Money as a Service?
Have you ever think of the nature of the money? It started from the obligations — paper with a statement that a person who owns it is able to go to the bank and ask for a particular amount of gold or any other treasure.
Later on, we started to use money as just a physical equivalent of the value of the price. Even now, when we have credit cards, Visa and Mastercard, we still use money as just a representation of the value or the number.
Nowadays, does not matter what type of money do you use — digital or physical, it is still just a number of the valuable units you own in the bank or in your pocket. Additionally, there are a lot of rules, regulations and business logic on the top of the money: salaries, taxes, transactions, benefits, discounts, loyalty points and so on.
Having all these business logic outside of the money creates tons of the manual work, which includes human errors, problems with paying taxes (usually not paying!), criminal money, fraud and etc.
What if?
But what if? If there will be a Money as a Service? I am talking about a new way of thinking what the money can be. Just imagine that you have a system that already has some business logic that works automatically within any transaction in the system?
Sounds incredible? Sounds impossible? Probably only if you think about it in the current approach of how do we all use the money. The old simple-minded way.
For instance, paying taxes. How does it work now? Every time when you get your payslip, accountants calculates how many of the whole amounts comes to your pocket and well as other payments, including taxes. Sounds good. But at the same time, there are many and many people and companies try to avoid paying taxes which negatively affect the amount of money in the country economy.
As an example, imagine that instead of that complicated way we calculate taxes, paying of them once a quarter, monthly, weekly, fortnightly or even annually; we actually have it already included in every transaction automatically?
Sorry, I do not have any numbers as I do not have any relationship with an accounting, however, let say, it will be something like 0.05% from an amount of a transaction. But whom you need to take that fee from — sender or receiver? I would say that receiver, as it looks more like PAYE. In this case, there is no way to skip paying taxes for anyone. This is kind of a transactional fee which returns back to the system to reuse it. Looks more transparent for everyone and provides less possibility to avoid paying it.
Any country could create their own rules and regulations, based on different parameters. For example, a particular company would pay more or fewer transaction fees based on the type of company.
How to?
Well, that is cool, you would say. But how we can create such a complicated system? It could probably cost us billions of dollars (pounds, euros, whatever currency do you use), you would say. Yes and no. This really depends on how do you want to create it. Creating a system like described from scratch is very expensive. However, we can just reuse the system that has already been created not so long time ago.
How you probably understood, I am talking about very scalable cryptocurrency with smart contracts, for instance, Etherium (ETH). As you may know, most of the cryptocurrencies based on the blockchain technology.
“While smart contracts might sound new, the concept is rooted in basic contract law. Usually, the judicial system adjudicates contractual disputes and enforces terms, but it is also common to have another arbitration method, especially for international transactions. With smart contracts, a program enforces the contract built into the code.”
Basically, just using that technology the mankind is able to create smart contracts from their economic laws. Instead of having all the business logic in laws it is quite easy to convert them to a digital code that works without human errors. Additionally, it uses a decentralised protocol with encryption which increases security to a next level.
The Etherium project provides us with the opportunity to create our own cryptocurrency by just using their technology stack. For now, there are already huge of etherium based crypto tokens, created for different purposes which use the whole power of the smart contracts.
Above I mentioned about crypto tokens, but earlier I discussed cryptocurrencies. It might be confusing, but actually, the difference is pretty simple — there could be more than one crypto token implemented on one cryptocurrency.
A cryptocurrency is a digital asset used as a medium of exchange that is transferred by signing transactions and validated by nodes on the blockchain through the use of cryptography. There is a distinction between a native cryptocurrency and tokens. One acts as the foundation of the other. © Dan Emmons
Just imagine!
I believe that everyone who heard about Bitcoin (BTC) and cryptocurrencies remembers Q4 for 2017 when their volatility was really crazy — hundreds percents and even more. For example, the Bitcoin price in January 2017 was just around $1,000 USD but in December 2017 it was already around $20,000 USD. However, the volatility of some altcoins that time were even more — up to 36,000%!!!
Nowadays, there are some altcoins called stablecoins that less volatile just because of their nature — their exchange rate is pegged to a fiat currency or something less volatile. For instance, there is a quite popular stablecoin called Tether (USDT).
In the nutshell, I assume that at some point in future, there is a high likelyhood that we will see that governments, countries or even just corporations will create their own cryptocurrencies or crypto tokens to make their economics more transparent and lightweight. There will be a brave new world! Just imagine!
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