How feasible is the implementation of programmable money without robust infrastructure support, particularly in terms of blockchain technology and smart contracts? Can existing solutions such as stablecoins provide a foundation for programmable money, or are entirely new frameworks required? Additionally, what challenges might arise in the development and adoption of this infrastructure, and how can they be addressed?
Dear Steve In the UK Regulated Liability Network are looking at the feasibility to having a distributed ledger or as they like to call it a shared ledger whereby they are able to swap their liabilities potentially in a tokenized format. As for stablecoins I believe we will see the rise of Digital Bank accounts whereby potentially why not have £1 or $1 or €1 in your current/checking account NOT earning interest and the balance of your monies in an interest bearing (savings) account. If you send money in the jurisdiction where you live you use fiat with a smart contract before you buy something you have the money in your savings account. If you are abroad and spend money the transaction is paid for using your digitized money. Interest can be generated on your savings account in theory in two ways. Either the bank invests in low risk short term dated money market type securities professional managed by experts in treasury management so your digital accounts is backed securely by ring fenced assets. Alternatively your digital account operates like a traditional savings account and your money is backed by the bank's balance sheet and they are at liberty to hypothecate your money making loans etc and the bank shares in the profit it makes/pays interest. In both cases your saving are digitized and can be used when appropriate to make programable payments. In theory much of the above could be conducted by FinTechs NOT banks and even by global corporates (provided they have a strong balance sheet/can be trusted). Your thoughts would be welcome Jonny
Hi Jonny, I am big fan of the idea of programmable money but there some structural issues. Tokenized deposits are not ‘transferable’ outside the bank with whom you have your bank relationship because you own a claim not the money itself and you cannot transfer that claim. Stable coin have a business problem which is the redistribution of the interest component. If you are client of bank A and hold your funds in stable coins from bank B this would potentially make you an unprofitable client. Hence such a model will be ‘unstable’ because the bank does not have infinite capacity to service such clients. I am sure a solution could be found but so far I have seen nothing credible, but I could have missed something.
Nice article Jonny. Thanks for it. I loved the way you put the discussions about programable money in the sense of payments and i am curious to listen your views on the composability that de permissionaless blockchains bring to this discussion (maybe an ideia for another article?). Payments for me is an important part of the programable money for sure, but the main driver for innovation is on this composability that we see in DEFI and that tradfi could benefit a lot.
As a side comment, if you keep the paragraphs shorter, it is easier for us to read and for the search algoritms to help you spread the word.
Nice piece Jonny, the $€£¥ QR code stablecoin payment evolution is set to emulate the explosion in the west as it has done so in the east. With 1 billion + Chinese now using Alipay and WePay peer-to-peer wallets, the non-state blockchain payment rails will dwarf anything issued by Government’s and Central Banks as around the world trust in people’s governments is fragile to say the least.
Dear Steve In the UK Regulated Liability Network are looking at the feasibility to having a distributed ledger or as they like to call it a shared ledger whereby they are able to swap their liabilities potentially in a tokenized format. As for stablecoins I believe we will see the rise of Digital Bank accounts whereby potentially why not have £1 or $1 or €1 in your current/checking account NOT earning interest and the balance of your monies in an interest bearing (savings) account. If you send money in the jurisdiction where you live you use fiat with a smart contract before you buy something you have the money in your savings account. If you are abroad and spend money the transaction is paid for using your digitized money. Interest can be generated on your savings account in theory in two ways. Either the bank invests in low risk short term dated money market type securities professional managed by experts in treasury management so your digital accounts is backed securely by ring fenced assets. Alternatively your digital account operates like a traditional savings account and your money is backed by the bank's balance sheet and they are at liberty to hypothecate your money making loans etc and the bank shares in the profit it makes/pays interest. In both cases your saving are digitized and can be used when appropriate to make programable payments. In theory much of the above could be conducted by FinTechs NOT banks and even by global corporates (provided they have a strong balance sheet/can be trusted). Your thoughts would be welcome Jonny
Hi Jonny, I am big fan of the idea of programmable money but there some structural issues. Tokenized deposits are not ‘transferable’ outside the bank with whom you have your bank relationship because you own a claim not the money itself and you cannot transfer that claim. Stable coin have a business problem which is the redistribution of the interest component. If you are client of bank A and hold your funds in stable coins from bank B this would potentially make you an unprofitable client. Hence such a model will be ‘unstable’ because the bank does not have infinite capacity to service such clients. I am sure a solution could be found but so far I have seen nothing credible, but I could have missed something.
Nice article Jonny. Thanks for it. I loved the way you put the discussions about programable money in the sense of payments and i am curious to listen your views on the composability that de permissionaless blockchains bring to this discussion (maybe an ideia for another article?). Payments for me is an important part of the programable money for sure, but the main driver for innovation is on this composability that we see in DEFI and that tradfi could benefit a lot.
As a side comment, if you keep the paragraphs shorter, it is easier for us to read and for the search algoritms to help you spread the word.
A paragraph is a unit of thought, not of length.
Nice piece Jonny, the $€£¥ QR code stablecoin payment evolution is set to emulate the explosion in the west as it has done so in the east. With 1 billion + Chinese now using Alipay and WePay peer-to-peer wallets, the non-state blockchain payment rails will dwarf anything issued by Government’s and Central Banks as around the world trust in people’s governments is fragile to say the least.