A few weeks ago we learned about the history of money and how we got to where we are today. Now, we get to spend time thinking about the even more intriguing idea of how money might look in the future!
If you’ve ever traveled abroad, say to Europe, you might notice that coins are used frequently for payment. This is an easy way to trade and the metal coins are durable and can be kept in circulation for a long period of time.
When we think about the future, while we might not see a growth in coin usage, we will likely see a growth in whatever method of trading is most convenient.
One point of clarification is that we are not discussing “Forex”. This is the practice of exchanging currencies based on their expected value. For example, if you believed the US dollar might rise in value in the future, you might trade now. Since currency values vary on a weekly and even daily basis, when you trade back it could be worth more. This is one type of trading, but it is not the main focus of today’s discussion.
One of the growing trends in money exchange that you’ve likely encountered is electronic transfer tools such as Cash App, PayPal, Square and Venmo.
These systems allow individuals to send funds electronically and the recipient has instantaneous access.
There is even the option to link a debit card! Now instead of needing to go to the bank to pull out cash to pay back you friend for the movie tickets he bought, you can immediately send money through an app.
This distancing from traditional banking systems is called “decentralization” and is something we will likely be seeing increase exponentially in the future.
Branded pay is a second area that is likely to be key.
Many big companies already have their own platform including Apple Pay, Google Pay, and Samsung Pay. Even Facebook has added the ability to exchange money through their messaging app.
Large companies may also merge their branded pay with a decentralized payment tool. PayPal, for instance, kick started its growth as the key payment feature for eBay.
A third area to watch in the future is crypto-currencies and blockchain.
Crypto-currencies allow money to be exchanged anonymously. Blockchain is a way to manage the software and technology behind crypto currency and is not the actual currency itself. The ability to make secure, but nameless transactions can be a catalyst to providing greater reliability.
For example, in the accounting and financial services sectors, if companies were able to share their transactions secured by crypto currency, individuals might have greater trust in the company and be more willing to invest.
Similarly, in personal finance guaranteed secure payments could have the potential to provide better credit reporting and maybe increase credit scores. Amazing!
Finally, let’s come back full-circle to where we started a few weeks ago. Remember how we learned about bartering in the past? There is a likelihood that we could return to this in the future!
Instead of trading cows for crops however, there is the ability to exchange modern goods and services. For example, two individuals might trade 3 hours of video editing work for 3 hours of financial consulting services, and their contract can be secured by technology.
Money has changed a lot throughout history, and we can expect it to keep evolving continuously. We live in an incredible time and we have much to look forward to in the future!