THE SMART MONEY

PROGRAMMABLE PAYMENT S-8— THE FUTURE OF FINANCE 2

- DAMIEN MARTIN

What if your refrigerator recognized on its own that it needed restocking and took it upon itself to order and pay for more food when the time came? Thanks to the convergence of the IoT and blockchain technology, that’s one of the potential use cases for programmable payments. Made using smart contracts on the blockchain, these payments are automatically executed once a pre-programmed set of circumstances occurs. Smart wallets can be used to set restrictions on the authorizations of these payments. The applications for these programmable payments are just being discovered, but it’s a brave new financial world.

“Money is electronic today, but what is missing is programmability,” said Naveen Mallela, head of coin systems for JPMorgan. “That is the holy grail.”

CBDCS

With programmable payments, money is effectively set aside for a specific purpose. It’s only released when specific conditions are met. As many countries explore issuing their own central bank digital currencies, they can set up certain triggers in the smart wallets holding those CBDCs.

For example, governments could put CBDC tokens in special wallets earmarked for specific subsidies or rebate programs, like buying an environmentally friendly heat pump. Buy the heat pump, upload your proof of purchase, and the money instantly goes into the wallet.