Cryptocurrencies, with their distributed ledgers, have There is also significant interest in finding innovative new clearly brought something new to the table. The
uses for the technology platforms that underpin
technologies that underpin cryptocurrencies promise to cryptocurrencies. If not Bitcoin (the currency), then why transform how value is exchanged, with today’s
not bitcoin (the technology platform)? Cryptocurrencies intermediaries cut out of the process in the move to peer-are not necessarily separable from their technology
to-peer approaches. These technologies are faster and
platforms, as the currency itself is integral to the end-to-more efficient than the current processes and will replace end solution. Clearly, we can take apart the constituent them as part of a Darwinian evolution of technology. Only technologies and reuse them to create
regulation is preventing this change, and regulation always a wealth of new solutions, many of which could
changes when enough pressure is applied. While the
disrupt the financial sector by disintermediating the
intermediaries may be happy with the current situation, the current payments process. Many will also have little
parties at either end of the transaction – the merchants, resemblance to a cryptocurrency, such as a
financial institutions and consumers – are unhappy and distributed ledger to track transactions within a firm, actively looking for alternatives. A consortium of
or a distributed content management solution that
merchants in the US,
enables the creation of distributed websites that don’t led by Walmart, is investing in a peer-to-peer payments live in any single location. In this report, however, our solution under the banner of CurrentC™, where
interest is in exchanging value, not on accounting,
clearance is via direct account-to-account transfers.
content management, maintaining authoritative
A cryptographically based peer-to-peer approach is a
registers or other possible uses of the core
logical technological step and we expect it to be simply a technologies. Once the cryptocurrency is removed
matter of time before direct account-to-account, peer-to-from the technology platform, the platform is no
peer transfers are used to settle payments.
longer capable of supporting the use case we care
about: measuring, storing and exchanging value
The adoption of technologies on which cryptocurrencies are between two entities that do not know enough about
based does not imply that the currencies themselves will be each other to develop mutual trust. The use of a
adopted. The strongest possible driver for
peer-to-peer paradigm to address many of the
the adoption of a currency is a national government
deficiencies in our current approaches to managing
mandating that taxes be paid in the currency or,
information storage and transfers is a worthy topic of potentially, declaring the currency as legal tender and study and one we will investigate in our next report.
forcing merchants to accept it as payment. We also note that both of these events are unlikely. Consequently, we expect cryptocurrencies to play a niche role in the
economy, a role similar to Bartercard or the leather debt tokens that merchants issued in the past. This isn’t to say that these cryptocurrencies won’t be successful, just that they won’t supplant a sovereign currency
as the primary store of value for most
people and institutions.
The Future of Exchanging Value Cryptocurrencies and the trust economy 57
Finally, we considered the possibility of using a
We can expect digital payments to take an increasing
cryptocurrency as a global reserve currency, a global
share of transactions and the use of cash and cheques –
store of value and a means of exchange. Many nations
physical money – to continue to decline. However, the
and institutions are dissatisfied with the US dollar in the shift from physical payments to digital payments is better role of reserve currency – being the most liquid and
thought of as a move away from the point of sale, both in stable currency on offer – because, as the saying goes time and space. It is also clear that the peer-to-peer
“when the US sneezes the world catches a cold”. At first technologies used to create cryptocurrencies are more
glance, a distributed, Internet-native currency would
efficient and effective than the intermediary-based
seem best suited to the role of reserve currency in a
solutions currently in place.
digital and online world. Unfortunately, individuals (and A future of purely incremental technological and
institutions) will use the most convenient currency at social change – where the incumbents integrate
hand based on the level of trust between the two parties these new technologies into their current solutions to unless they are coerced by higher powers.
improve the existing processes – also looks unlikely.
In international exchanges, this usually will mean
a currency from one end of the transaction,
Nor can we expect the future to bring a new paradigm in or a currency from a much larger (and trusted)
which consumers set the terms and determine how, when
third party. We can expect cryptocurrencies to
and in what currency they will transact – a future in which take on a similar role as that held by SDR, as a
the current processes for exchanging value are
specialist tool for exchanging value used in
transformed by high technological change and high social specific circumstances, with most international
change. The balance of power may have tipped from
transfers remaining in sovereign currencies.
merchant to customer, but the customer’s choice on how, when and in what currency they transact is still
Near and far future
constrained by the context in which they operate. While Looking back to the scenarios in which we
customers or merchants may prefer to store their wealth explored big and small change aspects for both
and make all their payments in Bitcoin, they are also
technology and society, and considering what we
forced to deal with the preferences of others and the
know about how technology and society interact,
constraints placed on them by the government.
we may conclude a number of things.
The most likely outcome is a transition to a new
It is highly unlikely that Bitcoin or other distributed and equilibrium. This future involves a significant change in online cryptocurrencies for a digital and borderless world the relationship between merchants and consumers
will trigger a collapse of the existing system
and between institutions in the finance sector.
as there is no indication they could ever achieve the
However, it is also a future in which the technology we level of adoption required. The ambitious predictions
use to exchange value changes incrementally.
for sovereign currencies being supplanted by
cryptocurrencies are clearly wrong. As we have
mentioned, no technology survives contact with society unscathed. Cryptocurrencies enable many possible
futures, but one in which technology forces us to
rethink the foundations of our financial system with
high technological change but incremental social
change – is clearly not viable.