, and privacy.
- 9.
Cf. Jaag and Bach (2015) for a microeconomic analysis of the irreversibility characteristics of cryptocurrencies.
- 10.
A specific concern is ransomware that disables the computer unless a ransom is paid. Ransomware cannot accept PayPal or credit cards since those transactions are traceable. The increasing adoption of cryptocurrencies makes using them worthwhile.
- 11.
See the introduction to Sect. 2 above.
- 12.
Exchange rates of currencies used in industrialized countries are usually more stable than cryptocurrencies. However, in developing countries, local currencies may be more volatile.
- 13.
Colored coins are a method for associating assets with tokens on a blockchain network.
- 14.
If a PO issues its own currency, it has full control over its supply and essentially takes the place of a central bank. By coloring digital tokens, it puts a layer on another cryptocurrency and uses it as a payment system. All transactions in Postcoins are at the same time transactions in the other cryptocurrency which are verified in the other cryptocurrency’s network (and which have to pay according transaction fees).
- 15.
Provided that they comply with the required regulations.
- 16.
See Sect. 3.2.3.
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Jaag, C., Bach, C. (2017). Blockchain Technology and Cryptocurrencies: Opportunities for Postal Financial Services. In: Crew, M., Parcu, P., Brennan, T. (eds) The Changing Postal and Delivery Sector. Topics in Regulatory Economics and Policy. Springer, Cham. https://doi.org/10.1007/978-3-319-46046-8_13
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