The Future Of Money

I had the pleasure of speaking at StartCon on Friday about the future of money. This topic is something I am extremely interested in and I wanted to share what I discussed on stage in case you missed it.

The way we view money is changing right now. We are slowly starting to realise that currency and money are not the same thing. 

The major difference between currency and money is that money holds value, while currency is a means of exchange. 

To be able to deal with devaluation, new currencies need to be developed and constant modification needs to occur. Particularly now, money is evolving. 

The way we view currency has evolved over time. In particular, there have been five major waves of currency evolution. These are:

  1. The barter system: used by cavemen
  2. Physical tokens: used from 1200BC onwards
  3. Paper money: used from 618AD onwards
  4. Electric money: used from 1861AD onwards
  5. Cryptocurrencies: began in 2009 with bitcoin.

The wave of cryptocurrency is the newest trend and it’s one that will continue growing over time. 

I have eight predictions about the future of money. Here are a few of the ones I spoke about today:

1. No physical cash

Only 30% of Brits reportedly buy products with notes and coins, whilst in Sweden only 2% of payments are made by physical cash. South Korea wants to wipe out physical cash in 2020 and cash in Australia has been declining for the past decade. Cash payments in Australia dropped from 70% in 2007 to 37% in 2016. I predict this trend will continue into the future where technology will make it easier to make transactions without physical cash.

Potential issues for a cashless society, writes US-based journalist Ian Fraser, older people and those without access to internet will be marginalised, and there’s a correlation found in countries with low physical currency usage have higher rates of personal debt.

2. Banking will be replaced with apps 

There is a rise of neo banks hitting Australia, which operate without a face-to-face customer service and have the ability to hold our money. Up and 86 400 for instance both have transaction accounts and linked savings accounts, Xinja recently launched a transaction account, while Volt will launch a savings product.

These digital banks are disrupting traditional banks’ market share, as we slowly test the waters with what these banks have to offer.

3. People will use cryptocurrencies to store value

Cryptocurrencies are currently taking a position as a store of value, where people can now hold their money outside centralised systems like banks. I think this will increase as economic uncertainty and volatility continues around the world.

4. We will have multiple currencies in our digital wallets

I predict that in the future, we will have more than one form of currency in our wallet. This trend has already begun with over 2,000 cryptocurrencies in the world, and I propose that more people will hold several currencies as we learn more about them and their use cases grow. 

Cryptocurrencies are already proving cheaper and faster to transfer value across the world. In September 2019, 94,504 bitcoins were transferred in one transaction, worth almost $1 billion. It cost 0.00007% ($690) in fees. For a typical foreign exchange remittance of 7% this transaction size could have cost $67.7 million.

In the HiveEx Gold vs Cryptocurrency report, bitcoin – the most popular cryptocurrency with over 60% market share – trades about US$14 billion per day, about one-tenth of gold and the S&P 500 stocks.

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The USD is the primary reserve currency. As of January 2019, there was USD$1.7 trillion in circulation, of which $1.65 trillion is in Federal Reserve Notes (the remaining $50 billion is in US notes and coins. Could cryptocurrencies and a cashless society threaten the strength of the US Dollar?

5. Money will be programmable

Smart contracts will ensure money is only released to vetted and accredited suppliers. One example is a coin called VeganCoins, a cruelty-free cryptocurrency introduced in March 2018, capable of remembering where they have been and can be programmed so they only go to vegan spaces.

6. Say hello to “smile to pay”

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Tap to pay will be replaced with “smile-to-pay”. It’s happening in China. In December 2018, mobile payment giant Alipay released facial scanning payment product called Dragonfly, that scans your face to pay for goods at a shop.

7. Open APIs will transform banking

Through Open Banking legislation, open APIs and artificial intelligence (AI), third parties and banks will be able to instantly access data, allowing a hyper-personalised ecosystem. We will be able to predict what consumers need, more automated affordability checks and money-saving prompts will be engineered. This is the one that I’m most excited about because we’re building this future right now with the Finder App. Join the wait list here to be the first to use it: 

8. Instant transfers

Think transferring ownership of property or other assets over the blockchain instantly, or apps like Beam It and technology like Osko. In the future there won’t be a wait to move money.

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