Could Bandwidth be a Super-Currency - A Global Digital Asset for the Masses?

For as long as cryptocurrency has existed, innovators have attempted to launch decentralized replicas of fiat money and the broader centralized financial system. In the Bitcoin white paper, Satoshi Nakamoto described Bitcoin as a “peer-to-peer electronic cash system,” but extreme volatility means that store of value is now its primary utility.

Stablecoins pegged to the US dollar became popular because they allowed investors a way of entering and exiting volatile crypto positions without the inconvenience of having to keep on- and off-ramping to fiat, but they aren’t typically used for making everyday payments in the real world.

The sheer pace of growth and innovation in the crypto sector is remarkable but even at nearly $2 trillion, the global crypto market cap is still just a few percent of all the world’s money.

So far, fiat reigns supreme. However, what if the transformative power of blockchain technology doesn’t necessarily lie in creating new currencies and instruments to replace the old ones? What if we were to harness the potential of decentralized technologies to turn something we value and use every day into a currency – one that fits the criteria of being a store of value, a unit of account, and a medium of exchange?

Bandwidth – The Ideal Super-currency

Telecom companies currently sit at a unique juncture in history because a consensus is emerging… it is becoming increasingly obvious that bandwidth would make a perfect super-currency. First off, it is already deeply interwoven into our lives and has an extensive established infrastructure. It also has many other characteristics necessary for a currency.  A currency needs to be easily divisible, durable, and consistent over time.  A currency has to have a degree of scarcity as well as the ability to expand or contract as needed by the financial system. The cost to produce the currency should also be less than its value.

Fiat’s main strength is the fact that it can be controlled by central banks, which use it as a tool to manage economic conditions. In the event that spending and investment go down, central banks pump more money into the economy to encourage growth.

However, if the effects of inflation begin to outstrip growth, the bank increases interest rates, making it more expensive to access money and credit which leads to reduced spending.

Fiat is Fundamentally Flawed

As crypto proponents are fond of pointing out, the model has several inherent flaws.

Central banks aren’t democratic bodies, yet they hold a vast amount of power, and they are comprised of fallible humans who can be corrupted or just make bad decisions.

In countries where this has happened, such as Zimbabwe and Venezuela, citizens have suffered enormous hardship due to irresponsible decision-making from their central banks and leaders. Furthermore, the same citizens will testify that while fiat currency is always inflationary against other assets, in a crisis situation, the speed at which inflation can spiral out of control is stunning.

One of the ways governments create demand for fiat currencies is through policymaking and their ability to collect taxes, meaning that the value of fiat is sensitive to a government’s fiscal policies and power to enact those policies. Instruments like cryptocurrencies, which allow individuals to transact pseudonymously, point to a weakness of fiat.

So, applying stringent know-your-customer procedures to cryptocurrency exchanges isn’t just about stopping money laundering. The US Internal Revenue Service (IRS) has previously pursued crypto exchanges through the courts to enforce taxation on crypto-related revenue.

As much as critics level the argument that Bitcoin has no intrinsic value, one can argue the same about fiat currencies. The only thing holding up their value is a collective sense of trust, which derives from the vastly complex web of rules, customs, and intermediaries known as the world’s financial system.

How Bandwidth Addresses the Challenges

Bandwidth as a currency could overcome many of these challenges. There’s already a global market with a demand that’s only increasing over time – bandwidth is now a fundamental requirement to run almost every major industry including banking, healthcare and emergency response, travel, media, and much of modern commerce, to name a few.

However, unlike pretty much anything else you can think of, bandwidth and data packages are measured in a way that’s universally standard. It has intrinsic value that doesn’t fluctuate excessively and so can be a usable medium of exchange.

In fact, the concept of bandwidth as a currency is not entirely new, dating back to the era of file sharing two decades ago, well before the advent of the blockchain and cryptocurrencies.

With the right business structure and incentives in place, it’s entirely possible for data to be traded between users in exchange for other goods and services. Mobile devices are already connected in vast networks and on top of that telecommunications companies manage  extensive networks of physical retail branches that could serve as retail bank locations as needed.

First-Mover Advantage

Any large telecommunications companies who take the leap by tokenizing their bandwidth will have an enormous first-mover advantage precisely because they already have the existing infrastructure in place, including large customer bases. Effectively, they’ll be printing the money of tomorrow. Late movers who ignore the shift will risk finding themselves unable to match the pace of financial innovation and also unable to effectively compete in their traditional business model. This has been seen in the past with companies losing voice, sms, and media revenue to innovative tech companies like Skype, Whatsapp and Netflix.

The emergence of cryptocurrencies and blockchain represents a groundbreaking development in finance by any measure. It is too early to declare anyone a winner. But by applying the same technologies to bandwidth, we could have a globally recognized medium of exchange and store of value that solves the inherent shortcomings of fiat and provides a viable alternative.

It will be interesting to watch as bandwidth gains momentum in the battle of alternatives to see if it evolves into a super-currency and a global digital asset for the masses… Only time will tell!