Blockchain and the cashless society

Blockchain and the cashless society

Chris Trew

CEO at Stratis

Views 2099

Blockchain and the cashless society

17.09.2019 12:45 pm

It took 200 years before the invention of the printing press heralded the widespread use of modern banknotes. Four centuries on and blockchain technology – still barely a decade old – is moving so rapidly that the days of cash are surely numbered.

The way we use money has been revolutionised by plastic cards, online banking, contactless and smartphone payments. The next big development will see blockchain turn the concept of a cashless society from science fiction to reality.

Some countries, such as Sweden, are already going down the cashless route using existing technology. But these systems are still relatively slow, vulnerable to fraud and depend on banks and other financial institutions to acts as intermediaries.

Blockchain enables rapid transactions on a distributed ledger, a digital record stored on a network of computers around the world. It also provides a high level of security against fraudsters and makes transactions quicker and cheaper by removing the need for intermediaries.

It supports cryptocurrencies, or digital money, such as Bitcoin and alternatives known as altcoins. It also supports crypto tokens which are used on existing blockchains as a method of payment, to give holders access to goods and services or a share of a business.

For instance, blockchain could be used by workers to send wages to their family in their home country. Tokens could be sent in seconds. Such remittances can take place securely, with no middlemen and lower costs.

There are now many cryptocurrencies in use in addition to bitcoin. The sector is evolving rapidly and as they become more widely accepted it is inevitable they will be adopted by businesses of all types.

One of the elements that makes blockchain so revolutionary is that it supports not just the cryptocurrency and payment system but the whole transaction process through smart contracts. As a digital ledger that cannot be altered, it provides users with traceability and security without the need for middlemen.

Its use will span retailing, manufacturing, distribution, financial services, property, gaming, and healthcare.

Even central banks that issue notes can see the way the wind is blowing and an increasing number are developing their own central bank digital currencies (CBDCs) using blockchain.

It has another big advantage because it can be used for micropayments of a few pence or cents, such as paying to listen to a piece of music, watch a video or read an article.

This has huge implications for the Internet of Things (IoT) where devices are linked via the web, from household appliances to smartwatches and from sensors in buildings to robots on production lines. Blockchain will seamlessly host the contract between provider and customer as well as payment.

Blockchain also heralds a revolution for the two billion-plus people without bank accounts by giving them access to digital financial services from which they are currently excluded. For a close parallel, see how mobile phones have transformed communications and financial services.

For individuals, businesses, financial institutions and central banks, there is a now a rapidly growing momentum pulling us away from a centuries-old system based on banknotes to one built on blockchain.

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