The Philippines has a unique financial infrastructure, and the banks are aware that only the upper class and high net-worth individuals can afford banking services. The main reason behind the difficulty of acquiring bank accounts and services in the Philippines is the base balance required by financial institutions. UnionBank, for instance, requires users to store more than $2,000 as default balance, and the failure to maintain a balance of over $2,000 could result in penalties. In a heavily Remittance-concentrated country like the Philippines, any technology that could provide transparency, security, robustness, and efficiency in processing transactions is crucial.
ConsenSys and UnionBank concider that the blockchain could be the way that may cardinally improve the present financial infrastructure and ecosystem of the Philippines. Justo Ortiz, the chairman of UnionBank, affirm that the blockchain can “crack the hole of financial inclusivity,” if accepted and commercialized suitably.
In the upcoming months, ConsenSys and UnionBank will cooperate to utilize Kaleido, an enterprise blockchain solution ran on top of the Ethereum blockchain protocol, to manage information and transactions more safely and transparently.
Our appetite for experimentation is warming the country up for significant transformational change for the next generations to come.
ConsenSys Solutions Lead, Asia Pacific
Ethereum founder Vitalik Buterin declared that the cost of processing information on the blockchain is essentially higher than centralized systems like Amazon Web Servers.
Blockchains by themselves are a far less efficient computer and database than technology that has existed for 40 years. If you want to talk about what blockchains are for, the answer is not simple raw efficiency. If you look at Amazon EC2 pricing, the cost of this is about $0.04 per hour. How much does it cost to make the Ethereum world computer to do stuff for you? Every Ethereum block, which comes every 14 seconds, on average takes about 200 milliseconds for my laptop seconds to process. A block has a million gas and let’s assume the average gas price of 4 GWEI. The cost of filling up an Ethereum block is $13.4 per 200 milliseconds.
Hence, UnionBank and other banks in the Philippines that are utilizing the blockchain to act transactions have to take into consideration that blockchain technology isn’t necessarily the most rational technology to manage information. A proper solution would have to be chosen to justify the overhead and possible cost of using the blockchain via centralized systems.