A New Kind of Money

It is a digital currency, which works online and makes anonymous transactions between buyers and sellers across all over the world. It works through the mathematical formula and does not have any regulators controlling it. The digital currency can be exchanged for real traditional money. Bitcoin is gaining its popularity and is already used in many ways, such as WikiLeaks in order to accept donations.

A block chain is stored in every computer running bitcoin and registers every transaction between buyers and sellers. It is said that transactions are anonymous, although it is not entirely true. Anyone can see the transaction, but cannot see the transistor, but that is also not guaranteed, because having just a little more additional information, anyone can find out who is the transistor of a particular transaction.

Some of the world’s biggest financial institutions are concerned about mobile payment evolution and are very sceptical about it. Mobile payment systems bring evicted people into the global financial economy. Questions whether conventional, real money will still exist after the spread of ‘M- payments’ are popular subjects and discussions around the world. Most likely, digital currency and its system will not substitute for conventional banking and money. Moreover, this kind of rather new way of payment will most probably lead to an old- fashioned banking. As mobile- payment starts to gain its audience, it has also negative effect on companies, such as those who already make their profit out of transactions, like banks and credit card managers. Mobile payments are growing rapidly. For example, the report from Bank of Scotland has showed the total of global M-payments to be $223 billion in 2013 and a growth rate of 50 per cent a year over the last three years.

Governments have learned that information will be available for anyone through mobile communications and the political impact of this is already enormous. If mobile communications will become a leader of unregulated money, not regulated by anyone, may cause huge changes of the way people think and use money. The control of interest rates and the issuance of money would be irrelevant in that case. Capital controls would disappear entirely. Individuals will be able to control their risk and profit, therefore there are many who would like such a zero- regulation financial world. However, this might also not happen. In order for M- payment to become totally independent and far from traditional banking, it has to have its own currency. The most popular digital currency right now is Bitcoin. M- payment users are focused on reducing risk, which might come from instability of digital currency. Therefore, they are increasing the use of the US dollar and the euro, which are traditional trading currencies.

The question of who will take fees from mobile systems is still open. It can be Visa or MasterCard payment processors, or mobile operators, or even computing companies like Apple. Anyways, mobile system will need traditional bank account to complete the transaction.

Certainly digital payment is the future, but is it an unregulated future, which will totally change the global financial power structure? Those who have not made their “digital pockets” yet, are very likely to get it soon, where they will have their recognised currency and will rely partly on a bank that already exists. Therefore, there will be not significant changes and the future will most likely look like the past.

Image source flickr