THE NEW REALITY OF MONEY

A historical-social innovation briefing for a world where military high-security standards meet digital crypto-assets

by Jochen Werne

Chief Development & Chief Visionary Officer PROSEGUR Germany

SAVE THE DATE

Strategy Summit B2B Sales & Key Account Management
5. – 6. October 2021

The aim of this contribution to the debate is to combine historical insights into the meaning of money with the latest technological developments in the digital age, to compare visions with realities and to develop options for action for shaping the digital transformation of money.

The 10 most successful bank robberies in human history, in which the equivalent of US$1.62 billion was taken at sometimes massive expense, seem like the work of amateurs compared to the US$3.78 billion taken by cybercriminals in 2020 alone. In a world where tech companies are spearheading campaigns to create a new cryptocurrency and bitcoin is surpassing the US$50,000 mark because a visionary electric car maker wants to recognise the cryptocurrency as a means of payment, some fundamental questions arise: How must money be defined in a digital world to reliably fulfil the characteristics of a universally recognised store of value and medium of exchange? And what changes will result if so-called stablecoins challenge the banks’ classic deposit business and their traditional business models?

MONEY IN THE DIGITAL AGE

Reflections by Jochen Werne, Chief Development & Chief Visionary Officer Prosegur Germany (published in Prosegur Express 02/2021)

In all debates on analogue and digital means of payment, “trust” is always at the centre of the discussion: trust in the state-social order, which stands as a guarantor for stability and security of the fiat money issued. In this respect, some would almost like to marvel at how Bitcoin & Co. have managed to gain such trust in such a short time that a market capitalisation in the billions has been achieved. One of the points is certainly the technological confidence in the non-manipulability of the blockchain.
But is the blockchain really not manipulable, or is it rather a question of time before an attack will succeed? And what conclusions are central banks around the world drawing from this as they look at creating central bank digital currencies? Currencies designed to bridge the gap between the stability of analogue central bank money and the demands of our digital age.

Perhaps the solution for a trustworthy and generally accepted today and now lies in a hybrid model: in a cryptocurrency, in form of a stablecoin, that is 100 per cent backed by physical central bank money. This means that every digital token has a unique physical counterpart (euro). Due to the tradability of the tokens, the flexibility of book money is paired with the guarantee of physical central bank money. Last but not least, a regulated trustee function guarantees that the existing and securely stored central bank money is always paired with its digital twin. Thus. the best of both worlds is firmly united.

Buying Crypto-Currency with Cash: Prosegur supports the operation of Bitcoin-ATM‘s in Germany

The possibility to buy Bitcoins with cash in a regulated process at a designated ATM intelligently combines the best of both worlds. As Germany’s market leader in cash transport and processing, Prosegur guarantees secure cash handling for Europe’s largest operator of Bitcoin ATMs.

Find details about the project in this article from t3n, translated with Deepl.com. Find original HERE

Sutor Bank has announced a number of cooperations in the fintech sector in recent years. In the future, the tradition-rich bank will set up Bitcoin ATMs in Germany.
The project will be implemented as a cooperation with the Hamburg-based Sutor-Bank, the Austrian Kurant, which claims to be Europe’s largest operator of Bitcoin ATMs, as well as the startup Spot9 with the participation of IDnow, Coinfirm and Prosegur. According to the participants, this is a unique cooperation that meets all the requirements of the German banking supervisory authority Bafin – and the number of participants already suggests how high they are. Their rules include, for example, compliance with money laundering guidelines and the secure identification process of customers, which IDnow takes over. Finally, Prosegur is involved as a security service provider in the area of cash transport and processing and is supposed to guarantee secure cash handling.


Last week, the first machine was set up in Berlin – in the medium term, a nationwide network of Bitcoin machines is to be set up. “Spot9’s vision is to enable everyone, even without extensive prior knowledge, to use our Bitcoin ATMs. That is why it is very important for us to understand exactly how customers behave at the vending machine before we open the additional locations,” says Johannes Gorski, CEO of Spot9.

Vending machine solution: Easier than buying bitcoin via an exchange


The vending machine solution is intended to be a safe and easy-to-understand alternative to buying online and carries fewer risks than buying cryptocurrencies on Bitcoin exchanges, the parties involved explain. The purchase process works via cash and is similar to the operation of a conventional ATM. Thus, the offer is aimed at customers who want to buy cryptocurrencies in their normal everyday life.

After the first vending machine has been set up in Berlin, but can be used by a selected test group for the time being, the primary goal is to get to know the user behaviour of the customers better and thus ensure an optimal user experience. The opening of further locations is to take place in the course of the first quarter of 2021, whereby the Corona Factor will of course still have an impact.

It should be possible to use the Bitcoin ATMs with any digital Bitcoin wallet. The user is thus independent of an ATM-specific wallet. However, in order to use the Bitcoin ATMs, the customer must first go through the registration process with verification on the Spot9 website.

Cash, Currency, Culture – the love affair of Germans and their coined liberty

It has been a great pleasure giving the keynote at the CashCon2020 together with Mirko Siepmann, member of the board at Bankhaus August Lenz and long term business partner of Prosegur Germany.

Jochen Werne – CDO/CVO – Prosegur Germany & Mirko Siepmann – MD – Bankhaus August Lenz

We reflected with the expert auditorium, topics as Cash versus Crypto, The rise and fall of cash through the ages; Why we Germans, of all people, stick so closely to cash and if ATMs – will soon be a thing of the past or will they withstand digital disruption?

Libra and the Dilemma of Trust

A crypto currency challenges technology, regulation and humans.

Author: Jochen Werne

“Money is perhaps the most concentrated and acute form and expression of trust in the social-state order.”

Georg Simmel


In this clarity, the German philosopher and sociologist Georg Simmel, born in 1858, formulated the value of a currency in his work “Philosophy of Money”. This clear and comprehensible insight also provides a simple basis for understanding why, for example, states rely on the independence of their central banks. And just as simply the question arises, which order do you trust when it comes to crypto currency?

Almost 4,000 of these currencies now exist worldwide. After Bitcoin, Ether, XRP, Litecoin and Co., Libra now wants to establish itself as a future heavyweight in the market – and with a noble goal. Libra is to become the cashless payment option “for mankind” and make international payment easier.

Libra Coin – the currency of the future?

No crypto currency received comparable media attention, triggered only by the announcement of the project. And the emotionality and toughness with which the discussion is already being conducted shows how seriously the topic is being taken. It’s about reputation, influence, control, responsibility and only in the last instance about technology. Central banks and government bodies are sceptical about the “currency of the future” on a broad basis, even though the advancing globalization could argue for a single currency in the long run. A currency that supports a consistent free exchange of goods and services. Also under discussion is whether Libra Coin could be the means of payment for the approximately 1.7 billion people who have no access to banking services and whether the familiarity and the large target group of Facebook, combined with the announced low transaction costs, could make it possible to reach billions of people worldwide.

Challenges at all levels

Technically, not all hurdles have been cleared yet: In order to make a stable coin possible, it is necessary to find the right technology. It is precisely this stability that is supposed to distinguish Libra Coin from other crypto currencies and thus also make it suitable for skeptical end consumers. Members such as Mastercard, Paypal or Ebay should also provide the Libra Association with their names and brand promises additional confidence for the end consumer. But already today the alliance is not as stable as the founding members had hoped and the exits of Mastercard, Visa and Paypal weakens the consortium.

The Libra Association has repeatedly emphasized that it wants to comply with all regulatory aspects, but there are voices at the political and banking levels that are extremely sceptical about the project. The new payment system raises many questions in monetary and legal terms. Central banks and supervisors want to keep an eye on the influence of the potentially new currency and usually share the view that whoever acts like a bank must be treated like a bank. In other words, comprehensive requirements must be met and regulations observed – especially at the international level. This is difficult because current regulations are designed for the classical financial system, with which the Libra system has largely no points of contact. The aim is to keep total regulatory influence and not to allow any possible loopholes.

Despite its American origin, the Libra Coin is to be administered from Geneva by the Libra Association. The idea here is to be regulated by the Swiss Financial Market Supervisory Authority FINMA. Although Facebook has paid a lot of attention to the underlying technology, the legal issues still need to be clarified. Especially with regard to money laundering, consumer protection and possible misuse of the currency for illegal activities. Within the Association, there will be no special treatment for the founder Facebook, but equal voting rights for all members.

Acceptance and European values

With regard to Germany, it can be said that its citizens are within the international average as far as their affinity for digital is concerned. However, a historical-cutlurell caution can certainly be observed with regard to the topic of money, which certainly explains the well-known love of cash. A more pronounced European awareness of data protection with the General Data Protection Regulation (GDPR) makes many people, especially in Germany, sceptical about the subject. The fact that Libra was launched by Facebook is hardly a confidence booster after the Cambridge Analytica scandal. The fear of the transparent customer meets with security concerns about one’s own savings. Every German knows the quote: “Friendship ends with money” and thus new things are always put test. Culturally different in Sweden, where sometimes it’s only possible to pay by card. The same in China, where WeChat Pay and Alipay are no longer just a trend.

As always, changes are taking place step by step. It remains to be seen whether Libra Coin in its current form has future prospects. In any case, any change can only work if it is accepted and used by the end consumer despite all skepticism.

And this stands and falls – also in the digital world – with what Georg Simmel already put in the centre in terms of money in the 19th century: CONFIDENCE.

A more in-depth look at money and value can be found in the article “Coined Liberty 2.0“.

Following the keynote on “Libra in Retail?” at the Payment Summit 2019 in Hamburg, the article “Libra and the Dilemma of Trust” has been published to give participants further insides on the topic.