The digital money revolution is already here, and banks and credit card companies have reason to be nervous

The digital money revolution is already here, and banks and credit card companies have reason to be nervous
While Bitcoin is inarguably one of the most consequential computer science innovations in a generation, ushering in the blockchain revolution, it may be no more than a bit player in this new world of digital money and digital capital.

It’s not because it has other competitors in homegrown cryptocurrencies. Rather, now that the technology genie is out of the bottle, the state and the private sector are taking notice and kicking into high gear.

While these are early days of this revolution, the contours and trajectory are clear and unstoppable. Capital as we know it is being reinvented.

Let me explain:

In the first era of the internet, software upended media industries like news, music, advertising and television, and ultimately extended to a few others like retail, customer service and education. The second era of the internet will make those changes look quaint.

Emerging technologies like artificial intelligence, which automates decision-making, and blockchain, which programs trust into our economic systems (and displaces middlemen), have already begun to disrupt capital as we know it.

Capital has always been narrowly defined as “money and other financial assets” – gold, stocks and cold hard cash. Traditional capital is stored in vaults and banks and requires us all to rely on trusted intermediaries to manage our assets. Every time you buy a coffee, send money to your kids, or make a mortgage payment, you are interacting with a middleman which extracts value from the transaction.

Digital capital changes this. Digital capital can be moved, stored and used online in a frictionless, instant and secure way without relying on banks, credit card companies and other intermediaries.

More importantly, digital assets are smart and programmable. Let’s say you’re sending money to your kid studying in college. You can now program the money to only work at certain retailers like Walmart and Whole Foods, rather than the Ontario Cannabis Store or LCBO.

By rethinking capital, we can reimagine markets, money and finance. Entire swaths of the financial services industry currently worth trillions of dollars — banking, payments and even money itself — will be questioned, challenged and upended in the years to come.

Money is where this digital transformation is being felt first. Indeed, money as we know it will be radically transformed within the decade, and we’ve already been offered a glimpse into what that will look like.
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