Utility consumption via money streaming
Utility consumption today
Individuals and organisations usually pay water and electricity via a subscription with regular adjustments when they consumed more or less than what they paid for during a specific period, for example 6 months or one year. An individual might pay $100 per month for the electricity consumption of their household. If they actually consumed $1304 of electricity over a year, they would have to pay the $104 extra (1304–12 x 100) at the beginning of next year. If they consumed $1088, then they would get $112 back. In both cases, their monthly fee would be adjusted to the latest level of consumption. As prices are rising pretty much everywhere, most consumers are expecting “unfavourable” adjustments and higher monthly fees in the coming months or at least from 2023 on. Utility prices are usually made of a fixed subscription fee plus rates depending on the consumed volume, which tend to be decreasing as volume goes up and is counted in kWh for electricity and m3 for water. Here for once, the English speaking world and old Europe use the same measuring units. Utility services get thus usually monthly payments and one or two additional payments (adjustments) per year. They also have to perform sometimes credit checks of their customers, especially if they are private entities, to be sure that they are dealing with solvent entities. So, let’s recap: utility providers check sometimes the solvency of their customers, they get money mostly after water/electricity have been consumed, they have to emit invoices and they tend to sell water/electricity cheaper when volumes grow.
Let’s disrupt utility consumption
Digital currencies will disrupt this model by introducing billing through money streaming and the real time/same place concept. Money streaming means that a two-way channel opens between you and a service, utility or goods provider: you get something and send small amounts of money very regularly as you consume this something. For example you watch a movie and send 1 USD cent to the provider in the metaverse every minute. Or you consume electricity and are charged every 10th or even 100th of kWh. Why is it possible with digital currencies and almost impossible with fiat currencies? And what does it bring? Well, digital currencies make micro-transactions very affordable and fast, which opens a whole range of new possibilities such as… money streaming. Sending 1 cent per SWIFT, SEPA or even Paypal every minute doesn’t make sense; I will not elaborate on that here. Plus digital currencies make the real time/same place concept possible: you watch the movie via a service provider which is represented on a digital register and pay this service provider via this same digital register as you watch your movie: in real time and at the same (digital) place. You connect with your wallet on the digital register, so you are identified and able to pay: the new generation video club is more than happy to welcome you as a customer. The wallet of your house will also connect with the utility provider of your city and pay in real time your consumption according to a clear and accurate fee table.
The money streaming channel would be programmed to charge each 10th of kWh or 100th of m3 at a different rate than the one before and the one after. In the pre-climate change world, one could imagine that the next unit is cheaper than the previous one to incentivize you to consume more. The opposite logic would make more sense now that climate change has become a reality also in developed countries. A typical household of 2.5 people consumes a third of m3 and about 13 kWh per day on average in Europe. Water and electricity prices should be very affordable for the first tenths of kWh and litres of the day, then raise progressively with each additional consumed unit. We could thus imagine the following contract, here for example in Toronto:
Three significant advantages
Digital currencies enable money streaming, which brings significant advantages:
- the utility service gets their money in real time, continuously: no payment delays, no billing, no adjustments, no defaults
- rates can be programmed very accurately in order to 1) make the “normal” consumption (the first 10th of kWh and 100th of m3 every day) affordable to anyone and 2) make high consumption extremely expensive, to deter households from filling their swimming pool during a drought or letting air conditioning work all the time, or at least to make them pay high taxes that the city could use for environmental purposes
- the system would be extremely flexible, efficient and transparent.
