The Future of Currencies and Currency Exchange

 

The simple act of using paper to pay for products and services is mostly taken for granted, but paper currencies are a relatively modern financial instrument when seen from a historical perspective. The concept of agreeing on a specific object such as a paper bill to act as a measure of value as well as a means of circulation, accumulation and payment seems simple enough for most people. Nonetheless, it requires a certain degree of technical knowledge to understand the real complexity that goes behind the use of currencies. A countless number of objects have been used as currency along the history of humanity, ranging from seashells to precious metals. We finally stuck to paper money largely because of how much easier and cheaper it is to carry, produce and control. 

We owe our capacity to have better and more practical forms of currency largely to technology. As obvious as it might seem now, the invention of printing ended up changing virtually every aspect of life, being one of the key elements that defined modernity. The emergence of internet technologies means a comparable if not much larger leap in technological progress than printing was at the time, and just as printing paved the way for the widespread adoption of paper money, it is logical to assume that in the not-so-far future internet technologies should let us replace paper with digital currencies. 

But why would we? You may ask. The simplest possible answer is because we can. Nonetheless, there are more interesting reasons as to why we also should. There is a theory in economics that is often referred to as the “shoe leather cost”. It is a metaphor for the higher costs of currency that come with inflation. The theory points out to the fact that even if the real income of the people in a country can eventually adjust to inflationary effects, having a higher amount of physical currency circulating has a cost. That is, as the metaphor implies, the cost of the shoe leather that wears out as people have to walk more often to the ATM to withdraw their money. 

Although the shoe leather costs might seem meager at first, and even as a somewhat amusing concept, when you stop and think about the sum of all the mobility costs that people undertake to use cash, it is not hard to realize how expensive it really is. To this are added other expenses ranging from currency exchanges and remittance fees to bank handling fees and negative interest rates. This is not to mention the possibility of irresponsible governments going too happy with the money printing machine, which has led countries like Germany in the early 20s, Zimbabwe in the late 00s and recently Venezuela to render their currencies virtually useless. Such a possibility still exists despite the widespread adoption of independent central banks. 

The question that should arise now is not why we should replace cash with digital currencies, but rather, why haven’t we done so yet. Such a thing is easier said than done. First, there needs to be a technological framework with enough computing power to process all transactions in real time, as well as a secure enough system to prevent third parties from hacking into other people’s and institutions’ accounts. Technologies such as blockchain seemed to promise this solution with currencies like bitcoin. However, if bitcoin taught us something is that, besides the technological framework there also needs to be some sort of governance to prevent excessive volatility. Although speculators are too happy to gamble their money by acquiring bitcoins, it is generally not practical having a currency which value can be significantly change from one week to the next. In sum, there needs to be a balance between governance and decentralization. 

Konzortia Capital is the latest and most promising company taking a shot to solve these practical problems, making all financial transactions easier, cheaper and more seamlessly interconnected than ever. Their digital currency Koura is going to work within its own distributed ledger ecosystem, which will be accessible for all financial entities, from individuals and small businesses to investment banks, central banks and governments. Koura will hold a one-to-one exchange relation with any fiat currency employed by the user. This means that, if you buy 100USD in Koura, you will own a total of 100 USD KOU, same thing applying to EUR, CAD or any currency. This will make any transactions easier, and will allow users to exchange any currency at a market price. Using Koura, it will be possible not just to save money in highly secure multicurrency accounts and send it abroad in real time with little to no costs, but also to raise capital, invest, trade financial assets and more. So, if you were wondering what is the future of currency exchange, the answer is here, and it’s called Konzortia Capital. 

 

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