What are dedicated wallets?
As I described in this article, the wallet will be the most important element of payments systems of tomorrow, as it will enable you to identify yourself on a digital register and emit or receive payments. Wallets will substitute and enhance greatly our current bank accounts in tomorrow’s digital economy as they will enable human and non-human entities to interact with the numerous participants of the digital economy. Exchanges (trading platforms for cryptocurrencies) and specialized companies such as Metamask have already gathered a significant experience in developing, managing and offering wallet services to their customers/users. A wallet must typically be able to connect safely with the network on which you wish to exchange value, be it Bitcoin, Ethereum or some less famous cryptocurrency, store, manage, emit and receive safely and in a user-friendly way the units of this network. As soon as official currencies become digital (CBDC) and centralized entities such as organisations jump on the bandwagon of digital currencies and registers, wallets will connect with other networks than cryptocurrency networks.
The development of digital currencies and registers as well as artificial intelligence pave the way for the Internet of things: networks of machines, sensors and entire systems (power plants, refineries, steel mills, etc.) that can communicate and interact with each other autonomously via the Internet. To be autonomous, machines must be equipped with wallets to let them identify themselves on digital registers, emit and receive (digital) money, interact with other machines, share information etc. These wallets will be ultimately controlled by real persons, but equipping machines with wallets will enable them basically to take part in the upcoming digital economy, as described here.
Dedicated wallets
Let’s take the example of a household to describe how wallets can be attributed to machines, and what they could bring to individuals, organisations and the society as a whole. As soon as CBDC become a reality, central banks and private organisations such as banks will make wallets available to the general population. You will receive and spend money through your wallet pretty much as you do today with your bank account; each transfer will require your authorization and will be carried out within seconds. Since there are services you need every day continuously, such as water, electricity or the Internet, they could be charged via money streaming: your account is charged small amounts very regularly, what brings lots of advantages but would not make sense in the current monetary system. You wouldn’t want a transaction every minute or so to appear in your wallet history (equivalent of today’s bank statements), so you delegate certain recurring or compulsory payments to dedicated wallets, such as your home wallet to pay for utility services and the Internet, but also receive payments if you have solar panels or a small wind turbine on your roof, your smartphone wallet to pay for mobile data consumption, your car wallet to pay or get paid for electricity charging/supply, tolls, parking meters etc. Your dedicated wallets could also pay already existing or new generation taxes.
Your personal wallet would also act as today’s bank account whereas recurring expenses and revenue from machines would be managed by dedicated wallets via real time pay-per-unit or money streaming models. You would connect your dedicated wallets with specific wallets on digital registers, such as the wallet of your water provider on the digital register of your city, as shown here, and pay continuously your consumption, in real time, in dedicated currencies, with ascending, decreasing or stable rates. You would accept payment plans just like you accept cookies today on your browser, and here we go.
Using dedicated wallets for recurring expenses would have the following advantages for individuals:
- they wouldn’t “spam” their personal wallet with countless mini-transactions
- they would get access to pricing models which are potentially very advantageous, as the charging entity (utility services, road concessions etc.) reduces their costs in the process
- their personal accounting would become extremely accurate.
And for organisations:
- they would spare significant fees: no payment delays, no credit checks, simplified billing, high level of automation
- they would only deal with solvent customers
- they would optimize their rates very accurately according to several criteria.
