The Institute of International Finance’s recent panel on the Future of Money is now out, and I really enjoyed the back and forth, especially hearing folks on the front line discussed what they see and hear everyday about the evolution of how people make and receive payments.  But for my part, I make a couple of basic points about digitization.  First, I observe that the latest (but not the last) stage in the evolution of money, presents two important developments. First, digitization transforms the current categories of use cases of money: instrument of payment, storage of value and unit and account.  For example, tokenization allows individuals to pass money and value directly to one another over the internet, creating a paradigm shift in the concept of “payment” in the use case of “instrument of payment.” Tokenization turns digital money into a bearer instrument.  Second, digitization expands the very universe of possible use cases for money. When digitized, money can be transformed into code, and programmed. Programmability in turn opens the potential for the transformation of money into a service, social networks—or even an internet of value.

This is all, I think, creates new kinds of questions—and models that will be driven as much by consumer demand as they will from supervisory oversight.  As a law professor in particular, I’ll be very curious to see how this plays out.

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