Sweden might be cashless in three years’ time. That would mean the disappearance of the only means of payment that always works and never jeopardizes personal integrity. Although offering the unique features of cash in digital form is urgent, the process of finding an alternative is currently too slow. Besides, the proposed Distributed Ledger Technology (DLT) is inefficient and even unnecessary. Now, Crunchfish is taking on a leadership role and showing how it’s done.
Joachim Samuelsson
Managing Director, Crunchfish
The move towards a cashless society must have its benefits, but in the near future Sweden will be missing the only means of payment that always works. Downtime and long Internet disruptions could paralyze the country. The Swedish National Bank’s e-crown experiment has been debated in three webinars moderated by Crunchfish. Sadly, the process is a slow one, involving inefficient and even unnecessary Distributed Ledger Technology, that does not solve for the features of cash. For Sweden this is serious, as it is poised to become the world’s first cashless society.
But the Swedish National Bank is not alone in being on the wrong track. The entire world’s Central Bank Digital Currency (CBDC) industry is at a dead end in its quest to digitize cash as a cryptocurrency money format, when it should be implemented as just another currency. By digitizing the money order instead of money makes everything fall into place on existing digital payment rails, requiring no additional investments for Central Banks nor commercial banks. The only thing required to offer the features of cash digitally is a Digital Cash Wallet. Crunchfish recently made a submission, in collaboration with Swish to the Swedish Post and Telecoms Agency’s innovation competition, implementing the unique features of cash to account based transactions. If Swish’s member banks choose to implement Digital Cash Wallets, Sweden will be offered digital cash guaranteed by the banking system, instead of the National Bank. With this as the only difference it is obvious that it is CBDC may be implemented with Crunchfish Digital Cash without any costly infrastructure changes to the digital payment rail.
Crunchfish’s Digital Cash Wallet is usable even without an internet connection, may be integrated with any Digital Wallet on any payment scheme, whether on mobile or on a cash card. It manages a balance that is linked to a virtual account where all transactions are registered when the user is online. The virtual account balance is blocked to guarantee coverage when offline payments are settled against this account.
Crunchfish’s Digital Cash Wallet is based on a patent-pending two-step architecture, first an offline clearing at the moment of payment, and then an online settlement to move money between the accounts. VISA has recently proposed this architecture for CBDC. Another exciting aspect of this two-step architecture is that payment services including CBDC may become globally interoperable. Even in the future, cash is king.