Currency Design for Social Networks Jon Matonis Monetary Strategy Consulting Digital Payments  ׀   Virtual Currency  ׀   C...
Overview <ul><li>The Changing Digital Payments Landscape
Virtual Currency Opportunities
Central Banking Opportunities in Virtual World Environments
Monetary Strategy Consulting
Selected Projects
Contact Information </li></ul>
Digital Payments <ul><li>Payments go mobile
Peer-to-peer is essential
Prepaid cards are a factor
In-world to real world convertibility
Bearer certificates as negotiable “tokens”
Anonymity and untraceability are drivers
Non-reversibility is a paradigm shift </li></ul>
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Currency Design For Social Networks

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Given the changing digital payments landscape, opportunities exist for virtual currency issuers to circulate beyond the in-world environments, thereby necessitating "virtual" central banking functions.

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Currency Design For Social Networks

  1. 1. Currency Design for Social Networks Jon Matonis Monetary Strategy Consulting Digital Payments ׀ Virtual Currency ׀ Central Bank Design themonetaryfuture.blogspot.com Gibraltar, March 2010
  2. 2. Overview <ul><li>The Changing Digital Payments Landscape
  3. 3. Virtual Currency Opportunities
  4. 4. Central Banking Opportunities in Virtual World Environments
  5. 5. Monetary Strategy Consulting
  6. 6. Selected Projects
  7. 7. Contact Information </li></ul>
  8. 8. Digital Payments <ul><li>Payments go mobile
  9. 9. Peer-to-peer is essential
  10. 10. Prepaid cards are a factor
  11. 11. In-world to real world convertibility
  12. 12. Bearer certificates as negotiable “tokens”
  13. 13. Anonymity and untraceability are drivers
  14. 14. Non-reversibility is a paradigm shift </li></ul>
  15. 15. Virtual Currency Opportunities <ul><li>It's NOT just about the platform
  16. 16. It's about setting monetary policy
  17. 17. It's about creating a medium of exchange
  18. 18. It's about encryption and security
  19. 19. It's about negotiability and circulation
  20. 20. It's about critical mass and installed base
  21. 21. Viral design is the competitive advantage </li></ul>
  22. 22. Virtual Currency Design <ul><li>Create a reliable and stable store of value
  23. 23. Select a unit of account for the real world
  24. 24. Leverage existing exchange infrastructure
  25. 25. Eliminate real-money trade (RMT)
  26. 26. Encourage outside circulation (viral) </li></ul>
  27. 27. Central Banking Opportunities <ul><li>Customized design for social networks
  28. 28. Key functional areas mirror real world
  29. 29. Benefits unique to virtual currencies
  30. 30. Drive adoption rates
  31. 31. New revenue streams </li></ul>
  32. 32. Central Bank Design <ul><li>Virtual world developers will rely increasingly upon in-house macroeconomists
  33. 33. Environments will require in-world central banks or that functionality will be outsourced
  34. 34. Envision the virtual economy having multiple non-governmental monetary authorities </li></ul>
  35. 35. Central Bank Functions <ul><li>Provide a stable unit of account
  36. 36. Maintain convertibilty to “real” backing
  37. 37. Perform clearinghouse function
  38. 38. Act as lender of last resort
  39. 39. Guarantee overall system integrity </li></ul>
  40. 40. Central Bank Benefits <ul><li>Promote brand outside of virtual world
  41. 41. Drive adoption rates of new users
  42. 42. Become the dominant trade currency
  43. 43. Attain reserve currency status which will solidfy status and provide issuance opportunities
  44. 44. Enjoy new revenue streams </li></ul>
  45. 45. Drive Adoption Rates <ul><li>Currency unit of account is a pardigm shift that becomes the driver for the new “experience economy”
  46. 46. Benefit from both in-world and real world currency circulation </li></ul>
  47. 47. New Revenue Streams <ul><li>Processing fees
  48. 48. Licensing and management
  49. 49. Seigniorage profits which is the difference between interest earned on purchased securities and costs to produce and distribute currency </li></ul>
  50. 50. Monetary Strategy Consulting <ul><li>Expand transactional volume through increased payment options
  51. 51. Analyze e-money laws and jurisdictional issues related to transaction anonymity and traceability
  52. 52. Research new markets and prepare feasibility studies appropriate for that country or region
  53. 53. Structure the virtual central bank for maximum market penetration </li></ul>
  54. 54. Selected Projects <ul><li>Sumitomo Bank - Eurodollar deposit platform (1985)
  55. 55. VISA International – Foreign currency trading and pricing model (1992)
  56. 56. VeriSign – Encrypted payment services product offering (1996)
  57. 57. SWIFT – Secure certificate hierarchy and server proposal (1996)
  58. 58. Hush – Launched HushMail 2.0 with OpenPGP compliance (2001) </li></ul>
  59. 59. Contact Information <ul>Jon Matonis [email_address] linkedin.com/jonmatonis twitter.com/jonmatonis themonetaryfuture.blogspot.com </ul>

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