From paper to bits


How is technology changing the way we manage our money and what might be some of the consequences of this?

Gabriel Werneck Paiva in London MARCH 18 2022

This article was written for the Financial Times writing competition; after not hearing back from them, I assume it did not qualify me for any prizes; however, after some reflection, I thought it might be of interest to Medium readers.

Peter gets out of bed and grabs his phone to check the stock market while drinking his morning coffee. When commuting to work, he scans his watch to board the train. He then uses his Sodexo card at lunch and orders groceries from Amazon when he gets home.

When it comes to money, the world has changed dramatically over the last three decades.

In the past, stock transactions were done on paper, person to person; however, as technology advanced, people began to use phones. They would call their brokers and order the desired amount. The rise of the World Wide Web has made this method far less popular. While many brokers still accept phone orders, most people have switched to online exchangers due to lesser fees and significantly more practicability.

Paying for public transportation is also becoming more convenient; more and more public transportation is accepting NFC payments, allowing riders to commute to work using their phones or watches without having to stamp any tickets or interact with a booking clerk.

Before, companies would give their employees lunch tickets in a paper stack, today, this has completely been replaced by prepaid cards.

Even going to the supermarket, when it is not entirely online, was a different experience decades ago. Clients would pay large sums with checks, which required the cashier to either trust the client to have the money in their bank account or spend additional time calling a company to verify the client’s trustworthiness. Nowadays, the practice of writing checks has been rendered obsolete by online transactions.

Most operations that were once difficult and time-consuming can now be completed by Peter with the click of a button. Peter no longer uses cash; whenever he makes a purchase, funds are automatically deducted from his online bank account.

Online baking however does not yet satisfy all of Peter’s needs; in recent years, we have seen the emergence of cryptocurrencies, which is completely changing the way we see and handle money.

Now, let’s put us into the future: Peter is driving home when an inattentive driver collides with his car, breaking his backlights. In a matter of seconds, both cars communicate and exchange their digital identities. All the information about the accident is forwarded to both drivers’ insurance companies. A few minutes later, Peter receives a notification, detailing when and where his car will be repaired.

Similar occurrences could occur to you and me in the next ten years. Smart contracts assist in the facilitation of complex transactions by eliminating the need for a middleman and replacing it with a few lines of code.

Peter is now at home and decides to go online, where he discovers that his favorite artist has just released a new NFT collection. Excited, Peter connects his crypto wallet to the website, places a bid, and after a few nerve-racking minutes, Peter wins the bid. The money is automatically transferred from his wallet, and the artwork is added to his collection.

The popularity of NFTs has skyrocketed in the past year. What was once a concept only understood by a few enthusiasts has now grown into a $40 billion market. An NFT acts essentially as a title of property over an asset, such as an artwork, which is extremely useful for artists who no longer require editors and can now claim royalties by simply using smart contracts.

Cryptocurrencies are actively defying the global banking system. Storing a digital asset in a digital wallet is extremely simple, eliminating the need for banks to manage money. Transactions can take place almost instantly and with no monetary transaction costs thanks to newer technologies.

Peter now goes to the movies. When he arrives, the vendor offers him a deal: instead of paying with his regular currency, Peter can purchase the cinema’s own currency, which entitles him to a twenty percent discount on movies. He accepts it, and the currency is saved in his digital wallet. He then purchases tickets, which are also saved in his wallet as an NFT, and enters the movie theater.

In the future, the currencies you use will be determined by their utility rather than by country borders. Different currencies may be used for different types of transactions; for example, a movie theater may create its own currency to incentivize customer loyalty.

Because of the decentralized nature of most cryptocurrencies, the government will have no control over the supply of these currencies; this will mark the beginning of the separation of money and state.

Now it’s up to you, how different is going to be your day in fifteen years?

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