Programmable money refers to a digital form of money that can be programmed with conditional logic prior to exchange. It has the potential to revolutionize financial systems, which is why organizations are scrambling to investigate its potential applications.
In this article we explore:
- What programmable money is and why it is primed to transform financial services
- How organizations could encounter challenges in developing and deploying programmable money systems
- And how organizations are already accessing the power of programmable money quickly and efficiently with the number one blockchain solution enabler: Catalyst Blockchain Manager
So, what is programmable money?
Programmable money refers to digital currency that can be assigned conditions about its use by leveraging blockchain-based smart contracts. Digital instruments embedded with logic-based conditions can enhance user experiences and significantly boost the transparency, efficiency, and accessibility of financial services. This can greatly benefit automation while allowing for innovative new business cases.
At its simplest, programmable money can remove the need for trust, limiting how funds can be used by enforcing predetermined conditions. Funds can, for example:
- be algorithmically earmarked for sustainability projects
- change in value depending on when or where they are being used
- only be released to the beneficiary once certain criteria have been met
But in order to access the power of programmable money, organizations must leverage blockchain. For this reason, forward-leaning companies are using Catalyst Blockchain Manager to simplify and accelerate their implementations of this technology and allow them to develop programmable money use cases far more easily.
Benefits of Programmable Money
Improved Transparency and Auditability
Programmable money can create trust among all participants by providing a transparent record of financial transactions and direct access to transaction history for regulators. Smart digital currencies can track transactions, assisting with anti-money laundering programs and creating barriers for other forms of malicious activities. Organizations could, for example, tightly control how employee benefits are managed and no longer need to concern themselves with logging and verifying receipts for expense reports, as this could be entirely gated and automated.
Efficiency
Having contractual requirements entangled with real payment, programmable money allows the many layers of transaction processes to be combined, drastically accelerating the speed of business and payment settlement. This has massive implications for the efficiency of the financial system, where the automation of transactions and the elimination of intermediaries can streamline processes, reduce administrative burden, and minimize human error — together resulting in greatly improved operational efficiency.
Innovation and New Business Models
Organizations can stimulate financial innovation with new business models formed on top of programmable money platforms. By leveraging smart contracts, programmable money facilitates automation and conditional payments, allowing the creation of new financial instruments and decentralized applications founded on self-executing agreements and predefined conditions. This opens the path to an entirely new, as-of-yet undefined business reality.
Use Cases
Loyalty & Reward Coins
Applied to loyalty and reward programs, programmable money provides radical simplicity and ease of use to a wide-spread business practice – one that is burdened by cumbersome processes related to point systems, point redemption options, and the exchange of points among program partners. A well-designed programmable loyalty token system can render the task of devising, tracking, and assigning loyalty points trivial.
Supply Chain Transaction Settlement
Programmable Money can be encoded to only trigger payment once specific conditions are met. This could transform supply chain transaction settlement, with transactions instantly finalized the moment goods or services are delivered. Payment could travel at the speed of the Internet, providing enhanced traceability through coin transaction data and greatly reducing the need for expensive dispute resolution processes.
Healthcare
Programmable money in healthcare can be used to streamline medical payments and accelerate insurance claims processing. Programmability could also be used to automate the reimbursement process when verification conditions are met.
Corporate Treasuries Management
Programmable money can transform corporate and institutional treasury management by linking payments to identity verification and real-time data. Not only would this eliminate nefarious mismanagement of company funds, but it would also mean payments could be executed based on accurate, live measures of capital liquidity. This would greatly reduce the need for manual monitoring and sluggish forecasting models, altering procurement and corporate resource management for the better.
Energy and Utilities
Energy and utilities markets could leverage programmable money to facilitate and streamline energy billing and settlement processes. It could help with automating aspects of peer-to-peer energy trading, pinning payments to energy consumption.
Other Use Cases
Programmable money could also be used for:
- innovative financial products
- enhanced e-commerce transactions/ecosystems
- accelerated flows of funds pinned to art ownership and intellectual property rights
Challenges in developing programmable money
Developing programmable money requires an organization to have blockchain capabilities. In the current business climate, however, it can be challenging to maintain teams with the deep expertise required for building and developing blockchain solutions from scratch. Regardless of the specific blockchain protocol leveraged by an organization, there will always be obstacles and technical hurdles that require the right knowledge and experience.
For this reason, going it alone comes with risks. An inability to overcome technical problems could bring projects to a halt, and failure to anticipate future requirements could necessitate expensive and time-consuming redesign.
Fortunately, the world has moved on from the early days of blockchain. The technology is now mature and better served, with tools available that can lower technical barriers and enable DLT solutions with greater ease. This is where Catalyst Blockchain Manager changes the game.
How organizations can overcome the technical barriers to programmable money
Catalyst Blockchain Manager is an end-to-end blockchain solutions operating system and the perfect tool for enterprises struggling with technical hurdles to blockchain technology, uncertainty around implementation risk, and the need for enterprise-grade deployment. Catalyst provides clear, simplified management and streamlined automation of blockchain solutions, resulting in cost savings and greatly reduced complexity when developing programmable money systems.
Catalyst Blockchain Manager enables programmable money for a European bank
One of our customers is using Catalyst Blockchain Manager to enable a loyalty coin for its banking customers and employee base. Created using Hyperledger Fabric and built in a scalable and composable way, the reward and payment ecosystem integrates on-chain coin movements with off-chain products and services.
With Catalyst, organizations can quickly and easily adopt programmable money solutions, while minimizing the effort required for configuration. Catalyst is developed by a team of experienced blockchain solution specialists, financial services innovation experts who understand the specific needs of the industry. Catalyst customers benefit from a dedicated support team available to assist with the design and customization of their solutions.
BUILD INNOVATIVE PROGRAMMABLE MONEY USE CASES BEFORE ANYONE ELSE
Speak to one of our specialists about deploying and managing programmable money with Catalyst Blockchain Manager.
