Money goes mobile

Mobile wallet
By Ed Sinclair

2 October 2017

Ed Sinclair takes a look at the future of currency, the rise of micropayments and blockchain technologies.

Peer-to-peer technologies have already completely revolutionised, and in some ways even threatened the survival of the entertainment industry – now they are set to do the same to banking.

Increasingly, making payments via online providers like Google Wallet, PayPal or many of the other services available is more expedient than using a traditional bank. Many companies are looking to a future where we conduct our business and financial transactions the same way we conduct social ones – via Facebook and other platforms.

The peer-to-peer revolution

While various forms of ‘scrip’ are in circulation in online multiplayer games environments, in the form of ‘Facebook Credits’ and other pseudo-currencies, their real-world value is unlikely to result in them ever becoming viable currencies in and of themselves. They are more like air miles – valuable, but non-transferable, and with no intrinsic cash equivalent. Peer-to-peer technology could change all that – in fact the process has already begun.

“We are tending… toward a burgeoning number of ever more specialised currencies,” believes Davis G.W. Birch. “These will circulate electronically, by means of the mobile phones that are increasingly part of the dress of every person on the planet.” 

Birch sees money itself as simply a technology, pointing to the ‘tally stick’ used in Medieval times to calculate tax revenue as the technology which made possible the creation of government bonds. “That money is a technology is obvious,” he writes. “It is not a feature of the natural world but rather a constructed tool, one that defines a way of doing things.”

google and facebook
Image credit: Twin Design / Shutterstock.com

Davis has researched emerging micropayment systems like M-Pesa, which has allowed nearly 15 million users in Kenya to take payments for goods and services via their mobile phone – the modern tally stick. “A third of Kenya’s gross domestic product now flows through M-Pesa, and an amazing range of new businesses have sprung up to use it, none of which were envisaged by its founders,” he writes. He cites Scandinavian systems which allow users to take small change from shops and vendors in the form of mobile phone ‘airtime’ as evidence of the proliferation of a new kind of currency, where value can be assigned in much more complex ways, and with less technological friction.

“Switching among dollars and euros and frequent-flyer miles and Facebook Credits and Google Bucks and any other form of money will be just a matter of choosing from a menu on the phone,” he speculates. “The cost of introducing new currencies will collapse—anyone will be able to do it… we can look forward not merely to hundreds but thousands or even millions of currencies. And though regulators may oppose the trend, they can’t hold it back.”

Rather than seeing it as a challenge of radical complexity, he believes technological solutions will create a frictionless experience for end users: “Trying to imagine a wallet with a hundred currencies in it and a Coke machine with a hundred slots for them is, of course, nuts,” he explains. “But based on the available currencies in your mobile ‘wallet’ and prevailing market conditions, your phone and the Coke machine will be able to negotiate an exchange rate in a fraction of a second.”   

Free money, or freed money?

As with any innovation, blockchain has its evangelists. “Blockchain and digital currencies may mean no more fees for ferrying cash between pockets, a vastly simplified financial back office—which today is consumed by clearing and validating transactions—and even companies that fund and then run themselves,” wrote Jason Dorrier last year for Singularity Hub . “When making your plan for 2025, don’t forget to take into account the exponential nature of these technologies,” he advises. “Go beyond the linear, and prepare to be surprised.”

Others like cryptocurrency researcher Neha Narula believe Blockchain currencies can speed up our economies, removing barriers to finance which are posed by the complex exchange mechanisms of the present era. “We are at the mercy of ‘gatekeeper’ institutions” like banks and exchange rate mechanisms, she said in a recent TED Talk . “Money only moves at the speed of banks.”  

Digital strategist Dan Tapscott goes even further, imagining an “internet of value… a global, distributed ledger” which protects intellectual property, automates democratic processes and makes them more accountable, and even facilitates measuring a currency value in acts which generate social capital, such as charitable activities (17). He points to the noble aims of emerging cryptocurrencies like Ethereum as evidence.

Bitcoin

He isn’t alone in his utopian vision for blockchain applications. “Imagine a world where shopping for books would mean spending not only regular currency but also ‘EDUs’, an alternative value currency earned by providing or buying education services,” wrote Markus Iofcea, Kostas Viskanta and Kevin Kohler of the Y Think Tank . “This complementary currency would be accepted by participating retailers or other organisations seeking to incentivise education. These alternative value currencies could be either non-convertible or partially-convertible into the fiat ones, similar to air miles.

As with ‘EDUs’, ‘ARTs’ would be issued by museums, Opera theatres and others who would reward their customers with ‘ARTs’ when they bought their products or services. Instead of spending these ‘ARTs’ on more tickets, gifting them to a street performer – which could be used to buy services from the original issuers – would in return reward the customer with reputation points that could be showcased on a platform similar to LinkedIn or Facebook.”

This vision is truly radical – it pictures a society where currency goes beyond being a legal method of solving the question of value, and mediating the exchange of goods and services. It imagines a future where everything from your private data, to your attention to advertisements, to your viewing and entertainment habits could generate ‘value.’ In such a utopia, what would be the real worth of a one hundred dollar bill? Just maybe, it won’t be worth the paper it’s printed on.

Topics

  • Financial Services

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