The trouble with money.
But money seems largely unchanged.
Back in 1990 it was all payphones and postcards, cold wars, shopping in the high street, Channel 4 was a novelty and big data meant double sided 3.5” floppy disks.
But we all had bank accounts with cards that worked in the cash machine or as debit cards. We used wet signatures and imprints from credit cards. Only the futuristic French had those chip & PIN cards which since became the European norm. And like today we used cash.
Fast Forward to 2017 and it’s all Facebook, Amazon Prime, smartphones, Netflix, identity fraud and state-sponsored cyberattack.
So everything else has gone internet. But money still seems to mostly involve cash, or repeatedly typing credit card numbers and 4 digit PINs.
Money is slow, unreliable, and unsafe. Its estimated that the burden of folding cash handling costs the economy 1.5% of GDP compared to more efficient electronic equivalent
Debit and credit card fraud is still a huge issue, especially in the Cardholder Not Present transactions which power ecommerce. The costs of accepting credit and debit cards is huge for small businesses, who generally must accept proprietary payment terminals, slow settlement, and the 2 or 3% transaction fees incumbent in the Europay, Mastercard and Visa (EMV) system. In international currency exchange and remittance its even worse, with intermediaries extorting 7% of transactions on aggregate from the poor and underbanked.
Cash is still king...
Perhaps that’s why we still love cash. Its convenient, intuitive, and doesn’t incur additional personal costs. Putting aside forgery and loss or theft of folding notes, it's often considered less risky by the punter who can retain control and privacy of their payments. Its certainly simpler and cheaper for everyday transactions than the complex verification and insurances implicit in EMV.
Cash is comfortable for my parents’ generation, and I’d more readily send my primary school son into the shop with a fiver than a credit card. Cash is the still the only option for maybe 3 billion around the world without access to financial services.
Digital currencies, or CryptoCurrencies’ utilitly has been proven with BitCoin since 2009. Their promise is to deliver the best of both worlds; The simplicity of cash, but in the global electronic arena. Clever money which we can design to do our bidding, with low or no transaction costs, but with ApplePay convenience. Money which works for enterprise, by simplifying the burdens of reconciliation and tax collection. Libertarian money which frees us from the shackles of a banking system stuck in the 90s!
...but Bitcoin is for geeks
But only geeks try to buy a beer with Bitcoin because its inconvenient and unintuitive. And there are hundreds of altcoins and ethers, each with their own wallets, apps and arrangements, which further complicate matters. Perhaps that’s why altcoins such as ScotCoin have so far failed to find support beyond a few pubs, and worthy initiatives such as ScotPound have failed to leap from the imagination of left-leaning think tanks to win popular and political support.
Keep it simple
For cybercurrency to play a role in the evolution of money it has to pass the great-granny test. For young, old and financially illiterate it must have cash-like simplicity. It also must be “ApplePay smart” to provide an easy transition from the EMV card world of today.
What should this look like to enable a multi digital currency world? For the Merchant taking payment it should be cheaper and simpler than it is today – and it must offer other value-add over the status quo, like using transaction metadata to automatically complete small business accounting and VAT returns
For this to happen, secure payment should be enabled by Wallet capabilities on any device the consumer wants to use or happens to have on them at the time; phone, card, bus pass or keyring. And Punters must be able to automatically and transparently select from their basket of Digital Currencies, the most advantageous currency at the point of sale.
People will still lose cards and forget their credentials in a Digital currency world, so the public service of basic banking services will still be required. But with digital currency transaction rules can provide a means to levy those small fees required to cover the provision of basic services.
Mixing digital with conventional currencies requires Crypto Clearing, and Crypto Financial services will expand to loans, loyalty, insurances, and more sophisticated financial instruments.
This is Wallet.Services cryptobank project. Firstly, we make deployment of digital currencies simpler and accessible to communities smaller than those typically responsible (I.e nations). This will enable bottom-up local and community money, without each having to solve the difficult real world issues of clearing and integration with the banking system, and the point of sale economy. It will also support the design of currency with wider environmental, community or public good objectives - more of which in the next blog in this series.
Secondly we make digital currency so simple your great granny can use it, bringing the promise of CryptoCurrencies to a wider audience.
Wallet.Services are collaborating with community currency initiatives close to home. If you want to know more or get involved get in touch.