Imagine taking the subway, and instead of paying for it by fishing out a handful of change, you simply walk in, with a wearable, perhaps a bracelet or pendant, signing you in as you enter the subway and signing out once you leave. The subway system’s turnstile computers calculate the distance taken on your trip and charge an appropriate amount to your BitCoin wallet. This may be the future of money in the age of the Internet of Everything.
Every culture and country needs a currency – something to act as a centrally accepted means of exchange, and the same is true in the centerless world of the Internet of Everything. A growing trend towards using virtual currencies is emerging in parallel with the developments in technology, people and processes that the IoE represents.
Most prominent currently is BitCoin, a form of virtual money that, despite a rocky start, continues to endure, with merchants around the world – from Subway sandwich franchises through to airlines and law firms, willing to accept it. The important distinction to make, however, is that BitCoin is not simply a new and improved channel for transferring existing currency, the way a credit card is. It is virtual, created from complicated computer codes and held in a virtual wallet. It exists and is made safe through distributed computing. It is owned by no government and regulated by no central body.
In terms of the Internet of Everything, virtual currencies such as BitCoin allow for a wider range of actions that traditional banks find too costly to touch, and who make too expensive to use, such as micro-transactions. These small purchases may be the equivalent of a couple of cents, and would allow consumers, or their IoE-enabled possessions, to pay a small fee for to access a single news story on a news website, for example, removing the need for banner ads and other old-school monetization techniques, and allowing a greater sense of pay-as-you-go-only-for-what-you-need.
BitCoin is not the only virtual currency out there. In fact there are many dozens, if not hundreds of virtual currencies vying for market attention. BitCoin is only the most famous of the bunch – for now. But together they represent change, and a significant move toward decentralization and virtualization, just as cloud technologies are doing with big data.
The online travel portal Cheapair.com, already accepts payment in BitCoin. As Cheapair.com CEO Jeff Klee explains, one of the main reasons for doing so was customer demand.
“The idea to accept BitCoin originally came from a customer,” Klee says. “One of our travel advisors got the request and began asking around about it. I heard about it and got very intrigued by the idea so I started looking into it. I soon realized that Bitcoin would actually be pretty easy and very feasible to accept.”
Klee points out that as a currency BitCoin offers everything needed to manage a transaction. “From a purely practical standpoint, it almost doesn’t make sense for a company NOT to take BitCoin. There are third party processors out there who make it very easy to do (we use Coinbase), and they will allow merchants to accept as much or as little of the volatility risk (or reward) as they want. If there are a certain number of customers who prefer to pay in BitCoin, why would any company not want to accommodate them?”
On a higher level, Klee recognizes that virtual currencies are driving change, and moving economies out of long-held patterns of ownership by banks and credit card companies, along with the service charges which many merchant recognize as being disproportionate to true transaction costs. “It’s past time for an alternative payment system to challenge the entrenched players,” Klee says, “and I think BitCoin can provide just that.”
It is important to recognize a historical continuance: the forms of money that have been used for the past few millennia emerged for the very same reason as their virtual counterparts are now doing. In earlier centuries where every kingdom had its own form of money, gold was recognized as having universal value, which meant every local money could be assessed against its standard. As the age of global computing now leaves the traditional domain of “hard computers,” and becomes instead a resident of the cloud, accessible by mobile applications of all types, the same type of standard is emerging: a currency whose worth and stability will be based on planet-wide distributed computing power, and whose accessibility and ease of use will be made clearer through unfettered access provided by smart clothes, smart appliances and smart everything.
By Steve Prentice