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Programmable money: How crypto tokens could change our entire experience of value transfer

Programmable money (PM) is in the air. It may be the next stage in the evolution of money. And it could be as disruptive as any financial technology in development today.

Yes, China is close to launching the first central bank digital currency (CBDC) at scale — perhaps within the next 12 months — but if so it will be eclipsed before the decade’s end by CBDC 2.0, i.e., digital currency attached to blockchain-enabled smart contracts. At least, that’s what many think.

Programmable money is money with constraints. An analogy is food stamps where recipients are given coupons, the equivalent of money, which can be spent only on food — not on alcohol, betting on horses, lottery tickets or anything else. In modern guise, these ‘food stamps’ are digitized tokens transacted on a blockchain platform with smart contracts.

Last month IBM was awarded a patent for a “bespoke programmable crypto token,” the first PM patent awarded in the U.S., co-inventor Jonathan Rosenoer told Cointelegraph Magazine.

‘A slow moving tsunami’

“Programmable tokens are being discussed more and more,” Jonas Gross, a research assistant and project manager at the Frankfurt School Blockchain Center (FSBC), a think tank at the Frankfurt School of Finance & Management, told us. In Germany, for example, the Ministry of Finance together with the Bundesbank recently started a working group about developing programmable Euro. 

“Covid is forcing a slow moving tsunami in programmable money,” said Gert Sylvest, co-founder of Tradeshift, a business commerce platform. It could accelerate the transition to programmable money in e-commerce. Since the pandemic, “we’ve seen a spike in interest,” especially when the ensuing liquidity crisis included a payments slowdown. Many are ready now to give programmable money, including automated payables/receivables settlements, a new look, he said. 

With IBM’s new invention (“United States Patent 10,742,398, Rosenoer, et. al. Au...

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