How to Build a New Digital Economy
Alexander Vasylchenko is the CEO, Founder of Sofitto and creator of Sugi Card. Sugi Card is a cold-storage cryptocurrency wallet that looks and acts like a payment card and is just as easy to use. Sofitto is creating the infrastructure for the next-generation money ecosystem. Alexander is also the former CTO of Mycelium, one of the first mobile Bitcoin wallets created in 2013. With a Ph.D. in electrical engineering, he has also helped build, advise and launch blockchain products since 2011, such as GridSingularity, SIMMST, StromDAO and Cashila.
Few people look under the hood to understand how blockchain technology works - and they don’t need to. Just like with the Internet, we don’t consider the hundreds of millions of cables that power our world wide web. We just care about what it can do for us, like staying in touch with friends or doing business online.
Similarly, no one really needs to know how cryptocurrency transactions work, or even remember their Bitcoin or Ethereum address. They just want to know who they’re paying their bills to and where they can pay for their groceries. But there is still little progress in placing cryptocurrencies in the hands of ordinary individuals. That’s why our financial products based on blockchain technology need to look and feel like regular banking products.
The evolution of money will only progress if we embed this new technology within our current economy, complementing - rather than resisting - traditional financial infrastructure. Our blockchain-powered tools need to be so simple and familiar that anyone can make a blockchain transaction without even knowing what crypto is.
The challenge for traditional banking
Current banking systems are often rigid and unpredictable. When sending money abroad from New York, one of the financial capitals of the world, banks are still unable to provide guarantees about the length or cost of simple money transfers. There are only estimates, with prices fluctuating depending on what time of day the transactions are processed. We have to place our trust in these institutions to exchange and deliver our money safely.
Because of these dated IT systems, the traditional banking sector is being challenged by the new fintech industry in ways it could not predict. New ‘banks’ can be as simple as a mobile app – as easy to install as they are to delete.
Cryptocurrency offers an interesting possibility to eliminate many privileges that banks currently have, such as the licence to provide financial services. This barrier is challenged as peer-to-peer payment networks operate outside of this kind of intermediation.
The new digital economy starts with crypto compatibility
However, in order for cryptocurrency to enter the mainstream, we cannot completely abandon traditional finance, but must work with it. We must connect our products and tools with their current networks, designed to be used at ATMs (automated teller machine) and POS (point of sale) terminals, so that consumers are hardly inconvenienced by, or even aware of the transition from traditional fiat to cryptocurrency. This will also breathe new life into existing financial infrastructure, extending the lifetime of these old terminals and create a new monetization stream.
We can compare this to the manufacturing of new supercars; a Tesla can be driven anywhere, but it will never reach its peak performance on old dirt or gravel roads. Cryptocurrency is similarly restricted, a new technology that old banking infrastructure still needs to adapt to. Cryptocurrency should be able to travel on these old “roads” while we also build new ones so the technology can meet its full potential. This is how we can help the world transition into the new digital economy, with minimal disruption or effort on their part.
Everyone should benefit from this next-generation technology. Its mass adoption relies on whether blockchain-based currencies can be used with both existing and new financial infrastructures. Solving this dual compatibility problem will bridge the digital and analog economies so that anyone can keep their favorite blockchains in their pocket, without any thought of how it got there.