The PAYTECH Book

It’s Money, Jim, But Not As We Know It

By Marten Nelson

Co-Founder and CMO, Token Inc.

Money. Few other social systems play such an important role in helping us get on with our lives. Even fewer systems can claim to be on the brink of such fundamental change, driven, of course, by the rise of digital tech in payments.

PayTech innovations are challenging some of the most sacred premises in banking. What is money? What are payments? Do we even need currency anymore? Moreover, do we even need banks? Heck, what even is a bank these days?

So different is this new world that pretty soon we’re going to need to find new ways to talk − and think − about payments.

Programmable Money

In time, this simple concept will completely transform the global financial services industry.

In essence, money is nothing more than a shared set of rules for exchanging value. A €20 note is only worth €20 because it has been assigned that value by the European Central Bank, according to rules enshrined in law. Everyone who uses the Euro participates in these rules and agrees to abide by them.

Programmable money is just the same. The only difference is that here, the rules which define when and how value can be exchanged can be reimagined according to how the payer and the payee want to transact.

For example, banks and their customers can use programmable money to hardwire terms and conditions (T&Cs) into their transactions, securing and verifying them using a combination of cryptography and tokenization ...