The Prospects Of Currency As Visa, Cryptocurrencies Push For Cashless Future

Even as Visa Inc V works to end its competition once and for all, paying off businesses to reject the economic mainstay of cash, it has a threat of its own to worry about: cryptocurrencies.

The Veritaseum token, for example, recently became the first digital currency token to be employed in an established economy, as the Jamaica Stock Exchange launched a parallel exchange trading the likes of bitcoin and litecoin.

Reggie Middleton, founder of Veritaseum and creator of UltraCoin, said the cryptocurrency is a much larger and more imposing predator than is presently perceived.

First Things: What’s Cryptocurrency?

As far as Middleton is concerned, the term “currency” doesn’t necessarily apply to “cryptocurrencies.” He conceptualizes them as programmable commodities.

The protocol-based platforms or blockchains are akin to the internet in their capacity to hold written digital applications, including the digital currency application. The “bitcoin” with economic value is a commodity on the “Bitcoin” protocol-based platform.

It’s the platform, not the tradable resource, that Middleton considers disruptive.

“The biggest threat to Visa et al is not the digital currency application, because money remittance through this is going to be very low-margin, close to zero margin and then negative margin soon,” Middleton said, noting that the fundamental blockchain is the real threat. “As they gain in popularity, you’ll see the functionality easily surpass the Visas and the physical cash and coin parameters.”

“Think of it as a new platform of value transfer. So it allows bartering. It eliminates the need for currency.”

It’s just the next step in the evolution of trade, which began with the physical exchange of, say, a farmer’s eggs and fisherman’s fish, expanded to include currency as a proxy for physical commodities, and ultimately led to the development of electronic commerce and digital currency as it is known today ━ virtually held by banks through on-screen blips.

The latest representation of economic value is differentiated by a one-time spending limit. Original digital currency like the U.S. dollar enable the arbitrary creation of currency unbacked by economic value and subsequent double spending. It allows governments to create money they don’t have.

By contrast, blockchains, or universal ledgers, track the expense of mined digital currency and prevent second, unjustified exhaustion of value. Essentially, it forces the creation of value in currency, the backing of a tradable resource by fundamental proof of work.

The Realm Of Control

By his estimates, the disturbance is imminent, set to emerge as early as this year. But extant financial players are not fated for defeat.

“I don’t know if they’ll become obsolete, because it’s a matter of management execution,” Middleton said.

Either credit card companies and others in the industry will accept immediate losses required to adapt to blockchain technology, or competitors will beat them to it.

“If Visa et al adopt blockchain technologies, from my perspective, then they can compete,” he said. “Will they? History tells us no, but we’ll see how adept Visa et al management is at competing in a paradigm shift.”

For now, he’s betting on startups.

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