Money of the future: programmable currency and the end of the banking system

Without cuts and plastic

Science fiction writer Edward Bellamy back in 1888 in his utopian novel “View

ago" foresaw a society without cash. In his book, he wrote that cards would “completely eliminate” ordinary business transactions and the transfer of money between customers and store owners.

The future has come, paper money is becomingan atavism. By 2030, Scandinavian countries plan to abandon physical money at the state level. Between 2000 and 2015, the share of cash payments in this region decreased from 62% to 25%. In Sweden and Norway, their turnover is only 3-5% of GDP. According to the Central Bank of Sweden, cash transactions with cash by 2020 will be reduced to 0.5% of the total. By 2020, metal coins are planned to be abandoned by South Korea, and the Eurozone countries are gradually withdrawing large bills from circulation. In India, cash of a large denomination has already been withdrawn from circulation.

Until recently, the main advocate andthe shadow economy remained the user of cash. But even this sector is surrendering under the pressure of new financial technologies. It is he who is now the main customer for cryptocurrency turnover. So, cash is definitely doomed, coins with banknotes will soon take place in historical museums and will remain only with collectors.

The same fate may also befallplastic bank cards. The first ATM, which appeared in 1967 in London, exchanged special bank checks for small amounts of cash. Since then, nothing has changed, only bank checks now store information about the entire amount in customer accounts. And also appeared ATMs that issue gold bars.

Modern technologies make plasticcards are outdated and simply superfluous. The future is digital certificates that store financial information of a client in the form of a code and can be placed in any device connected to the Internet - in a smartphone or microchip sewn under the skin. The security of storing such data is exceptional.

In September 2017, Alipay launched in restaurantsKFC new payment technology - smile-to-pay. To pay the bill, customers just have to smile in the 3D camera. The image is matched with an account in the Alipay payment service and confirmed with a phone number. For the 2018 Winter Olympics in Pkhenchkhane, Visa created gloves, stickers and pins with the function of contactless payments. So, with the help of ordinary items, fans and athletes paid for goods and services in the Olympic Village. In January 2018, the company Adidas released sneakers, which also serve as a travel in public transport in Berlin. The Anglican Church in the UK recently introduced a digital contactless mug for donations - you can contribute there by attaching a phone. During the trials of the gadget fees immediately increased almost doubled compared to the traditional church donation box.

Programmable money

Currently digital media is advancedtechnological tool for all elements of life. The figure is the main technology penetrating everywhere. Based on it, data is generated. Use can be traced: install sensors, take various readings from them, build a neural network and integrate a huge number of devices in it - what is called the Internet of Things.

Something has already become a reality. For example, digital signatures, keys, stocks and smart homes. Soon the purchase of household goods will deal with the devices themselves. The refrigerator will be able to analyze the availability of products and order your regular grocery set, paying for goods directly from the account, and the TV will offer to subscribe only to those cable channels that you watch. This will save a lot of resources. Humanity will come close to the era of programmable money, which is based on a personalized approach to the choice of goods and services and allows you to save on routine payments.

Even modern cryptocurrency protocols allowprogram them for specific purposes. For example, you can transfer a child a certain amount to buy markers and notebooks and program it so that it will not be possible to spend this money for anything else. In the same way, digital money can be assigned new levels of security, a place, time and goals for which they can be spent. While these functions are almost not used, but with the spread of cryptocurrency, programmable money opportunities will be in demand in all areas of business.

But this does not mean that people will be deprived of their rights.on the choice and spontaneous purchases. Today, the Internet of things is actively developing in retail. For example, Amazon recently opened several Amazon Go smart stores in Seattle and Chicago. Goods, shelves and trolleys in them are equipped with cameras and sensors. Selected items are instantly reflected in the virtual basket of the mobile application, and the product, which the buyer then returned to the shelf, automatically disappears from the shopping list. At the exit, the money for purchases is automatically deducted from the account.

Sunset era of the banks

The current monetary system has builtsignificant obstacles for people and states. The future monetary system, based on electronic currencies and payments, will be independent of politicians or bankers and will be managed by communities and private lending platforms.

Financial market analysts do not excludethe likelihood of some kind of single world currency. The evolution of electronic money gives all the prerequisites for this. Perhaps only a few regional physical units will remain. By the way, over the past 30 years about 600 regional currencies have disappeared. At the same time, the Internet itself makes possible the development of completely different forms of exchange of goods and services, so the number of different types of currencies may increase.

Already today around the world are gaining popularityalternative digital currencies used in certain communities or among customers of individual companies. Their advantage is that people can exchange such money for goods and services without intermediaries in the form of banks. For example, in Israel there are 87 different types of "currencies", alternative to shekels, with which you can pay for food, books, rental housing and much more. In Kenya, with the support of Bancor cryptobirge, a community money network was created last year to fight poverty, which should increase the purchasing power of the population, improve the local economy and provide funds for small business development.

In addition, a new type of currency can be consideredinformation. To date, many services have accumulated a sufficient amount of unique and useful data for use in various fields, including machine learning and artificial intelligence. It is quite possible that soon the exchange of big data will be able to stand on a par with monetary transactions. Analogy today are various barter programs in the media: this is the exchange of advertising opportunities for goods, services or arrays of information by advertisers without cash payment.

Cryptocurrency evolution

Many experts are optimistic about strengtheningcryptocurrency due to the possibility to refuse protection of our transfers by banks, because we can get the same protection with the help of a good cryptographic application.

The key benefits of tokens are in theirnature: protection, trust and low transaction costs. But here is their key flaw: on the basis of the decentralized nature, cryptocurrency cannot be tied to the real metric on which our centralized financial world is based. In fact, each unit of any cryptocurrency is a complex mathematical task, in which out of a million solutions one right thing is presented. It is provided by itself. Hence the colossal volatility of the course. This pushes away many pragmatic payment professionals, and the cryptocurrency for some time turned from a financial instrument into a subject of speculation. But very soon the situation will change.

Cryptocurrency - the same revolutionary inventionin the world of finance, like a car in the world of transport. And humanity is not physically able to realize the full value and prospects of this invention, which, as a result, will turn the entire global economy. Money that is accessible to all and does not need to be provided by banks and states is an analogue of clean energy in the financial world.

The emergence of such financial energy has also beenpredicted by science fiction writers. According to Arthur Clarke, in 2016, all world currencies should have been supplanted by a single equivalent, equivalent to megawatt-hour.

Now cryptocurrency is coming into fashion, in whichhard-to-understand provision of anything physical - stablebcoins is eliminated. These are tokens linked to precious metals or national currencies. Today, many states, including Russia, are developing their stablecocks.

It is possible that the introduction of cryptocurrency ineveryday life will begin with them. Tokens that are emitted not by private individuals, but by states, will simplify all types of payments and remove artificial barriers between countries in the form of political and economic sanctions, bank transfer systems like SWIFT and other obstacles. At the same time, the transparency and audit capabilities of such financial transactions will increase by many orders of magnitude.

Mankind today entered the era whenMoney can really change the world for the better, increasing the availability of financial technologies, but it can also harm, simplifying, for example, the arms trade or drug trafficking. And here a lot will depend on the society and fintech companies, which are now at the forefront of technological development and determine the trends for the coming decades. The professional dream of any modern financier is to contribute to the formation of new convenient means of payment and tools that will be in demand around the world in 10-20 years.