Future Finance

(I2.wp.com, 2018)

For centuries central banks have controlled money, and money is just an accounting system, with the rise of new technologies such as Block-chain comes crypto-curencies in the form of Bitcoin, Etherium, Ripple and many more, as a result we are seeing a decentralised banking system, it has been described as a monetary revolution. The technology can store and record transactions, record value, and doing so digitally so that users can send money directly to each other without the middle man of the bank where sometimes fees are placed. All of this data is stored in the open ledger, which is a distributed ledger and there is no central server, but every user of the crypto currency aids in the process of confirming transactions, this is called a Peer2Peer network or P2P.

Block-chain Explained:

(YouTube, 2018)

Fintech: This is a collective term for technologically advanced financial innovations that result in new financial instruments, services or intermediaries. Among these include the block-chain and crypto-currencies and so on.


(Lee, 2018)
Previously as seen in the diagram above, banks make the majority of their money through loans and mortgages as they are essentially creating money out of thin air, however due to bitcoin and other crypto currencies that are decentralised, there would be no way to print more money than the supply that is created. It is said "1.2 million working in banking and lending, 460,000 in investment management, and 865,000 in insurance. These functions will see 20-40% productivity gains, or unemployment, depending on your vantage point,” the report stated. About $1 trillion in costs will be exposed to AI transformation in financial services sectors by 2030, according to the report; $450 million of this would in banking. " (American Banker, 2018) These statistics are crazy to think what the economical impact will be. Automated robot trading, less production and labour costs and more.

There are other alternatives to creating money than loans and mortgages, with the use of derivatives, an example of a derivative is the foreign exchange where currency pairs are traded against each other, this is used as a way of determining the strength of a countries economy, a further example is of  USDJPY, USD being the base currency and JPY being the quote currency,  if you are going to go Short it would mean that if the Dollar gets weaker against the Yen you would make money. And the opposite is applied when going Long. "A derivative is a financial security with a value that is reliant upon, or derived from, an underlying asset or group of assets. ... The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Derivatives can either be traded over-the-counter (OTC) or on an exchange." (Investopedia, 2018) 

Within these markets there are many autonomous bots trading every second of the day, these are what give the market its structure, the big banks and institutions place pending orders in order to manipulate the markets, an example included the 2010 flash crash "A flash crash began on May 6, 2010, after the Dow Jones Industrial Average fell more than 1,000 points in only 10 minutes. This was the biggest drop in history at that point, as more than one trillion dollars were lost." (Express.co.uk, 2018) The power of automation can cause levels of productivity like this, as with derivatives, where one person has lost another has gained one trillion dollars.

Another way in which money has been created out of no where is that of Cryptokitties which opens doors in conversation about digital scarcity, Cryptokitties is "a new blockchain-powered online game where users can buy and sell collectable virtual cats on a marketplace as well as breed new kittens."(Bravenewcoin.com, 2018) The cryptokitty pictured below is worth the equivalent of £10,000, but what you own is the code but not the digital image. This is achieved through the use of smart contracts. However how far does the ownership of this extend? Well the company that create cryptokitties have stated that they own all the images and assets of the cryptokitties and the only way that the images can be generated are through their system, so at the end of the day, all you really own is the piece of code that verifies the ownership of the images associated with the kitty. In one way this opens doors to making online goods more valuable and exclusive, as of current it is simple enough for anyone to copy and save data across the internet, from images, videos, albums and more.

(CryptoKitties, 2018)