We have been data. We have a music. We have a video. Thanks to the Stablecoins, we are about to start the economic work.
The US dollar stablecoins recently hit a milestone – they represent about 1% of the US currency supply (based on the M2 proposal). Not a big deal, you may be thinking, but in fact, it may be one in the near future.
Stablecoins grow at a wonderful rate, about 55% per year. While it is unlikely to continue forever, it is not difficult to predict a future, less than a decade away, where stablecoins represent a value equal to nearly 10% of M1, defined as cash, note, and “easily accessible” digital currencies such as current bank accounts.
Stablecoins are designed to be easily accessible and available, which certainly seems to fit in the sense of money supply. In fact, on-chain services are beginning to look like standard banking services. Unless they work faster and cost less.
Now, imagine if the transfer of money around is, effective, free, and immediately. Do you manage your money differently? You can. In fact, global companies are starting to think about it.
Today, companies keep a lot of money in many separate locations around the world. This is not particularly different from how they manage physical inventory. Since moving money to boundaries is expensive and slow, companies must keep a decent supply of cash in hand locally to pay fees. And, since customers do not have to pay invoices with fully predicted, companies must keep a cash buffer in hand to manage the difference between unpredictable costs, such as payroll, and unpredictable profits.
Things may look different in the future. If there is no cost to transfer money around the world and it can be done almost immediately, the size of local buffers can be reduced noticeably. Instead of keeping the two -week worth of costs locally, including payroll, you can only choose to keep the cost of one day. A slightly larger cash pile can be maintained in the middle and transmitted as needed. Companies can redefine their global cash handling every six hours. The result: a significant decrease in working capital requirements.
What can start at a global level for large companies can spread quickly, and not just in the B2B space. Why not pay every employee daily for the actual time worked? Payday lenders have made a fortune now running people between the weekly paycheck. Why not charge customers day -day for power consumption? Electric utilities now wait 30 days to charge you and wait another 30 days for you to pay. The gap between when you use power and when you pay it can be up to 60 days.
It sounds preposterous except for math pencils. At 5% interest rates, a $ 10 debt over the course of one year makes up a $ 0.50 interest at current rates, which is about $ 0.04 per month. Each week of “float” you can save (or earn) costs about $ 0.01. Provided that payment costs in the Ethereum Layer 2 network are regularly below $ 0.01, the answer is yes, it is worth it.
Transaction costs will go in just one direction, which means the efficient economy and frequency of managing your money will only get more grains.
We used to buy music. Then we downloaded it. Today we will take it. Sometimes, the idea of streaming music is being demanded – and all the bandwidth and calculation needed to do that – is seen as ridiculous -laugh. Now, it’s about a drop in the bucket compared to video streaming. There is no reason to think that payments are different.
Like all technology revolutions, the starting point is always “your mess for less.” Which one would say that the first thing people would do would take existing processes (such as monthly charges) and only operate them. Then it became your mess, but faster. Eventually, companies begin to re -imagine those processes in the light of the new economy.
Dropping the employment requirements can rearrange the economy in surprising ways. Many companies maintain enough cash in hand to cover 12 weeks of costs. US companies are, in combination -with, about $ 2 trillion of cash in hand and $ 2.8 trillion on working capital loans remaining. Moving to a financial streaming model can literally independent of the capital trillions for the new investment.
It can also change people’s behavior. The longer the time gap between an action and a reward, the harder it is to get people to respond. Incentives for things such as using services or energy at off-peak times can be more effective when the payout is instantly. No one is mistaken for betting on instant satisfaction.
Denuch: These are the personal views of the set and do not represent the views of the ey.
