IBM and the Brave New Financially Inclusive World: What Unbanked to Big Banks Entails
The introduction of digital currencies such as Bitcoin created a rush of people to proclaim that a revolution was in the offing. That we, the people, would be set free from the shackles of central bankers and retail banks, and be in complete control of our money.
A decentralized system with privacy controls and instant transmission is still considered revolutionary compared to the traditional notions of money in today's world. Blockchain, in particular, the technology that underpins cryptocurrencies, is looked upon as the harbinger of this new economic model we have created by going digital with business.
Defining Money is key
That is all well and good, but before we can talk about any monetary revolution, we need to define money as it is today so that we can see what a digital currency offers that traditional currency doesn't.
The core aspect of money is that it is just another tool we have created. This tool is used to facilitate trade between by eliminating the key problem of bartering which is the coincidence of wants. This tool was defined by Aristotle in 350 BCE as “sound money,” and the definition was of something that was durable, portable, divisible and intrinsically valuable.
That basic definition has evolved over the centuries, and we come to today where we have a functional definition of money. Functional can be translated in this sense to the properties of currency as a medium of exchange, a store of value and a unit of account.
Digital money, cryptocurrency as it were, is just another evolution in our understanding of money. It is a means to transfer the concept and notion of money to the digital realm. A seamless transfer of money across digital space that is not bound by the physical limitations of the current currency is important and groundbreaking.
IBM chips in to explain the new definitions, and uses, of money
IBM has been at the forefront if the blockchain revolution in many ways. The company has been leveraging the technology to come up with solutions to a wide variety of problems. Many of these problems are based on transfers of value between businesses on opposite sides of the world.
However, the company does stress that a key component of its blockchain projects is creating solutions to humanitarian problems. Blockchain is being used to bring microfinance capabilities to developing nations that simply do not have the pre-existing infrastructure to introduce it. It is also being used to track aquifers in developing nations so that the global water supply is improved.
IBM sent a few delegates to the SXSW Conference recently, among whom was Marie Wieck. She is the general manager of IBM Blockchain, and she was joined by the Vice President of Digital Currencies, Jesse Lund.
At SXSW, Marie shared one of IBM's most impactful projects that use blockchain. The project is called Plastic Bank. Co-founder of Plastic Bank and the company's CTO Shaun Frankson joined Marie on stage to help share their vision for a future where plastic waste is used as currency.
Their pilot project, launched in Haiti, has so far seen success. They were able to turn plastic into currency by encouraging taking the plastic to a recycling center. The recycling center would give the people a digital currency for their plastic, which would be usable in the real world to buy various items. This plastic, when sorted and weighed, was worth more than steel. That's some pretty powerful economics working in that project.
The success of the project allowed the two companies to expand operations into Indonesia and the Philippines. They are looking into expanding into a number of other developing countries to kick start recycling initiatives that will help the people, the world and will bring cryptocurrency to the masses.
Jesse Lund then took the stage to explain his view of the future. He started off by saying that money, as a technology, has been in flux since the dawn of time. Seashells to salt, gold to Bitcoin, the technology known as money has been changing throughout history and right now it is the perfect time for another disruption in how we view money.
He went on to say that the value proposition banks have given customers up until now needs to change. Banks used to be the intermediaries with money. Digital currencies are putting the money in the hands of the people, and the means of payment is shifting to a decentralized system so for banks to continue to thrive, they need to change with the times.