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Programmable money: next-generation blockchain-based conditional payments

Author

Listed:
  • Ingo Weber

    (Technische Universitaet Berlin)

  • Mark Staples

    (CSIRO’s Data61
    UNSW)

Abstract

Conditional payments allow the transfer of money only when pre-defined rules hold. Example uses could include welfare payments, employee expenses, insurance payouts, or tied donations. Normally, conditions are checked manually in reimbursement or pre-approval/audit processes, either at accounts before funds are distributed, or using account records after distribution. Blockchain’s capabilities for smart contract and digital assets can be used to implement next-generation conditional payments, on a decentralized ledger. We conducted a project with an industry partner where we conceptualized, implemented, and evaluated a novel programmable money concept using blockchain. In the system, programmed policies are not attached to accounts, but instead to money itself. Policies here specify the conditions when money may be spent, and can be automatically checked by the money as it is spent. Policies can also define auxiliary actions to be taken as part of payment transactions, including side-payments. Policies can be dynamically added to and removed from money as it flows through an economy. These policies could be budget rules for tied funds, but could also enable new forms of “values-based money” that respect ethical or other rules which relate to societal values or social norms. We report on some of our experiences and insights regarding blockchain architecture, software engineering with blockchain, and blockchain-based programmable money. We also identify opportunities and open research questions in these areas.

Suggested Citation

  • Ingo Weber & Mark Staples, 2022. "Programmable money: next-generation blockchain-based conditional payments," Digital Finance, Springer, vol. 4(2), pages 109-125, September.
    • Handle: RePEc:spr:digfin:v:4:y:2022:i:2:d:10.1007_s42521-022-00059-5
    DOI: 10.1007/s42521-022-00059-5
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    References listed on IDEAS

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    3. Bratanova, Alexandra & Devaraj, D & Horton, Joanna & Naughtin, Claire & Kloester, Ben & Trinh, Kelly & Weber, Ingo & Dawson, David, 2019. "Blockchain 2030: A Look at the Future of Blockchain in Australia," MPRA Paper 113843, University Library of Munich, Germany.
    4. Min-Bin Lin & Kainat Khowaja & Cathy Yi-Hsuan Chen & Wolfgang Karl Hardle, 2020. "Blockchain mechanism and distributional characteristics of cryptos," Papers 2011.13240, arXiv.org, revised Aug 2021.
    5. Burda, Michael C., 2021. "Valuing cryptocurrencies: Three easy pieces," IRTG 1792 Discussion Papers 2021-011, Humboldt University of Berlin, International Research Training Group 1792 "High Dimensional Nonstationary Time Series".
    6. Alla Petukhina & Simon Trimborn & Wolfgang Karl Härdle & Hermann Elendner, 2021. "Investing with cryptocurrencies – evaluating their potential for portfolio allocation strategies," Quantitative Finance, Taylor & Francis Journals, vol. 21(11), pages 1825-1853, November.
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    Cited by:

    1. Šilenskytė, Aušrinė & Butkevičienė, Jurgita & Bartminas, Andrius, 2024. "Blockchain-based connectivity within digital platforms and ecosystems in international business," Journal of International Management, Elsevier, vol. 30(3).
    2. Michael C. Burda, 2022. "Discussion on: “Programmable money: next generation blockchain-based conditional payments” by Ingo Weber and Mark Staples," Digital Finance, Springer, vol. 4(2), pages 127-131, September.

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    More about this item

    Keywords

    Blockchain; DLT; Smart money; Programmable money; Conditional payment;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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