Where the future of money is going

Our report already pointed out trends that are still in force today and not yet carried out in a massive way.  Perhaps our experts were optimistic about the pace of adoption, but very successful in terms of content: Complementary currencies, mobile payments, stable global cryptocurrencies, programmable money, disintermediation versus over intermediation. All these concepts remain the key themes in the future of money.

It may seem that innovations around money, like all innovations with social and political implications, are implemented very slowly or will never emerge, but when they do arise, they do so with an unusual and unpredictable power. To give an example, the Internet has its origins in 1969, when the first computer connection was established, known as ARPANET. Tim Berners-Lee designed the World Wide Web in 1990. Few could have imagined that the advent of smartphones would be the catalyst for a massive use of this technology (more than 50% of the world’s population). The emergence of a digital global currency could also be widely adopted in a short space of time.

The European Commission’s September 2019 report, “Blockchain Now And Tomorrow”, predicts that for a profound impact of Blockchain to occur it will take at least 10-15 years . It considers that the technology is in the “embryonic stage” and that it faces problems such as excessive energy consumption and interoperability.

Without discussing the deadlines for a profound impact, the number of actors involved, the number of investments made and planned both public and private, as well as the manifest interest of regulators promoting regulatory sandoxes, makes us foresee that the changes will occur much more abruptly than many think. It is enough for a project like Libra to see the light for billions of citizens to adopt a digital money that does not exist today and a new way of understanding financial transactions.

According to Eden Schochat, patron of the Bankinter Innovation Foundation,  founding partner of Aleph VC, and expert in disruptive innovations, cryptocurrencies and in general DLTs solutions (Distributed Ledger Technologies), within which are the Blockchain solutions and within which is Bitcoin, are still in a state of “pre-abyss”, following the model of Geoffrey A. Moore postulated in his book “Crossing the Chasm”.. According to this model, in the lifecycle of technology adoption (which starts with innovators and moves to early adopters, early majority, late majority, and laggards), there is a large gulf between early adopters and early adopters.  And we still don’t know how the abyss will be crossed. The useful, simple, unhindered application that allows this technology to cross the abyss and become of mass use has not yet emerged .  Eden predicts that there are still a year or two before that happens and that, when it happens, it will be with a use case for something that does not exist today.

Some of the unsolved problems with cryptocurrencies are the liquidity of cryptocurrencies and the ability to make micropayments with them. Eden points out that initiatives such as Lightning Network suggest that the solution to these problems may be about to appear.

In the most technological field, Eden tells us that an optimal solution for the resolution of existing “trilemma” with Blockchain and DLTs in general has not yet been reached: to offer security, decentralization and scalability simultaneously.

For Eden Shochat, an immediate application of Blockchain is in the business of asset securitization, where it would provide streamlined processes, reduce costs, increase the speed of transactions, improve transparency and strengthen security.

Moving on to the field of electronic money, the Second Payment Services Directive (known as PSD2), which theoretically entered into force on September 14, is called to revolutionize the payment system in Europe and, therefore, in Spain.    various payment services will be offered by those entities that meet the requirements to exercise as Payment Initiation Service Providers (PISPs).