Cryptocurrencies are not a bubble, not a Ponzi scheme, and not a flash-in-the-pan, here-today-gone-tomorrow phenomenon. Cryptocurrencies (think Bitcoin) are here to stay. They are the next generation of money. As fiat currency (paper money) disappears, we use checks less and less, we use debit and credit cards more and more, and we send and receive money via all sorts of electronic methodologies, it is quite apparent to me that we are moving towards virtual currencies. In fact, we’re moving not just to replace dollars with virtual dollars but we’re moving towards a state where we have many different currencies to handle many different situations, many different circumstances that we will use throughout the day, throughout our lives (think Airmiles).
Have you ever wondered why we bother to purchase Metrocards to use in the subway? Why don’t we swipe our credit or debit cards through the turnstiles directly just as we swipe our Metrocards? The answer is because the Metrocard is doing something a Mastercard or Visa card can’t do. The Metrocard has an ID number embedded in the magnetic strip that tells the system who is using the card or under what conditions the card is to be used. If you purchased a monthly MetroCard, the card might look the same as any other MetroCard but the ID number lets the system know that you have paid for the right to travel in the system for a period of one month. You are free to use the system as much as you want during that time. Your debit or Visa card doesn’t have that kind of ID number nor can it hold that kind of information. The ‘contract’ you have with the system is unknown by the transit system.
In a future world, that sort of unintelligent ‘money’ is unacceptable. We are living in a world that is and will continue to be more and more dependent on ‘intelligent’ interactions between the systems we use. The transit systems, including buses, subways, taxis, airlines, water taxies, highways, tunnels, and bridges, will be smart systems which will allow us to establish ‘contracts’ with them. These ‘contracts’ will be like the Metrocard ‘contracts’ for different rates at different times, for different periods of time, for different numbers of people, at different rates depending on the age of the user, to what use it is being put, and for what duration it is to be used. The money will have to keep pace with these types of contracts.
We have EZPASS in the Northeastern United States for paying highway, bridge and tunnel tolls. The system automatically replenishes our accounts without our direct involvement. When our automobile passes through one of the EZPASS readers, the system knows what our ID number is and what ‘contract’ we have with the system. Similar systems will appear in the coming years for other systems that we use. There might be one for parking your car, buying and delivering food, taking taxis, using music, downloading information, buying online, vacationing, renting hotels, renting sporting equipment, online gaming, online gambling, education, going to the movies, renting furniture, renting art to hang on the wall, taking singing lessons, learning to skydive, and ordering a babysitter. The list is endless. Are you getting the idea? The way we will conduct our lives in the future will be systematic, without currency, by a computer, online and by a ‘contract’ which is a set of guidelines agreed upon by both the party ordering the goods or service and the system or party delivering the goods or services. To facilitate those transactions will be virtual currencies.