Tokens For Time? Inside One Banking Exec's Blockchain Pet Project
"The level of experimentation that’s now possible ... it’s just incredible."
So says Alex Batlin, global blockchain lead for BNY Mellon, in a conversation about a new personal experiment he’s working on dubbed the 'Alex Batlin Time Token'. While not an official project tied to his duties for BNY, it’s undoubtedly an offshoot of his work with the firm, having spearheaded blockchain testing while at UBS as well.
The idea is fairly straightforward. Batlin created a token via the ethereum network, each of which represents a liability against a certain amount of his time. If you want Batlin to work for you, you send the token back. Should you decide you don’t want him to work, but you want to reap the value of his time, then sell it to someone else.
At its heart, Batlin says, the time token – outlined in a recent LinkedIn post – is an experiment in trust, specifically how one can effectively commodify trust in a digital format. In this instance, blockchain acts as a cost-efficient rail for distributing that digital commodity. On one hand, it’s kind of like a loan. On the other, it’s sort of like a new kind of equity.
One perspective, Batlin said in interview, is to look at it as a new way for lenders (in this case, anyone who buys the time tokens) to weigh the trustworthiness of borrowers.
He told CoinDesk:
“You are transitioning from evaluating the risk of the loan based on the asset you can recover to looking at who you are giving the loan to, and looking at the risk of not repaying the loan.”
One comparison he drew was with the so-called 'David Bowie Bond', a reference to an effort by the late musician David Bowie to securitize the future earnings of his music in the late 1990s.
As reported by Bloomberg, the $55m in bonds sold were backed by royalties he received. But going deeper than that, the bonds were backed by the continued success and relevance of Bowie’s music.
The more people buying the music, the more valuable the bonds became. From that perspective, the bonds were underpinned by the promise that Bowie’s songs would stay popular.
According to Batlin, it’s that kind of promise of value that forms the foundations of any kind of loan.
“What’s a loan agreement? What’s a mortgage?” he asked. “It’s a bit like a promise to work – you have to work to pay off the mortgage.”
Time on the chain
Granted, blockchain tech is unlikely to upend the basic concepts of lending overnight.
At the same time, the low barrier to access allows for experimentation in these new models, which Batlin said drew him to the concept in the first place. He cited past examples of attempts to tokenize time and value via third parties, but those efforts ran into questions of cost, trust, and actually finding an issuer who would bet on what is, from one perspective, an unsecured loan.
“But, here, the cost to experiment is so low that it’s feasible now,” he went on to say.
This approach also brings the concept of the free market efficiently determining the true value of an asset into play. If people start selling your token on the market en masse, for example, that would demonstrate to those on the outside that your time, perhaps, might not be that valuable to them.
On the other hand, market support would present a uniquely indicative degree of faith in the person issuing the token.
“If somebody bought something of your value ... and they keep buying more, that’s probably the best kind of recommendation you can get, because they see the value in what you’ve done and want more of it,” he told CoinDesk.
But to bring this kind of concept to fruition, Batlin suggested, more work might need to be done on the control side. For example, problems could arise if a time token issuer is faced with the prospect of having to work for a buyer that he or she finds unethical.
But who exactly would benefit the most from this kind of model?
One example could be students, who, by economic or social circumstance, may be unable to tap the broader market for competitive student loans.
Current estimates put the amount of student loans in existence today in the US alone as high as $1.5tn. Further, higher education costs – from tuition to housing to student services – are also climbing, with little to indicate that those increases will cease anytime soon.
It’s in this kind of environment that a college student may want to take matters into their own hands. With a time token, they could sell the future value of their earnings, backed by a college degree, to potential investors who may want to benefit from that student’s individual talents down the road.
“This could even be a different kind of student loan, and that you hope to increase the value of that token,” Batlin suggested. “You get the money upfront if you’re a promising student, if your grades are good.”
Image via Shutterstock
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