What do Samsung, Facebook, JP Morgan and Nike have in common? They are all creating their own cryptocurrency. Samsung is not only creating Samsung Coin, but is also creating an Ethereum-clone blockchain to host it; Facebook is seeking $1B in investment for its cryptocurrency project; JPM Coin is being created (on an Ethereum spin-off) to improve the way it moves $6 trillion daily in its wholesale payments business, and Nike is working on a cryptocurrency “Cryptokicks” to be used by its sneaker fans.
These are just some of the companies creating their own blockchain-based currency. Jaguar, Mitsubishi Financial, and AirAsia are some others. Facebook's WhatsApp won’t even be the first messenger with an integrated cryptocurrency. Telegram (with 300 million users) has raised $1.7B for its cryptocurrency that will be used for in-app payments this fall.
There are already smartphones (Samsung’s Galaxy S10) that natively support cryptocurrency, as well as web browsers, such as Opera and Brave, that have built-in crypto wallets too.
At this rate many dozens of the products you use regularly will have their own associated currency, not unlike the Starbucks stars, Amazon points, and Delta SkyMiles you have today. The difference is that now these company currencies can be more robust and trustworthy and in turn may be accepted not just by the issuer, but by other vendors as well. A blockchain brings transparency into the inner workings of the currency, such as how many coins actually exist and what the creation or inflation rate is; and it allows you to hold the currency independently of your account. By holding the “keys” to the currency, you control it and are free to transfer it as you like.
A problem with national currencies today is that there’s no direct insight into how much of it has been printed. How many paper dollars are there? The FED says approximately $1.7 trillion, but you need to take them at their word. Paper money has an additional problem of counterfeiting. Roughly 1 in 10,000 US bills are counterfeit, a cost we all absorb. Not to mention the money spent to prevent, detect and punish counterfeiting.
So we’re going to have dozens or hundreds of currencies in our wallets in just a few years. This may sound like a step backwards, to before the Civil War, when there were 8,000 different kinds of money in the United States. Banks printed their own paper money. And, unlike today, a $1 bill wasn't always worth $1. Sometimes people took the bills at face value, sometimes they accepted them at a discount, and sometimes people rejected certain bills altogether. Merchants would need to keep a book detailing the reputation and value of different currencies, and generally the further away you were from the issuing bank, the less it was worth.
But with the arrival of modern cryptocurrencies those problems won’t exist. We’re in the digital age and computers will take care managing and exchanging the different currencies. Instead of selecting a credit card, you'll select the currency you want to pay with. Your digital wallet (as an app or browser extension) will automatically show you the currencies you own in common with what’s accepted by the seller.
The reason why there will be multiple currencies, and people will welcome them, is the same as why there are many different types of handbags, chairs or cars. We could just have one universal type for everyone, but why would we want to? Can you think of any everyday product or tool that there is only one type of? Some monies will be faster, some will be safer, some will be cuter (see Dogecoin). Some will be better for the young, some will be better for the old, some will be better for the single parent, and some will be better for the vegetarian. They would all be interchangeable, but the monies you hold will be in alignment with the beliefs and communities that you support and identify with.
Having a non-fiat (non-government) currency is not new. There are over 4000 privately issued currencies in more than 35 countries. These include commercial trade exchanges that use barter credits as units of exchange, private gold and silver exchanges, local paper money, computerized systems of credits and debits, and electronic currencies such as digital gold currency.
The oldest and largest private currency in the United States still operating is the Ithaca Hours, where its primary function is to promote local economic development. Businesses who receive Hours must spend them on local goods and services, thus building a network of inter-supporting local businesses.
Soon there'll be a currency for nearly every initiative and product you support. The days of the boring dollar are numbered. See Santa and his reindeer in the banknote above.
About the author
Dr. Lederer has over 15 years of technical experience in computer system design and programming. He has been teaching about blockchain and Ethereum for 3 years and recently co-authored Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions. Prior to working on blockchain technology, he worked at The Wall Street Journal, Morgan Stanley and BAE Systems, where he held a DoD TS (top secret) clearance to develop a novel mobile ad-hoc network for the US Air Force.