Imagine a world where currency is no longer measured by pieces of paper or coins. Many of us already live in a similar situation through our credit/debit cards and online payment services like PayPal, but what if your country’s primary currency printer supported digital transactions at its base level?
Enter MintChip, a digital version of the Canadian dollar. Not only would this currency be directly backed by the Canadian government, but it would have the advantage of being completely anonymous — a current advantage of physical currency over credit/debit options.
I’m one of those folks that prefers to pay with something in cash than using my debit and/or credit card. My bank doesn’t need to have a record of everything and anything I buy, and sometimes I want to sneak a gift past my wife long enough to make it a surprise.
So, why is MintChip important? What are the advantages (and disadvantages) of such a currency?
What MintChip Isn’t
MintChip has been compared to Bitcoin and other digitally powered currencies, but this isn’t exactly a fair comparison. Bitcoin was a peer-to-peer currency with no central management structure. MintChip is a government-backed method of trading an existing currency.
MintChip isn’t a bank account, or a tool used through a bank account. It’s an anonymous currency, much like physical cash is now. You will theoretically be able to pay for things you might normally pay for with a credit/debit card without having record of the transaction appear on your bank statement.
MintChip isn’t coming today or tomorrow. It’s a project that’s in early developmental stages. At the present moment, the Royal Canadian Mint is holding a contest to see what kind of AoPS software developers can come up with for the platform. The prizes? Perhaps the oldest form of currency in the world: gold.
MintChip is not expected to replace all forms of hard currency. In fact, its target is at the multitude of smaller transactions modern citizens are taking part in every day through app purchases, digital music downloads, and even payment of person-to-person debt. Simply put, it’s intended to make these transactions easier and cheaper for everyone involved.
MintChip isn’t entirely cloud based. In fact, physical devices including SD/MicroSD and USB thumb drives would contain the virtual currency. You could theoretically hand someone an SD card or have it swiped for the balance owed. These physical drives allow for a secured (yes, relatively speaking) method of transferring funds without having to log in to an online system, allowing it to be used even when no Internet connection is immediately available.
What Could This Mean to Canada?
Creating paper (well, plastic) currency takes money. The Royal Canadian Mint has been printing money for Canada for many years, and will undoubtedly appreciate the savings a digital currency would present. In addition to getting rid of its 1 cent piece, the Royal Canadian Mint will benefit from not having to print a significant amount of small-form currency used to make smaller person-to-person or person-to-business transactions easier.
Buying things online would no longer require a credit card or debit transaction risking identity theft for the user. Micro-transactions including 99 cent transactions would be possible through the MintChip system.
Even transactions ranging from $5-10 could eventually be carried out using MintChip, further adding to its usefulness in day-to-day life.
A report issued in December of 2011 issued by the Task Force for the Payments System Review made a case for a revised payments system that met the demands of a digital age. In short, it stated that Canada is simply behind the times, and it needs dramatic changes in order to compete in a modern global economy. MintChip is a very large step in a digital direction.
Critique for this project can be heard loud and clear around the world through social networks and forums, with complaints ranging from possible hacks to a listing of what doing away with physical currency could mean to freedom.
Like any digital technology, MintChip has a lot to prove before people will trust it to do more than buy an occasional coffee.
Digital currency, however anonymous, has to have some form of a paper trail. Privacy advocates love hard currency because it allows people to transfer money without a corporation or government body overseeing the transaction. The temptation to tax these small transfers or log them in some way is too great in many citizen’s eyes, and it’ll only be a matter of time before a taxing scheme is put in place.
MintChip is a technology that’s built to evolve. Some believe while there may not be very much in the way of tracking or taxing at first, the system could be upgraded later on to include this.
Bottom line: We don’t know very much about MintChip right now. Because it’s still in early developmental stages, it’s hard to tell who the brokers of this new currency will be or what safeguards will be in place to keep it from becoming another failed attempt to digitize an official currency.
What Real People Think about MintChip
We decided to take the question to our community, which includes people from all over the globe (including Canada) to find out what they think about MintChip. Here are some of their responses:
Robert Misner — I’m pretty sure MintChip comes with unlimited potential. For saving the government money, bringing currency into the digital age, and expanding potential for abuse.
Geordon Stephen — If this sees widespread execution, it has the potential to be huge. Currency seems to be finally getting some digital traction in North America. Google Wallet sparked something, and governments are taking notice.
Alex Wright (Canadian) — I think MintChip is definitely the way things should progress. It seems like the sensible currency of the future. I’m just not sure if we have the ability to keep it secure and avoid people hacking the system to accumulate more ‘credits’ than they rightfully own.
I think the greatest part of MintChip is the anonymity associated with it. That’s what sets it apart from using your debit or credit card and other NFC payment methods.
Giles Crouch — I am Canadian; it’s progressive and in line with countries such as Finland, Japan, Norway, and others. It will make micropayments easier for Web apps and services and contribute to new online business opportunities (such as small content purchases like articles and eBooks) and subscription services. As an entrepreneur who lives and breathes Cyburbia, I’m all for it!
Randy Westman — Maybe I’m too pessimistic, but I can foresee a day when the government will want to collect tax revenue (“just pennies per transaction!”) for each virtual purchase I make.
Woman Credit Card And Money by Petr Kratochvil