Technology is playing a key role in transforming payment systems. In the past, the immense amount of trust required to be the anchor point in these systems reduced the candidates to states and financial institutions. But now new technologies are gaining the trust required to create a clear alternative to the legacy models.
Cash, cards and checks have long been the backbone of consumers’ payment alternatives. These options were well suited for an economy in which payments for products and monthly bills for things like utilities or TV dominated our transactions. But in a Networked Society, we can expect a more transaction-oriented economy. Products can be bought as a service. And pay will be tied to use, measured through advanced analytics systems. This will lead to new transaction systems that will match the needs of the new arena.
Trust, trust and trust have always been, and will remain, the three most important requirements for any payment system. The cryptocurrencies introduced in 2009, when bitcoin was launched, have gradually earned the trust required for consumers and businesses to consider them a real alternative. Technology is now taking the role of securing the system, something previously assigned to states and financial institutions. Technology always played a role within the institution but it was never the focal point.
Digital cryptocoins have the potential to play an interesting role in a market featuring many micro transactions. This business model is often too complex to realize with cash, cards and checks, due to high handling costs. While in the classic world we are moving from cents and pennies towards dollars and pounds, bitcoins have gone in the opposite direction, with milliBitCoin (mBC) a highly relevant term. Being “nickel and dimed” used to be associated with being charged too much. In a cryptocoin world, that might be turned into a positive experience,
My prediction of the future of crypto-currencies:
1.The momentum around these payment systems is significant enough to attract the technology development required to keep them trustworthy.
2.Crypto-currencies are well suited to be integrated with Product-as-a-Service and pay-per-use scenarios for smart, connected devices and associated services.
3.Parties with a high trust level and high innovation ambitions can grow their role in the shaping of new payment systems for transaction-centric business models.
4.Cryptocoins will fragment the market previously dominated by cash, checks and charge cards provided by states and major financial institutions.