The Future of All Money

Here’s a term you don’t hear every day—or pretty much ever: Programmable money.

But you should probably familiarize yourself with the term. It’s the future of all money.

Say goodbye to the dollars in your wallet. And one day soon, the coins you find beneath your couch cushions will be collectors’ items, or, at the very least, a reminder of an entirely different era.

For our world is rapidly moving to digital money.

Governments the world over have adopted or are in the process of adopting and/or studying what’s known as a Central Bank Digital Currency, or CBDC.

I’ve mentioned these in previous dispatches. In terms of the U.S., a CBDC will replace our paper dollars and metallic coins with digital dollars that will reside in digital wallets assigned to all of us, much like we’re assigned a Social Security number.

Anytime you earn any money, the dollars will arrive as digital currency inside that digital wallet.

When your employer pays you, the dollars you earn will leave your employer’s digital wallet and flow instantly across the blockchain (the digital highway on which all cryptocurrencies operate) and into your wallet. When your neighbor pops over to your garage sale and buys an old jacket you’re selling, the $5 will flow from her digital wallet into yours. And when you dash into Sonic on your way to work for your morning Diet Dr. Pepper, the money will flow from your wallet into the digital wallet of that local Sonic outlet.

In short, all money will be electronic.

Transactions will occur instantly.

They will clear instantly. No more waiting a day or more for money to move around.

Lots of voices raise lots of legitimate concerns about this brave new financial world, not the least of which is the very big question of privacy. Because CBDCs exist on the blockchain, every transaction is wide open to review by anyone, or any company, or any government agency that happens to know your digital wallet address.

But in our increasingly Orwellian society, privacy is increasingly less relevant to the government than is the power it gains by turning physical money into digital money.

That power is defined by the term “programmable money.”

Here’s a good example of what I mean…

Back during the COVID crisis, the U.S. government ran a bunch of programs to keep the economy from collapsing. It did so by sending our gajillions of dollars to consumers and businesses. Alas, a vast amount of that money was misused or claimed fraudulently. With cash, that’s an unavoidable risk.

With CBDCs it’s an entirely manageable and largely avoidable risk.

That’s because digital money can literally be programmed.

During the 2007 financial crisis, for example, the Obama Administration ran a “Cash For Clunkers” campaign aimed at encouraging Americans to buy new cars as a way to help stimulate the economy. As one would expect, that program was rife with fraud at the consumer and dealership level.

With a CBDC, government could credit every American’s digital wallet with X amount of dollars, but that credit would come with a digital proviso: Spend this cash on a car before Date Y, or it is not spendable.

You wouldn’t be able to use the money anywhere else because your wallet would not authorize the transaction.

Or think about Food Stamp fraud. With a CDBC, the U.S. Department of Agriculture, which administers the program, could program the money based on “merchant category codes” that already exist for all products sold in the U.S. Food Stamp recipients, or a cashier willing to look the other way, would not be able to skirt laws and allow the purchase of banned items like tobacco or alcohol because the wallet would detect the offending codes and nix the transaction.

Or maybe this: Government dieticians decide that Food Stamps can only be spent on fresh fruits, fresh veggies, and certain types of meats, bread, and dairy, but cannot be spent on Cheetos, Doritos, and SpaghettiOs. Again, the wallet would simply not authorize the transaction when it detected codes attached to those items.

That is programmable money.

It gives government power over money and spending that has never existed in the history of history.

To be sure, some benefits do accrue. Money moves around at the speed of electrons, meaning instantaneously. And there’s no longer anything resembling “banker’s hours” or “bank holidays.” The blockchain is open 24/7/365. Send money from one account to another on Friday at 11 p.m., and it will arrive in the designated account seconds later. No waiting until the banks are open on Monday for that transaction to process and clear.

That also means a sharp reduction in costs, since blockchain transactions can cost just fractions of a penny and require no human interventions. So banks would have no legitimate reason to charge you the cost of a kidney for basic transactions.

And it means the idea of an unbanked population—people for whom bank accounts are hard/impossible to come by for any of a variety of reasons—will no longer exist. Everyone will have a federal digital wallet; it won’t be up to a bank’s discretion.

Other benefits: You’ll have a certain ability to program your money or your wallet yourself, so that rote transactions automatically happen, like paying utility bills or a mortgage/rental payment. You’ll assign certain wallets to receive a certain amount of money from your wallet every month, and that money is digitally earmarked for that wallet only. Or you can block wallets or certain types of transactions so that scammers cannot target your account.

Wallets will also likely include lock functions that require you to approve a transfer, another way to prevent fraud from draining your finances without your approval.

All of that—the good, the bad, the potential loss of privacy—is “programmable money.”

And it’s a couple years away from being our new normal.

Maybe start stashing away some mint-condition physical dollars and coins. They’ll be collectors’ items soon enough.