Digital Money: Then and Now

There are 2 main differences between when money was digitized in the 1970’s and now: cheap, fast, always connected computers and essentially the entire field of cryptography.

When money was first tracked by computers in the 1970’s, the only way to supply digital money was via monolithic centralized databases. In the intervening 50 years though, the technology landscape has fundamentally shifted. If you were to rebuild the financial system given what we have today, it would look very different.

Cheap, fast and always connected computers allow realtime settlement. Previously, financial transactions were done in batches requiring a time delay between the initiation of a payment and its final settlement. Technology has progressed to the point where realtime settlement is not only viable but far less complex. This creates almost unimaginable efficiencies for the financial system.

Add to this the emergence of the field of cryptography which fundamentally alters what is possible. Not only does cryptography offer fundamental building blocks for security and identity but it also opens a vast array of choices particularly for the preservation of privacy and ability to limit bad activity that we are just beginning to understand.

In the 1970’s, the only way to build a digital financial system was to use a small number of centrally…