The evolution of money
7 May 2020
Author: Jerome Faury
We will see more innovation in currency, compliance and payments in the next 10 years than we have the last 1000. This will be driven in large by the democratization of digital assets and digital identity.
Cash money as we know it today started out as a paper receipt for gold stored in a vault; cash in the near future will be a digital receipt (aka token or digital asset) stored on your mobile. This Digital Asset can be programmed to meet specific compliance requirements or codified to comply with predetermined rules and use cases, for example:
Economic stimulus: If the government wanted to give citizens money to restart the local tourism economy they might say ‘we want people to spend the money on local businesses, so non applicable purchases wouldn’t be authorised for the money it distributes.
Parents: Children ask for traditional money for lunch and often spend it on something else. Parents could airdrop to their childs device smart (programmable) money for the specific use of purchasing a healthy lunch
Digital Food stamps: Govt departments or large enterprise who want to help people in need, can get significant savings by delivering food stamps digitally to people’s devices and specifying participating merchants where they can redeem.
Codified compliance: 30% of a banks operating cost is compliance. We think its possible to radically reduce this by codifying compliance directly into the currency itself. Enforce certain transactions to ensure both parties have been KYC’d (whilst preserving peoples privacy); ensure the underlying asset passes source of funds checks (i.e. isn’t from a stolen wallet) and reduce the risk to your business and customers.
The user experience will be fundamentally better. There wont be a need to login to an antiquated banking app to transfer funds; you could do this directly in your messaging app.
Cards will be a thing of the past (my bet is its less than 2 years before Mastercard changes its name) and actually, no UI / UI i.e. face-pay or similar will be a reality in the near future. Furthermore, any app will have the ability to integrate a digital wallet and also be a payment app. This wont the exclusive domain of tech oligarchs or banks.
Currently, multiple parties participate in an electronic transaction — usually more than 6. With peer to peer value transfer; people, machines, merchants can transact directly with each other. There is real time settlement, less parties charging fees. And, if we get it right, individuals will be in control or their data, payment experience and digital ID will be the key to unlocking much of this.
Self sovereign Identity, at its essence, changes how we control information. You change the centre of gravity from companies, to individuals. This core pillar, this new internet of trust or trust over IP will power greater equality and innovation by distributed power and control to the fringes (not large centralised entities).
And the elephant in the room. Our global reserve, the USD, is unlikely to be the reserve for much longer, based on historical data. The average tenure for global reserve currency is 94 years and the USD is about to celebrate its 100 year anniversary.
@centrapay, we see a future where value is transferred as easily and efficiently as information.
Where the possibilities for what we constitute as currency are infinite; where consumers, brands and businesses can engage and transact directly with each other without a third party taking a disproportionate cut.