This article posits that programmable money is a combination of crypto/tokenization, smart contracts, blockchain, and IoT. Combining unproven technologies to solve existing problems without addressing the requirements of global standardization and regulation creates a fog of unlimited possibilities.
While the future may well be made of such stuff, recognizing the scale of the barriers preventing these dreams and how to overcome them is where the money is.
Cryptocurrencies as they exist today do not implement controlled spending, whereas tokenization as currently implemented by the global card networks does.
Smart Contracts have yet to be proven technically, linguistically, or legally reliable. In order to operate across borders smart contracts need to be standardized and incorporated into local and international law.
The immutable ledger is reality today in unregulated environments and has even begun to operate in regulated environments where a small number of regulated entities partner together to execute it. Expanding this into a national or even international standard will take improvements in technology and cooperation between government agencies and countries.
IoT Payments are already a $5B plus market and growing rapidly. This growth will increase as tokenization prevails and will grow faster still as smart contracts are implemented, perhaps between existing payment network participants that are already fall under network regulations. In any scenario IoT implementations will be the bedrock for these solutions and more as technology evolves to address the laudable goals dreamt of in this article:
“Programmable digital currency could forever alter the role of central banks, providing funds for large companies involved in B2B transactions. Instead of opening a line of credit, companies could use an infusion of digital currency from central banks to increase liquidity, freeing up more working capital to optimize operations.
“If an organization held the money like cash, even if it’s digital but it’s millions, they could directly lend funds to supply chain suppliers based on pending and expected orders,” said Bramm. “For trusted suppliers, this would keep business moving, especially in times of uncertainty like the post-pandemic world.”
Reserve auctions are another potential use case for programmable currency. Rather than bringing a certified bank check to an auction for a big ticket item like a piece of property, a company or individual could use programmable money – from any number of separate accounts – that’s earmarked for the sale and only released from each account via a smart contract when the bidder wins the sale. Once complete, the transaction would automatically be recorded on a blockchain-based distributed ledger connected with the government land registry.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group