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Expert opinion

The confluence of the blockchain and traditional CNP payments

Monday 7 March 2016 | 08:41 AM CET

Ashok Misra, Alina Consultants: Human ingenuity and private enterprise should be challenged to create money

I am thankful to the Empiria Group for inviting to speak on my favorite topic i.e. ‘Payments Security & the Blockchain’ at the MPE, Berlin on 15th Feb. This post covers my takeaways from the event.

I have in fact delivered a series of talks and papers in the last couple of years on the numerous security advantages with using bitcoin as a method of payment for ecommerce. At the MPE having a captive audience of payment intelligentsia, I took the opportunity of expanding on the subject in considerable depth.

As an initial reaction, I was gratified by the keen interest on blockchain technology in the Fintech world. We are now at a point where there is serious ‘Fear Of Missing Out’ on the part of those in the payments world who have thus far not yet familiarized themselves with the greatest invention of our lifetimes.

That notwithstanding there are not too many who have got their hands dirty and actually played with the technology. Also, I had to clarify widespread misconceptions related to the underpinnings of the Blockchain.

I continue to see the tendency to discredit cryptocurrencies for the ecommerce use case as a technical solution waiting for a problem to present itself. This viewpoint makes the assumption that there is nothing that needs to be fixed with respect to the CNP payments. That could not be further from the truth given that traditional credit card payments are insecure by design regardless of the acceptance channel ( i.e. CNP or POS ). I had to reiterate that traditional payments are fundamentally insecure due to the simple fact that the recipient needs to be trusted to accept sensitive payment and authentication information. On the other hand, bitcoin is dramatically more secure as it employs asymmetric security at the consumer end and achieves security in a decentralized manner through emergent network properties. Indeed, over the years multiple methods (tokenization, enhanced authentication, etc) have been used to ‘patch’ the inherently insecure nature of credit card payments, but the solutions tend to be vastly inferior by orders of magnitude compared to the security offered using blockchain technologies.

Another frequent corridor conversation thread is why the need arises for the blockchain given the availability of ubiquitous wallet and APMs, such as [Apple, Samsung,etc]pay. On this subject, I think we lose sight of the fact that the majority of such innovations offer incremental improvements in the form factor for payments that are already fundamentally broken. On the other hand, bitcoin changes the very fabric of money.

The deflationary nature of the currency and the lack of governmental issuing authority continue to cause serious angst amongst those schooled in traditional economics. A read of ‘The Denationalization of Money’ by Friedrich Hayek is the perfect cure for such consternation. Professor Hayak rejected the concept of specific currency issued by a National Government. Indeed, fiat currency can only exist by coercion. It eventually fails, and when it does, it implodes in a brittle manner. Human ingenuity and private enterprise should be challenged to create money. A better quality of money will emerge. Bitcoin is the first creation of such money.

About Ashok Misra

Mr Ashok Misra is the founder of Alina Consultants Inc. Ashok is an indefatigable ecommerce professional with more than 10 years experience in ecommerce architecture and operations.  Mr. Ashok Misra has considerable experience in crypto currencies and in Blockchain technologies. He is widely regarded as a Payment Security Expert and possesses in-depth knowledge on PCI Compliance. He has a deep knowledge of country specific payment methods and mobile payments. He is the Chairperson for the European Union Customer Not Present Payments Forum (EU CNPPF).

About Alina Consultants

Alina Consultants delivers expert guidance to merchants in all areas of ecommerce payments processing. We provide consultation for various online payment processes: processor selection and onboarding, contract negotiations, micropayment business logic, set up of subscription services, operational review, international expansion, security architecture review and PCI compliance strategies.

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