Money is a-Changin’, and interesting allocations of human capital are primarily to credit.
Horrible puns aside, money— and everything it symbolizes— is in a state of flux.
First off, people are mad, and rightfully so. You don’t have to go any further than examining your paycheck: if our wages kept pace with rates of productivity, the vast majority of us would be much richer.
In terms of financial innovation, we have Venmo, PayPal, Apple Pay, and even Bitcoin to pay for our goods and services. A few years ago, it was cash, check, or credit. Before that, it was cash or check. (And before that, barter).
As many begin to question the changing landscape of the world economy, it’s only natural to ask where money is going next.
This article will highlight a few of the innovations revolving around the universe of money— some of which you probably are aware of to some extent, and others of which may come as a complete revelation.
Mobile Payments
To start off with something familiar, everyone and their grandma is at least aware of the ability to pay with one’s smartphone.
Naturally, some players in the space are newer, while others are older. Two of the bigger players in the mobile payment industry are PayPal and Venmo, both of which are owned by the parent company of the former. Each, if used correctly, provide a free and easy way to transfer money to friends and family.
Meanwhile, Apple Pay, Samsung Pay, and their various competitors are mostly intended to allow you to pay merchants— as opposed to letting you reimburse your friend for that time he spotted you at the mall.
Although Venmo deems itself a “digital wallet,” it’s considered less traditional of a wallet than Apple and Samsung Pay, due to its limited functionality.
Nevertheless, in the bigger picture, both Venmo and Apple Pay are considered part of a larger digital payment ecosystem that is expected to reach nearly $3.4 trillion in annual transactions by 2022.
The industry’s projected growth rate from last year through 2022, a compounded rate of 33.4 percent a year, is astounding.
Another report released by JPMorgan Chase found that 69 percent of merchants expect a majority of their transactions to be conducted through a digital wallet within five years.
The time immemorial during which we’ve had to carry a bulging wallet appears to be coming to an end, which is good for both merchants and consumers.
Cryptocurrencies
Bitcoin is likely one of those things you’ve heard quite a bit about, but have no idea how it works.
Quite simply, Bitcoin is the most prominent— and valuable— currency in a category known as cryptocurrencies.
Cryptocurrencies, which by definition are digital, use “encryption techniques to regulate the generation of units of currency and verify the transfer of funds, [while] operating independently of a central bank,” according to Google Search.
In layman’s terms, this means that any given cryptocurrency relies on complex algorithms to create and transfer its value, while there isn’t a single entity that controls the currency.
Other than their lack of a central authority, perhaps what makes cryptocurrencies so alluring is their scarcity.
The process that is used to mint new cryptocurrencies is called mining; once a certain amount of a given cryptocurrency has been mined, production will cease.
Bitcoin, which is commonly abbreviated to “BTC,” will never exceed 21 million total coins in circulation.
Some have ventured that this controlled scarcity, assuming demand remains, could potentially make bitcoin more valuable than precious metals, such as gold.
If BTC sustains itself over the coming decades, it could not only modestly multiply in value— as we have seen in recent months— but do so exponentially, many experts argue.
Case in point: one Bitcoin, at the time of this writing, was worth over $1,500. As recently as July of last year, a single unit of Bitcoin held less than $500 of value.
Perhaps the nagging worries with Bitcoin and other cryptocurrencies is a lack of security and mainstream acceptance.
There have been a number of high-profile cases in which a monumental amount of Bitcoins were stolen. Mt. Gox, one the biggest Bitcoin exchange, for example, went out of business after nearly $500 million in the currency was confiscated from its coffers.
Bitcoins, which are stored in their own form of a digital wallet, can be easily seized by hackers if the owner does not secure their wallet with encryption and a strong password. Experts also recommend backing up one’s wallet onto a hard drive.
While the list of companies that accept Bitcoin has been growing, the common denominator between these firms seems to be a tech- or web-based focus— i.e., it’s rare to see a clothing retailer or supermarket that takes BTC.
A fairly exhaustive list of companies accepting Bitcoin can be found here.
To be sure, despite being the most popular cryptocurrency, Bitcoin isn’t the only one out there. According to Wikipedia, there are over 740 active cryptocurrencies, although only a handful are worth anything of note.
Some of Bitcoin’s biggest competing currencies include Litecoin, Feathercoin, Dogecoin, and Etherium.
While much has been made of Bitcoin’s struggles— its price volatility, lack of widespread acceptance, and disagreements over the vision for its foreseeable future— it’s clearly doing something right.
If nothing else, it appears as if the technology behind Bitcoin and similar cryptocurrencies will see widespread adoption.
Basic Income
The rise of basic income has been previously covered in great detail in this publication, but I’ll still highlight some of its key strides and innovations.
Universal basic income, or UBI, is frequently presented as the answer to what experts see as as a looming threat: the widespread automation of work.
UBI, in essence, provides an unconditional set amount of monthly income to everyone within a given jurisdiction. In its purest form, UBI does not set contingencies based on employment status, nor does it dictate how one spends the money they’re allotted.
Many academics and policymakers have championed the implementation of a UBI, in that it would allow for the sustenance of the average individual, who may very well be displaced by AI in the coming decades.
A number of UBI trials have commenced for research purposes, including in Finland; Utrecht, the second-biggest city in the Netherlands; and the Canadian province of Ontario.
While it remains to be seen if these experiments will be successful, the implementation of future UBI experiments should come as no surprise to observers.
Other Innovations
While much of this piece has focused on digitized currencies, technology in a broader sense, has also made great strides in allowing entrepreneurs and content creators to monetize their goods and services.
Patreon, for example, allows creators to fundraise money from their fans and viewers. Bigger crowdfunding platforms, like Kickstarter and IndieGoGo, largely enable the same goal, although they are usually more catered toward those producing tangible goods.
Amazon Go, the eponymous e-commerce giant’s much-ballyhooed supermarket, will allow customers to both select and pay for items without human interaction. Despite its opening encountering a delay, there’s no doubt that its potential is enormous. (After all, we’re talking about Amazon here).
For all of the benefits that money’s evolution will bring, there will assuredly be a whole host of new laws and problems. Hacking and data sharing, for example, will be concerns on the part of consumers; legislators and regulators, meanwhile, will worry about tax evasion.
Despite the mess we have in Washington, the money revolution makes it an exciting time to be alive.
Support Daniel’s writing on our site by subscribing to our newsletter on this link, Subscribe here!
Daniel Steingold is a writer from Los Angeles, CA who’s an advocate for alliterative artistry. Admittedly ambivalent towards social media, he halfheartedly hopes hospitable humans heap plentiful praise upon his prose periodically posted to Facebook.
His two known writing projects, one used and one abused, are The Article Review (thearticlereview.com) and A Wiki a Week (awikiaweek.com), respectively. He enjoys learning about everything under the moon, because, well… the sun BURNS his ghostly white skin.