I had a dream. I’d just sold my latest little watercolour on Instagram. It went for $Z55.95, enough for Brian Eno’s Music for Installations I’d seen on Amazon for $B45.99. Ah, but wait a minute, Emanue_art has a copy of Installations for $Z38.50 on Instagram and saves me the 2% Cryptx charge for the exchange. Is this the brave new world or was it a nightmare?
So what if Mark Zuckerberg ICOed the $Zuck, $Z for short. And Jeff Bezos launched the $Bez or $B and WeChat’s TenCent the ¥Tc? And these became the new cryptocurrencies of choice for trading on their platforms. It could make sense. Think about it for a minute. That shiny new Buy button on Instagram or that one click “Buy now” button on Amazon allows frictionless transactions that never touch your bank account or credit card. Don’t need to pay in dollars, pounds, yuan or yen – welcome to $Bez and $Zucks.
You may be thinking, okay, so it wouldn’t work. I don’t trust cryptocurrencies and surely I’d still need my $ / £ / ¥? No, they are consigned to history. Why use a state controlled currency when what you really want to buy is priced far more keenly in your friendly social cryptocurrency? You trust Jeff and Mark and the other mega platforms that would jump on board, after all you deal with them every day. Out with the $Buck in with the $Zuck. Okay I’m in, how do I start?
How could it work? Well it’s so easy. You just start by stocking up on $Zucks or $Bez or whatever platform’s currency you feel an affinity for. There are plenty of ways to get started. Take Instagram for example, you simply load up your account with $Zucks from old world currency before values plummet or you earn them directly on the platform. $Z1 costs $1.075 from Zuck but there are plenty of places where you can get a better deal. Just search for #zuckduck on Instagram and you will see who’s offering a better deal. You see it’s easy to move to $Zucks. Same over on Amazon, in fact Jeff may give you $B100 when you sign up for Prime++ (okay I’m just throwing it out there, he may not be feeling that generous). Mark could be thinking of a similar deal for you to remain on your Facebook account. Maybe a couple of $Zucks for each like for a minute, or maybe not.
It’s mostly all there already. Back in 2017 Amazon registered domains AmazonEthereum.com, AmazonCryptocurrency.com, and AmazonCryptocurrencies.com suggesting they wanted to enter the market. Barclay’s internet analyst Ross Sandler mentions the idea of Facebook launching their own cryptocurrency Facebook coin and bring in nearly $20m revenue by 2021. Think about Amazon’s credit card or the new Apple card – supposing the base currency is a cryptocurrency. Maybe a $Job for Apple?
Minting crypto currencies is easy, gaining trust has always been the difficulty, witness Bitcoin’s rollercoaster ride. Platforms like Amazon and Facebook have global reach and support encryption end-to-end. Sending money is a simple as sending messages. Trading likes for $Zucks appeals to our need for greed. I don’t mean that in a bad way. The endorphin kick we get from a like is similar to the feel of that crisp $100 note or that first pay packet. Yes, the data trust issues with Facebook and cryptocurrency volatility will be a factor in gaining trust, but there are so many advantages of a social currency we won’t look back for long.
Still not convinced? it’s a win-win scenario for you and me. Here’s why. Suppose I want to buy some new roofing. I get a few quotes from local traders that come in between £4000 to £5000. Their prices all include tax of some sort. In the UK it’s VAT at 20%. Yes another 20% of your hard earned cash goes straight to the state, that’s £1000 on a £5000 item. In the US there are sales taxes and local taxes and I’m guessing US readers would be horrified at having to fork out an extra $20 on a $100 item but that’s what we suffer here in the UK and it’s higher in some other European countries. So you can probably see where I’m going with this. If I can buy my roofing from a trusted roofer on Instagram the price is not $5000 it’s only $Z4000 and I can pay for it by selling a few more watercolours (okay, I’m still dreaming and that may take a while).
What about the tax man’s share you ask? Well they have to catch up with cryptocurrencies and in the old fashioned world what I’ve described could be made as barters that can’t easily be taxed. Whoopee. So what happens to the state? How are they funded. Well gov.uk needs to live up to its digital government proclamation and get with it. So will other governments because the world is going to trade in $As and $Bs and $Cs. What’s $A you ask? Well we can’t forget Alphabet that’s Google to you and me. They also have near global reach if you ignore China, which we can’t and I’ll come on to.
Every Google search generates $ revenue for Alphabet, so say they have ICOed $Alphas or $A for short. (In time there could be dedicated currency symbols with strike throughs like €, ¥, for the winning crypto currencies but for now the $ symbol is at hand.) So those roofers I found on Google also advertise and I can see their quote already displayed in their details. I forgot to mention that AI works frictionlessly with cryptocurrencies as well, so just by talking about a new roof, Google Assistant could give me those quotes… I can pick one of the roofer’s offers for $A3200 that has an excellent rating and pay for them instead. But my $A account is not doing as well as $Z as I’m not selling as well on Google (can’t afford the Adwords) and my local guide likes have not earned enough. Do you start to see the picture?
Each of the major platforms have their own cryptocurrency that provides frictionless transactions without the need for traditional money exchange across countries or the taxes that take a cut out of each one. From Google with $Alphas to Instagram and What’sApp with $Zucks. $A to $Z.
Staying within a platform keeps costs to a minimum. There’s still a need for foreign exchange – I will want to swap my $Z for $A to pay the roofer if he’s offering a better deal. That’s where Cryptx come in (I made the name up so if there is already a company with that name offering a similar service I apologise now, if not trademark it quickly!) Of course each platform will offer their own exchange service and rates because that’s what they will do. Think about your bank and then imagine that is now one of the platforms. Instagram mortgage or loan or savings account? No problem. Amazon already offer credit cards so credit in crypto is a no-brainer. What happens to traditional high-street banks? What high-street I say. It’s a different landscape in the world of cyber currency platforms. Cyber-street, Cyber-city. More on that in another post.
In China, Tencent’s interest in cryptocurrencies like Ripple and OST have been reported. Bloomberg published an article in February 2017 that China is developing its own cryptocurrency. Adding a cryptocurrency is arguably the easiest and the most difficult in China. Tencent’s platform already provides integrated banking, taxis, social networking, dating, eating, etc, etc. But in China the state has more control. It could be Huawei’s Ren Zhengfei that names the $Zhengfei or $任正非 and the ¥ fades or maybe not. Don’t understand enough about China to predict the outcome, but am sure cryptocurrencies will have winning advantages as platforms carve out a money supply economy all of their own.
Frictionless contactless mobile payment has a certain ring to it. And we do need digital wallets to keep our crypto cash safe and accessible, so a handy mobile may be the way to go. Huawei or one of the other physical platform providers like Apple are obvious choices.
Once we trust them, a switch to cryptocurrency for everyday use is compelling. Facebook workers paid in $Z rather than $ (along with the shares for the lucky). It would bring down the wage bill – keeping it all in the ‘family’. Say I earn $Z20,000 for some consultancy work I do for Facebook. No taxes for the company, no taxes for me unless I swap out of $Zucks for £ or $. And that’s the point, while I’m trading within the platform no-one else can see my transaction or get their hands on a piece of it. We just need the trust.
So what is a social cryptocurrency worth? How do I know how to price my goods and services from $A to $Z and how do I know how much to pay? Don’t worry. Pricing in $Zucks will become as common as pricing in Bucks. It’s likely that crypto’s exchange rates will start off close to the nearest old-world currency so that in the US one dollar is worth one Zuck. The sheer size of the platforms and their control will stabilise values. After ICO things could get interesting. Just like government and monetary unions use interest rates to control their economies the cryptocurrency platforms can use interest rates to control exchange rates and their own economy. True disruption of the old-world state backed currencies and for some the nightmare.
If this all sound a bit complicated think about it like this. Say you have earned $Z500 selling some advice on WhatsApp (yes whatsApp is part of Zuck’s economy). You don’t want to spend it right now but want to earn some interest. Zuck is offering 5% in the IG eazySave account so you open an account and deposit the $Z500. In a year you will have earned $Z25 enough for five cappuccinos. But Jeff pays 10% on his new PrimeSaverFix account with the interest rate guaranteed for a year! Do you see where you’ll be heading? Even if you pay the 2% Cyptex change to swap $Z to $B you will still have more cappuccinos for free a year on.
By issuing a cryptocurrency, the platform owners can control their own interest rates independently – it’s their currency. True, in the old world the banks could offer different interest rates to attract customers but they were all pegged to the state’s currency and base rate and market forces that limited choice. I’ve not thought through all the implications of what flexibility this fiscal policy provision may bring the owners but I do know governments will be concerned if it’s out of their control.
I can imagine a future where investment banking is disrupted too – and instead of $ / ¥ currency swaps there are $A / $Z swaps an so on. Again having one side of the trade inside the platform will be efficient so that’s where investment banking will be done.
Could this be the future? What do you think? Back from the dream to reality, the current appetite for cryptocurrencies with the general public looks weak. We simply don’t trust their stability enough to invest seriously and use every day. Some early adopters have done well and this lead others to pile in. Security is a real concern and the platform’s data breaches don’t help. And governments can’t ignore loss of tax revenue if transactions switch to cryptocurrencies so they could ultimately change laws so the platforms collect the tax and they end up paying their fair share. Of course it’s yet to be determined what’s fair.
I’ll run through some typical use cases for platform crypto in the next post.