The Merchant who will force the US to Digitize the Dollar
Digitized Merchant Dollars flying frictionless phone-to-phone, will have the US playing catch-up
US Payment is in the grip of the half-a-century old network-heavy payment system. Rebellion startups are popping up, but the heavy hand of multi-party, indirect, costly friction-screeching card mammouth is still in control. We have the technology to make payment fast, efficient, inexpensive and frictionless, but the only route for applying it today is crypto currencies — a tantalizing but flawed alternative.
In China, they have figured out that digital money is the way to run the economy, as long as it is designed to be consistent with legacy money, extendinbg modern banking to digitized finance, which is centrally-minted and decentralized-paid. See Q-Pay by Bank of Shanghai (operating BitMint technology). In the US the Federal Reserve is too reserved and is mired with endless “studies,” so in all likelihood, the way America will join the digital money revolution is kicking and screaming, playing catch-up with a large merchant taking the lead.
Let’s use Amazon as an example. Suppose Amazon issues claim checks — obligatory notes that say that the redeemer of this note will be credited by Amazon the sum of $100 (maybe a date is specified too) against any purchase. It’s basicallly the welll-known concept of loyalty money. With one difference: the claim check is completely digitized, peer-to-peer transactable, stand-alone splittable, and super-secure — eCash. That is what BitMint technology offers. Amazon can junp-start the trade in these claim checks by offering $100-Amazon againt $90 generic dollars (in effect a 10% discount), which is quite attractive to Amazon, getting paid now, and delivering the merchandise later, even much later. Amazon, because of its size, could prevail on its suppliers to receive some of their pay with Amazon dollars rather than with Fed issued dollars. After all Amazon suppliers are also Amazon buyers on other merchandise.
Because of its size Amazon money is nearly as good as regular money. Even people who don’t shop Amazon will be glad to recieve Amazon digital claim checks because they will be able to pass them on to their payees who are likely Amazon shoppers. And it goes both ways. Once you have Amazon dollars, you are likely to shop Amazon.
So now imagine you and your friend share a meal, he pays with his card and you wish to chip in. You pull your phone, and in two clicks you generate a QR on your screen, your friend reads the graphics with his phone, and payment is done. You don’t even need to know the payee’s name or phone number. BitMint digital moneys passes through camera, through text, through anything, with or without Internet present (that is what Bank of Shanghai is doing right now).
Convenience is the name of the game. No cards, no risk of exposing private payment details, just bits of cash flowing from payer to payee. Amazon dollars will start flying as peer-to-peer payment, as customer to merchant payment (small amounts first). And as this happens, the US government will be forced to catch up and digitize the US dollar to make its use super secure, super convenient, and frictionless.
Unlike crypto currencies which are fenced off by the establishment, merchant loyalty dollars, are US dollars, albeit with some restrictions that don’t bother their traders. If these merchant dollars pass around easier, they will be the de-facto passing dollars, and the only constitutional way to keep the Fed relevant is to keep it up with technology.