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RCM’s MintChip Goes Where (No Government) Has Travelled Heretofore

[heading]RCM’s MintChip Goes Where (No Government) Has Travelled Heretofore[/heading]

Fiat is getting an Information Age-style upgrade by the Royal Canadian MInt. And I can hear Alex Jones now (in my own head):

“You see what has happened is Bitcoin has caused the Powers That Be to move even quicker in their agenda to roll out a global digital fiat currency, and they’re doing it from Canada, with their songs and their queens and their ‘we’re so liberal and caring’ reputation and it will spread across the entire commonwealth, and then to Europe, then Japan and China and then the US, and then all the sudden when I go to the grocery store, I am paying in the queen’s money! Full Circle! Red Alert!! Red Alert!!! Full Circle!!”

Has Bitcoin forced government’s hand, by bringing them to the table of digital money quicker than otherwise would have been the case?

The only thing for sure is, by year-end, software engineers at the 105-year-old Crown corporation will commence testing its very own digital currency.

They believe this new technology “has the potential to revolutionize how we do business.”

They also believe they’re the first…

“Where we’re going is not a road that has been travelled,” said Marc Brûlé, who heads up RCM’s virtual money project.

The $1.5 billion Bitcoin market might take issue therewith.

Moreover, there are key differences between MintChip and a decentralized digital protocol like Bitcoin.

Some main components of the digital currency?

For one, it’s been shrouded by secrecy.  The Royal Canadian Mint is portraying its solution as “the future of money,” and discusses the digital money as legal tender, just like dollars and cents.

And now for a commercial break. Radiohead’s “Dollars and Cents”: (Why not?)

“The challenge for most companies trying to do this is they are not a federal mint,” said Catherine Johnston, chief executive of ACT Canada, a payments industry advocate.

“What they’re really doing is giving a digital representation of money, and it really requires a federally regulated body to be able to do true digital currency. So I see the Mint as having everything they need to make it a reality.”

The MintChip’s would be held on a smartphone or other electronic device, just like a wallet.

According to the Mint’s  Mr. Brûlé, the money is convenient whether you’re shopping at a conventional bricks-and-mortar retailer, online or at your neighbor’s garage sale…assuming your neighbor is linked in with the MintChip App.

“We’re at the very beginning of this, you know. But I believe that smartphones are very powerful devices and very popular. You miss your wallet in a couple of hours but you miss your smartphone in minutes,” Mr. Brûlé said.

Little is know about the security protecting these wallets, but the MintChip project is going after micro-transactions and is expected by officials to be adopted by the underbanked.

The MintChip is not like a credit card, which links to a system like the SWIFT system which is run by banks. It is rather a digital form of cash and change. The Mint maintains that MintChip maintains “the capability for anonymous, efficient and almost instantaneous transactions.”

Compared to physical cash and change, the Mint argues, the cost of managing MintChip is much lower.

“Theoretically, instead of an entire government organization like the Mint, all you need is a laptop and a good economist.”

MintChip will be a globally transacted currency. Merchants will just need to make the decision to accept it.

As The Financial Post writes of MintChip,

The Canadian Bankers Association declined to discuss the matter with the Financial Post, and head of mobile commerce activities at Visa Canada, Derek Colfer, said “It’s exciting to see all of the movement in this space,” adding that MintChip is “an interesting product.”

Visa has invested in Square, a succesful U.S-based start-up product that enables customers to accept credit cards with smartphones.

“Our world is based on conventional currencies, I haven’t really formulated an opinion on currencies that aren’t traditional, I’m familiar with non traditional currencies, but beyond that I think the big difference is the trust and the acceptance levels.

I have trust in the Canadian dollar, because it’s backed by something. I don’t know where I could use a Bitcoin,” said Colfer.

Definitely not under the rock where the head of Visas’s mobile commerce has been hanging out.

The digital money MintChip will focus mainly on micro-payments, such as bus rides, stamps or an article from an online magazine.

The benefits of a digital currency are familiar to anyone who has ever used Bitcoin.

But, some bitcoiners are not convinced by the Mint’s attempts to enter into a digital currency market it seems to little understand.

“What a joke. It will be fun to watch it but i don’t think we will see anything substantive from it.,” said Bitcoin Magazine editor Trace Mayer. Anything MintChip can do, Bitcoin can do, and we can do it securer because we have the processing power to do so.

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