The New Technology of Money

Humor me. Take a $20 bill out of your wallet, hand it to me, thank you very much, and then walk into a store and use the same twenty to pay for merchandise. Can you do this? Yes, you can. It is simpler than you think, and perfectly legal!

This is just one of the many marvels of the new technology of money.

Bear with me. What is your favorite charity? Now, suppose I suggest you donate $20 to that charity. No, don’t donate, lend. Say, for three months. After 90 days you can get your $20 back. Hey, that’s your favorite charity. If you’d donate 20 bucks, you should have no problem with the proposed three-month loan.

So, you do it. I take your money on behalf of that charity, and I provide you with a claim check. The claim check looks like an alphanumeric list (for example, “Uh673npL87222hb198”). I instruct you to present this claim check when you come to collect your $20. It will tell me the amount I owe you and the due date for your claim. Now, this claim check has also been processed cryptographically to prevent fake specimen and to prevent anyone from collecting twice from the same claim check. But you don’t care about all that crypto stuff. You just present the claim check and get your money back.

So far, there is nothing special about this short-term loan. But here it comes. You walk into a toy store and you buy that $20 colorful something. At the cash register, you keep your wallet in your pants. Instead, you text to the merchant’s phone. You guessed it. It’s that claim check! The cashier nods, and you walk out with your toy.

Now, why has the merchant agreed to accept your claim check in lieu of real money?

Because the “Charitable Bit Mints” app on her tablet identified that claim check as redeemable for the full amount of $20 within a month or two. And she is well aware of this highly publicized charitable initiative. You see, the 20 bucks you agreed to lend is actually routed to a financial institution that runs an income-oriented fund. And while the principal is eventually returned to the lender, the yield is committed to the charity.

This charity prevailed on you to lend the 20 bucks in the first place, and the same moral imperative makes your claim check hard to refuse. The merchant can collect “real money” for this claim check—or not. She might opt to use the claim check to pay an invoice from a supplier, who will feel the same moral pressure to accept that very same abstract claim check.

Of course, not everyone will play ball, but more and more will. And when the claim check reaches its redemption day, there is absolutely no reason to reject it as money per se (while the $20 is still producing a yield in the investment fund).

So there you have it. You give away your money, yet you use the same money elsewhere. And you can parcel out your claim check at any resolution. Again, this is crypto stuff, but you can readily pay $8.75, or 10 cents, from your $20 claim check. And the crypto prevents virtually all fraud and abuse.

Once the digital sequence of a claim check works as money, you can “tether” it, which opens the door to marvelous applications, as described in my new book, Tethered Money.

Think about it. This abstract claim check works more like cash than like a payment card. The restaurant owner paid with a claim check does not pay any interchange fee. He redeems the money at par from the Charitable Bit Mint (CBM) company, and neither Visa nor Uncle Sam records the details of your meal in any database.

If your wallet is loaded with claim checks, you can tether them to your identity so that if you lose your phone, they are useless to others. The CBM company will download replacement claim checks to your phone.

Are you enchanted by all the amazing things that can be done with Bitcoin? Well, what the Bitcoin bit-string does, the claim-check bit-string does too, only without Bitcoin’s shady speculation, unsettling fluctuations, and ill use.

We just don’t have enough imagination to see where this is going. You’d better fasten your seat belt!

—Gideon Samid • Gideon@BitMint.com