Should we be thinking about a future without currency notes?
Imagine a world where you don’t have to put your faith in the administration hoping it’s a good one. Where you don’t need to trust governments and banks blindly, believing that the mandate of all voters yielded a good set of people. No, this world would not be chaotic and without law, rather a world of order and equity, without power being concentrated in the hands of a few. Wishful thinking? Or is it? Perhaps not.
The first signs of this metamorphosis could be seen last November, as a major cash dependent population, stuck in a limbo brought about by demonetization, sought alternative options to keep lives running. The concept of e-wallets and online transactions spread like wildfire among the masses, as evident in the statistics of companies like PayTM, Oxigen wallet, and banks all over the country. PayTM alone saw the registration of over 14 million new users – a 300% surge in its existing database.
But the problem is that almost all of the payment methods at our disposal are regulated and supervised by the government and banks, institutions that are firmly going downhill in regard to public trust and convenience. The first solution that comes to mind is, why not a decentralized mechanism that allows us to transact quick and easy? Here arises the question, without any regulation or supervision, just how secure/reliable is this system?
In the past few years, many such solutions called cryptocurrencies have come up such as Bitcoin, Ethereum, Zcash, and DASH, with Bitcoin being the pioneering as well as currently, the most popular cryptocurrency in the world. It is a peer-to-peer technology that operates without any central authority or bank at the helm. It is in fact controlled by anyone and everyone who uses the currency. The cryptocurrency gets its value the same way a dollar does – depending on the popularity of its usage and simply because a group of users says it does. Also, these currencies are not infinite. Bitcoins, for example, number exactly 21,000,000 across the globe. Bitcoin’s price went up from 216.91 US dollars in 2015 to 697.37 US dollars in 2016 which clearly depicts its growing popularity. While decentralization is the groundbreaking attribute of these cryptocurrencies, the real credit for their security and transparency goes to the Blockchain; the technology that can revolutionize the future.
For those unfamiliar with the term, a Blockchain is a public, ever-growing digital ledger consisting of information regarding transactions stored in blocks. Each data block is virtually connected to the others in the chain and each of these blocks is made uberly-secure by a fingerprint as unique as our own – a timestamp. This very feature solved the double-spend problem in online transactions, where having or generating a duplicate receipt for a transaction was a big issue. The double-spend problem was responsible for a cumulative loss of over 70,000 US dollars due to glitches causing the users to be notified twice for every payment.
The idea at the very core of the Blockchain technology is to promote highly secure, transparent and convenient digital, bilateral transactions that would have no need to be validated, regulated or protected by any third party, bank or government authority. The only parties responsible would be the transacting parties and the only threat to the security of this contract would depend on how well the concerned persons can maintain the privacy of the information regarding their virtual currency.
The blockchain in itself, by virtue of being a public ledger, stored and accessed on multiple servers across the world, cannot be corrupted by any simple means. To do so, would require the attacker to simultaneously assume control of each and every server linked to the blockchain which is indeed a Herculean task; theoretically possible but practically not.
For example, a customer purchasing a music record may doubt that a record label has received its payment and not keep its side of the bargain by denying to send the customer his desired song. Meanwhile, the record label might doubt that the customer will receive the song first and choose not pay for it. In such cases, the blockchain code protects both parties and ensures both ends of the transaction are executed. Similarly, a blockchain configured for anonymity would prove to be a boon for purposes such as voting as it would ensure the integrity of the votes coming in as well as the vote count because the count would be easily reviewable and stored in multiple locations that would serve as a countermeasure against tampering of any kind.
Looking at the future now onwards, going cashless and saving all the paper does seem preferable but just when can all governments authorize and acknowledge blockchain empowered cryptocurrencies, which do not hail them at the top of the pyramid? While some countries like Vanuatu, a South Pacific island nation, have started accepting Bitcoins in transactions, there are still many road bumps on the path to a global cashless scenario. However, even amidst all these questions, one thing is for sure, gone are the days when the feel of a crisp currency note was one of the best things in the world.
By: Tanmay Aggarwal and Ananya Bal