Fintech Payments

Why the blockchain will radically alter our future

The future, as predicted by Star Trek creator Gene Roddenberry, is cashless. Image: JD Hancock, Creative Commons
Written by Chris Skinner

The future, as predicted by Star Trek creator Gene Roddenberry, is cashless. Chris Skinner considers the options facing those who may find it hard to leave cheques, cards and cash behind.

There’s an interesting debate about blockchains, sidechains and identity taking place that’s emergent right now, but will soon be mainstream. For those who are unclear about these things, blockchain is the technology protocol invented by Satoshi Nakamoto with bitcoin, though it doesn’t have to be based on bitcoin.

The blockchain allows you to create a public ledger system that’s accessible for all, and secure. This is achieved by having public recording of transactions while they’re secured by private keys. As a result, any exchange on the blockchain is secured until the private key is passed along. At that point, the ledger records the exchange of the key and the movement of a digital asset, and that asset can be anything from a currency transaction to a securities settlement, to a mortgage deed to a marriage contract.

Sidechains are just spinoffs of a blockchain used to record a specific market transaction
In fact, in order to allow different markets to create different blockchains to record these different styles of transaction, there is now this thing called sidechains. Sidechains are just spinoffs of a blockchain used to record a specific market transaction, such as house deed sales, and sit alongside the main blockchain. It’s this technology that all the banks are excited about, as it allows the exchange of digital assets to be recorded digitally for near-free, and for those who read them, the recent case studies with Ripple, Jon Matonis and Jeffrey Robinson illustrate the great debate around this technology well.

The core of this debate is whether this blockchain technology needs to reside on the bitcoin currency. For some, such as Jon Matonis, this is a given. Why would you create another currency? For others, such as Jeffrey Robinson, as soon as blockchains are endorsed and operated using dollar, euro or yen, then why the hell would you need bitcoin? You can make your own mind up, as this is a sideshow to the emergent discussion about the internet of things and how the blockchain may make it work effectively.

So, here’s the scenario in the very near future: You buy a fridge, a car, a house, a smartphone, a wearable, a whatever. All the things you buy have clear serial number identifications as well as chips inside to enable them to transact wirelessly over the web. Upon purchase, your device is recorded as being yours using your digital identity token (probably a biometric or something similar). The recording of that transaction takes place on the blockchain. Now, you have multiple devices transacting on your behalf. Your fridge is ordering groceries from the supermarket, your car auto-refuels as it self-drives the highways, your house reorders all the things needed for the robot vacuum and other cleansing devices it uses, and so on.

Each transaction is a micro-purchase around your wallet, but involving no authentication of you. The authentication is of your devices. Should a large transaction occur, or maybe just to check in (as contactless payments do with every 20 or more transactions), you are requested to agree that this is your device ordering on your behalf by providing a TouchID or similar. All of this is being transacted and recorded on the open blockchain ledger of your bank cheaply, easily and in real-time.

The future, as predicted in the 1960s

Did you ever see anyone pay for anything on Star Trek?
What this provides is the scenario I keep talking about. The scenario invented years ago by Gene Roddenberry when he came up with the idea for Star Trek, a show that included lots of things that were forecasts of the future; some came true, from communicators that were the predecessors of Motorola flip phones to body scanners that could be handheld. One of the other predictions was that we wouldn’t need money. Did you ever see anyone pay for anything on Star Trek?

The reason you don’t need money in the future is that all the transactions you make take place wirelessly around you, through your internet of things. You walk into a store or mall, and all of your devices and identity are communicating your location and intention. As a result, you never pay for anything. You just authorize with the blink of an eye or the wave of a watch.

The future is so bright, I gotta wear shades, and it’s coming within the next decade. By 2025, the only humans who will be using cheques, cards or cash, will be those who are happy to pay the penalty fees charged by the merchants and banks for these transactions. The rest of us will be using chip-based identities for ourselves and our devices to wirelessly order everything without having to think.

This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here. Image: JD Hancock, Flickr Creative Commons.

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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