What is an Impermanent Currency?
An impermanent currency is a stablecoin whose units are destroyed or converted into something other than money after it has been spent, so its role of vector of information is emphasized. The term stablecoin depicts here a digital currency the value of which is based on something specific such as an asset (USD, EUR, Gold etc.) or something which happened in the real world (CO2 has been emitted or spared, a product crossed a border etc.). Let’s imagine that you create a stablecoin pegged to the euro and call it Pennycoin. Its value would therefore be €1, but it would be called Pennycoin. The units you create must be backed by equivalent assets specified by the system you use to create your stablecoin, for example Diem, and locked for the duration of the use of the new currency: this is the concept of the collateral. In order to recover all or part of these assets, you have to destroy all or part of the created coins.
The basic information of your coin could be the following:
⦁ Name: Pennycoin
⦁ Reference currency: Euro
⦁ Security: fiat Euro
⦁ Number of decimals: 2
⦁ Description: The Pennycoin is a coin for educational purposes
⦁ Creation date: September 4, 2022
⦁ Icon: [Upload Logo]
⦁ Creating entity: person
⦁ Creative entity name: Enée Bussac
⦁ Place of creator: Germany
⦁ Initial quantity: 1000 units
To create my 1000 Pennycoins, I need to transfer the collateral, for example €1,000, via SEPA or via my wallet. A smart contract then locks the collateral, creates 1,000 Pennycoins and sends them to my wallet.
Money becomes the new data
Now let’s imagine a user who works for a supermarket chain and wants to optimize his accounting by testing a new system at eight points of sale in Munich. These branches are already assigned code numbers that correspond to their zip codes:
⦁ Pasing: 81241
⦁ Obermenzing: 81245
⦁ Laim: 80687
⦁ Blumenau: 80689
⦁ Theresienhöhe: 80339
⦁ Schwabing-West: 80797
⦁ Gern: 80637
⦁ Steinhausen: 81675
The user now creates 8 different impermanent currencies, all pegged to the euro:
⦁ EDK81241
⦁ EDK81245
⦁ EDK80687
⦁ EDK80689
⦁ EDK80339
⦁ EDK80797
⦁ EDK80637
⦁ EDK81675
This supermarket owner offers its customers the option to pay for their purchases through their wallet and the digital euro. The smart contract of the supermarket payment system converts automatically customers’ euros into the respective currencies of the points of sale: for example, if a person spends €50 in Munich Blumenau, the smart contract converts the €50 into 50 EDK80689. If a person spends €40 in Laim, the €40 are converted to 40 EDK80687. Thus, customers provide the collateral required for the creation of the impermanent currencies, which are automatically created by Novi when the customers pay with them in the test points of sale. At the end of each day, this user verifies that the transfers of the different currencies are correctly recorded, destroys them and retrieves the collateral (euros) back from the smart contract managing the impermanent currencies.
When he does his bookkeeping at the end of the day, he sees the following transactions which have been registered in his accounting system:
⦁ 21236.51 EDK81241
⦁ 27623.53 EDK81245
⦁ 13255.88 EDK80687
⦁ 22337.98 EDK80689
⦁ 14369.15 EDK80339
⦁ 5996.30 EDK80797
⦁ 23458.14 EDK80637
⦁ 14582.05 EDK81675
Based on the amounts and the denomination of the currencies, all pegged to the euro, this user knows exactly from which point of sale his cash inflows come from, which greatly simplifies his bookkeeping.
Source: author’s representation; Edeka doesn’t currently offer or use such a system.
In the graphic above, the customer pays €50 at the point of sale in Blumenau at 2:42 p.m. The smart contract managing the impermanent currencies stores the customer’s €50 (in digital euros), creates 50 EDK80689 and transfers them to the supermarket’s wallet. The latter registers this transfer in their accounting in EDK80689. The customer is not aware of these processes; she only knows that she spent €50.
At 8:06 p.m. the supermarket is closed and the last customer has paid for their purchases. All transfers of the day in EDK80689 were booked. It’s time to collect the corresponding digital euros: the supermarket transfers all EDK80689 back to the smart contract, which destroys them and returns the corresponding amount in digital euros to the supermarket’s wallet. The EDK80689 have played their role as an impermanent currency, with no impact on the customer, but to the benefit of the supermarket, who can do their accounting much more efficiently than in the current system, and at no extra cost.
New generation payment processes
We could then create and use several impermanent currencies dedicated to their recipients as well as other ones triggered by the ingredients of purchased products in order to make our payment systems very accurate, to automatise accounting and tax returns, and to systematically consider the environment in prices via a new generation VAT. Let’s take the example of the purchase of a toothpaste. Imagine that a currency is assigned to each ingredient of the toothpaste and component of the packaging, and that the amount collected during the purchase by this new generation consumption tax, which would replace the VAT, depends only on the mass and carbon footprint of the ingredients/components. We would have the following example (the levels of CO2 emissions and mass distribution do not correspond to scientific data):
Any impermanent currency with a name beginning with “IE” would be a currency issued and managed by the Irish public administration, here the tax administration, of which each unit would be equal to one euro and dedicated to a very specific use. Let’s also imagine that impermanent currencies make it possible to break down your payment into as many currencies as there are recipients and taxes. The purchase of your toothpaste would then cause the following cash flows:
These next-generation payments would make our economic system much more accurate, efficient, fair and transparent, but also complex than it is today. All settlements would happen in real time: no more payment defaults or delays. The consumer would not have to worry about the conversion of his digital euros, which would be ensured by his wallet in connection with the smart contract of the point of sale, but he could view the breakdown of his payment if he wishes, so that he could know the composition of the product he is buying as well as the distribution of the generated turnover by simply looking at the currencies and amounts which were involved in the resulting payment. Money, in addition to being a store of value, a unit of account and an intermediary of exchanges, would then also become a vector of information. Our economy could then reach an unprecedented level of transparency and precision, and would be able to integrate systematically the carbon footprint of goods and services into payments, leading to market ecology.
