THE FUTURE OF MONEY: WHAT WE NEED TO KNOW

Such wariness is understandable. After all, you don’t have to look too hard to find stories of scams and cybercrime associated with crypto. The UK’s banking and finance reputation is largely built on its highly regulated nature so many are struggling with how to respond to these disruptive, decentralised currencies and transactions.

The acceleration of Banking 4.0 driven by advancements in cloud, AI, and blockchain would expedite the evolution of money1

Dr Swati Sachan, Lecturer in Financial Technology, University of Liverpool Management School

Cryptocurrencies have existed for over a decade but many, including policymakers and financial directors, still don’t fully understand them and are somewhat wary. This was demonstrated recently when a UK Parliamentary Committee suggested that cryptocurrency be regulated as gambling, a proposal that was quickly rejected.

The ease of accessing digital currency has been significantly enhanced by high-speed internet connectivity in smartphones and the implementation of immutable, decentralised technologies such as Blockchain and InterPlanetary File Systems for transaction storage and validation. For instance, the UK’s first blockchain property purchase was recorded in North-West England2 It demonstrates the potential of secured digital transfer of real estate ownership without the involvement of third parties such as banks and lawyers.

Cryptocurrency transactions can facilitate more cost-effective payments due to lower transaction fees and the absence of intermediaries in traditional banking routes. The advancement in blockchain has improved the network latency to allow successful transactions within seconds at lower costs.

Additionally, some cryptocurrencies with a capped supply could provide protection from inflationary influences, serving as a potential hedge against the devaluation of traditional currencies.

Policymakers, consumers, and businesses need to navigate the rapid growth of cryptocurrency and its associated regulatory environment. We must ensure our future leaders are better-versed and equipped to understand and effectively and safely use the technology to benefit business and society. The education of our future workforce is already creating more digital “natives”, with Python programming skills and financial analytics much more common elements in today’s financial degree courses.

It’s an exciting sector with huge potential; we just need to know how best to embrace it.

References:

1 Kumar, A., Srivastava, A., & Gupta, P. K. (2022). Banking 4.0: The era of artificial intelligence‐based fintech. Strategic Change, 31(6), 591-601.

2 UK’s first blockchain property purchase recorded in Manchester, BuyAssociation, 2018.