Cashless Society CaseThe notion of a “cashless society” is drawing ever closer with the usage of coins and banknotes for transactions being steadily replaced by other systems which present themselves not only as viable, but also as potentially better alternatives. This movement of replacement, where cash as a mode of payment is being replaced by other forms, is led primarily by Plastic. When the first credit card was introduced in 1946 and the first debit card in 1978, the global community began its transition into a cashless society. Fast forward to the present and it is indeed evident that plastic has attained staggering levels of dominance and growth when compared to those of cash- which have met with a highly perceptible decline. According to an article in the Kenyan daily The Star by the VP of MasterCard, today, over 15% of transactions worldwide are cashless, pointing to the rising usage and acceptance of prepaid, debit and credit as modes of payment to cover our day-to-day transactions.
The chart below indicates the rise in card-payments from the year 2000 up till the year 2007. According to the chart, the use of cashless payments by non- Monetary Financial Institutions in the European Union had seen a significant rise.
Today, the concept of a cashless society has been realized and put into action in several places around the globe, although in a relatively smaller scale. For instance, the middle and upper classes of the Kenyan population, the reality of a cashless society is not a far- off prospect. Rather, on the contrary, it is something that has already attained high levels of acceptance and feasibility among the Kenyans, as properly evidenced by a Central Bank of Kenya survey. The results of the survey have clearly indicated that cashless transactions have grown 83% to Sh.386.6 billion in the first half of 2012 from the Sh.211.2 billion recorded during the same period in 2011. Although, cash remains to be the preferred and widely prevalent mode of payment in Kenya at over 98%, the confidence in plastic money is on a steady rise owing largely to its convenience and the potential risks associated with cash as a mode of payment.
The infrastructure costs of maintaining a cash- based system are huge. On the other hand, without it the customer becomes a more direct a participant in the various transactions involving himself and the product- provider thereby helping the transaction achieve a more satisfactory level of transparency and feasibility. This also eliminates all and if at all any peripheral costs by bringing the buyer and the seller into direct contact and thereby eliminating the need for a middle ground. This kind of a transaction is quite similar to how the P2P (Peer to Peer) cryptocurrency “Bitcoin” works. Bitcoins can be transferred through a computer or a smartphone without necessitating the involvement of an intermediary financial institution.
This Bitcoin-like token is a digital form of the decentralised value of digital tokens. Unlike regular fiat currency that has a centralised structure, this digital asset has “permanent” value on its token.
Btc is a digital asset for which all its data is encrypted using private key cryptography. The encryption does not require any data to be kept for a specific period of time, but instead transfers it over to the new owner of the Bitcoin address for safe keeping. For example a “wallet account” could be created for this digital asset, which allows both its ownership of bitcoin and its exchange price to be easily established. The private keys used in the transactions do not contain any fees, but rather provide the correct information required for each Bitcoin to be issued, compared to more traditional crypto-currencies.
The Blockchain
With the blockchain, we are able to implement decentralized digital assets as decentralized forms of virtual assets, a new kind of financial assets like fiat, bitcoin, etc.
Bitcoin will, as of now, come with an integrated “blockchain” which will allow for one or more transactions to be recorded using the technology behind Bitcoin. As the process to authenticate a Bitcoin address in the blockchain goes along at a speed of up to 15 Mb per second, each transaction will allow the recipient an independent verification of whether or not the Bitcoin has been issued.[1>
To get a feel for the blockchain, see the following video and the accompanying infographic:
Proof of Purchase:
Proof of Bitcoin
Proof of Supply
In a future version of the Blockchain, the creator of the Bitcoin address of a specific Bitcoin address will be credited with the tokens created by the system. For these tokens, the recipient will have a chance to claim the correct quantity of all existing Ether to his/her account. The payment is processed through the Blockchain for the payment of the tokens to the address he/she has set.
Once the correct quantity of tokens has been claimed by the actual person that set the Blockchain’s payment method, all funds will be automatically distributed among the Ethereum blockchain. Each Ether payment received has its token’s value added to the Blockchain’s address.
To achieve this, the Bitcoin wallet or smart contract already uses a blockchain. It has a private key to the address which is stored at the Bitcoin address:
These tokens can be redeemed for all kinds of virtual goods and services, from virtual cars and even toys.
The Blockchain will then use it to buy ether (which it uses to pay for transactions) from various online stores and merchants.
Token Sale on the Blockchain
Tokens will be sold on the blockchain. This token will be paid in bitcoin according to the Ethereum price and will be redeemable at an online Bitcoin address for which