Stupid money is on the way out, smart money is on its way, writes Peter Verhaar.
How quickly things change. A year ago I did a column on Bitcoins. It was at the time when bank account holders in Cyprus were done out of 10% of their savings and the anonymous currency took centre stage. Banks and governments were the enemy and Bitcoins the new financial safe haven. I had a go myself but found that buying Bitcoins was far too complex an operation.
I tried again in December last year and the system had become much more user-friendly. I could buy Bitcoins via Ideal and use them to pay delivery service Thuisbezorgd.nl for my pizza.
Recently, the international Bitcoin world congregated in Amsterdam for three days. On the Thursday I was part of a panel on the first national Bitcoin congress. The audience wasn’t made up of Bitcoin believers only: suits predominated. No ties, of course, not yet. Governments and banks were no longer the enemy but possible partners. ABN Amro hosted the congress. DNB and ING answered questions. As the Financieele Dagblad wrote: ‘The Bitcoin community is shedding its ideological feathers’.
But we mustn’t get too excited. Bitcoins are still a very big step too far for average consumers. Financial transactions pose no problems here. They are cheap and efficient. But things are always open to improvement and Bitcoins will serve as a wake-up call. For too long complacent banks have relied on past innovations and ignored other forms of transferring money. Or they were too busy competing with each other. The Chipper versus the Chipknip battle springs to mind.
Money transfers must become truly real-time. Banks should work during weekends and provide decent daily statements. But what fascinates me most is the underlying technology. Our current money is stupid. It has no memory. Programmable money is on its way. Think digital vouchers with the purpose for which it is to be used already built in.
The government could give every citizen a €100 euro which can only be used for food, for example, to be spent within a certain time frame. Ebay, owner of Paypal, recently applied for a patent on digital, programmable gift tokens.
When a third of all transactions made at Starbucks are conducted using Starbucks customer cards and customers effectively pay with Starbucks money and when Vodafone and its Smart-pass muscle in between banks and clients, banks should really start paying attention. Things really do change that quickly.
Peter Verhaar was a co-founder of Alex investment bank and is now a financial columnist. This column first appeared on BNR Radio.
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