Digital Transactions Authoritative, insightful and timely information for payments professionals
The pandemic drove people from brick-and-mortar stores, causing them to depend on card-not-present transactions. The fraudsters pounced, unleashing wily new schemes and hurting shoppers and shops alike. Merchants resorted to a vigorous identity-management strategy, exploiting artificial intelligence, tapping deep analytics, and using non-algorithmic randomness—a method invented by BitMint.
Business is good. Identity is under assault, and viable solutions are in great demand. Alas, one must raise one’s eyes towards the horizon, where the picture is different: a gradual death for payment-validation identity management and an evolutionary growth for its replacement. After lots of trial and error, cyber-finance managed to emulate physical cash, and ascertain transactions on account of the validity of the exchanged payment, not on a stressed validation of payor and payee (level-demo.BitMint.com).
You can wear a brown bag over your head when you buy in a store, as long as you pay cash. Soon enough, the same will apply to digital money. The technology is here, but getting used to this big shift is what takes time.
In the near future, a merchant will be okay with your remaining anonymous while you purchase merchandise for which no prescription or license is needed. You will pass on your digital coins, which will be validated and accepted without having a clue who the payor is. And what about money laundering? For convenience, with low-denomination transactions, money laundering is not an issue. For larger sums, digital technology can easily comply with any regulatory imposition and still maintain a frictionless payment regimen.
A cash-like identity-undisclosed payment option is a very big thing. It takes a while to realize how many possibilities are opened up thereby. Using a masked IP address, one will be able to buy digital goods with robust anonymity. Physical goods could be waiting for their private buyer in lockers opened up by a code. One will be able to expose their most embarrassing psychological whims without revealing personal identity.
Since the payor is not a factor in the transaction, it need not be a human. Your refrigerator, noticing you’ve run out of eggs, will order a dozen and pay for them directly to your grocery store.
Cash-like digital coins can be passed around between payor and payee in a face-to-face mode. And as with cash, one can do it without relying on the Internet. A local Bluetooth, NFC, or touch technology will enable local transactions. They are all battery operated, but battery power can be generated through a local solar cell or through rotating a mechanical arm. Today, the entire payment system crashes when a terrorist or a storm shuts off the Internet. Identity bearing digital coins cannot come soon enough.
And what about credit? Credit coins will be paid like regular coins, with the merchant getting paid in real time by the credit issuer, while remaining clueless about the identity of the buyer.
High-denomination digital payments give an invasive visibility to government, imposing strict regulations on all financial institutions. Low-denomination digital payment will define a privacy space for the public to thrive in. Every society will decide for itself the boundaries of this privacy space. Technology will comply.
The demise of one industry and the rise of another is a projected step. Current identity-management payments might linger through the foreseeable future. By the time the new industry is ready to jump in, a new payment vision may steal the show. Way in the background lurks the specter of AI, robbing us of the joy and burden of payment. Stay tuned for more next month.
—Gideon Samid gideon@bitmint.com
