Our desire to protect and better our livelihoods has kept the way that we trade and store our wealth innovating for thousands of years, and that historical trend shows no sign of stopping. New use cases, technologies and implementations are constantly being discovered. Some of these are high-tech, some are low-tech, and others are a fusion of both. Here, we list financial developments – some more quirky than others – which are well worth keeping an eye on.
1. Low-spread currency exchanges
Up until recently, paying 5% of your money to a credit card company, bank or bureau de change when you exchange currencies was simply accepted as normal. That changed with the onset of peer-to-peer currency exchange platforms (like TransferWise and CurrencyFair) which made it possible for individuals to exchange money multilaterally amongst themselves. Currency brokers (like Exchangemarket and Wechselstube) and app-based pseudo banks (like Revolut) have been quick to follow, and today it is possible for residents of Switzerland to exchange money at near-interbank rates. Will the new competition encourage conventional banks to lower their spreads? Let’s watch and wait.
2. Time banking
How much value do we place on our own time and that of others? Time banking offers what some may consider to be a fairer take on value, and swapping time for time is becoming steadily easier. You can get a glimpse of some of the options already available in the moneyland.ch guide to time banking in Switzerland. There is still plenty of room for growth in this area, and the technology required to make time banking work seamlessly is certainly available. It’s fair to predict that time banking could be a future trend waiting for the right implementation and target audience.
Like time banking, bartering has become far easier in recent years. No longer are you limited to visiting physical marketplaces in hopes of finding traders willing to exchange goods. Modern bartering marketplaces like Exsila use point systems which work like a community currency, allowing users to exchange goods for points which can be redeemed for goods from other users. Apps like tradr, Swopr and Swapub – while not yet widely-used in Switzerland – provide a glimpse of the potential which smartphones have to make bartering the new old norm.
4. Practical precious metal accounts
Precious metal accounts are widely offered in Switzerland – in fact, you can compare Swiss precious metal accounts here. But it is foreign companies the like of UK-based Glint and IMGold who are taking precious metal accounts to the next level with allocated gold ownership, app-based exchanges and transfers, and card-based payments and cash withdrawals. It would be great to see similar services offered by Swiss banks. The sheer popularity of gold as an investment vehicle and store of wealth makes this a trend to keep tabs on.
5. New Swiss 1000-franc note
With exceptional security features, a modern look and feel, and a high face value, the new 1000 Swiss franc note has all the ingredients necessary to facilitate free, decentralized trade. No data harvesting, no negative (or positive) interest, democratically controlled, backed by a strong economy, fits in any pocket. Sometimes old is the new new.
6. Easy interface crypto wallets
No matter how big the hype surrounding blockchain and cryptocurrencies was back in 2017, the majority of people do not know what a hardware wallet is, much less how to use one securely. All in all, crypto has remained a plaything for the tech-savvy, as have hardware wallets. But innovations like the Bitfi hardware wallet – which has the look and feel of a smartphone and can be secured using any passphrase of its user’s choice rather than a complex private key – may be the catalyst required to make secure hardware wallets less geek and more human.
7. Mesh network crypto transactions
If you understand how crypto transactions work, chances are you may also be familiar with the concept of mesh networking. A mesh network is a decentralized network in which devices communicate and transfer data directly between themselves rather than through central servers. An interesting development in mesh networking which may directly impact finance came with the arrival of the likes of TxTenna – which enables bitcoin transactions over goTenna mesh networks using the Samourai wallet. Transactions are performed immediately, but only mined when an Internet connection is available. For those who believe the future of financial transactions is decentralized, keep your fingers crossed for new developments in this arena.
8. Blockchain bonds
A blockchain is, essentially, a ledger. But its automated, decentralized nature makes it a relatively cheap and efficient means of providing the trust and administration needed to issue a bond and to track principal payments, principal repayments, and coupon payments. The launch of a blockchain-based bond by the World Bank went a long way in taking the concept out of the exotic category and into mainstream finance. Swiss companies like Swiss Crypto Tokens, a Bitcoin Suisse subsidiary which launched the XCHF blockchain bond, and SwissWide Holding (which operates Blockchainbond), have made Switzerland a hub of blockchain bond experimentation. While blockchain bonds and other seurity tokens don’t steal the limelight the way that ICOs did, they have all the ingredients required to change the way loans are administrated.
9. Token economy
So far, tokenization development efforts have largely aimed at providing alternative in conventional securities markets in the form of security tokens (equity tokens, for example). An interesting development has been the development of platforms which enable the tokenization of low-value assets in order to facilitate multilateral bartering. Theoretically, asset tokenization could take the concept of commodities trading to a new level by enabling the securitization of virtually any goods or services, allowing them to be traded just like stocks or commodities.
10. Fungible cryptocurrencies
Bitcoin revolutionized electronic finance by enabling decentralized electronic transactions which did not require the approval of a third party (i.e. a government, bank or payment network company). But bitcoin lacks one key ingredient to a successful currency – fungibility. Because each bitcoin is unique and traceable (at least since the advent of Crystal analytics), it is not fully fungible. But in recent years, both open-source, non-proprietary cryptocurrencies (think Monero and DeepOnion) and proprietary offers (Dash, PIVX, Zcash) have introduced many interesting features aimed at making transactions less traceable, and therefore more fungible. If the steadily-climbing market capitalization of fungibility-centric cryptocurrencies is anything to go by, this trend is on the rise.
11. Cryptocurrency as physical cash
The most recent development in finance fuses low-tech physical transactions with high-tech blockchain transactions. Solutions presented by the likes of Opendime and Swiss company Tangem are finally enabling physical cryptocurrency cash by embedding undisclosed private keys on microchips – effectively making the physical chip the crypto. No need for electronic transactions once the crypto has been embedded on the microchip. Simply hand over the physical microchip to complete the transaction as you would hand over a coin or banknote. If you think the 1000-franc bill is cool, a banknote with indefinite value will likely make you smile. This system could potentially be applied to tokenized assets (think physical bearer shares or bearer bonds). With its innumerable use cases, the crypto cash trend is definitely worth tracking.