Two related announcements out of Canada work to reduce currency in circulation.
Last week the Canadian government announced the demise of the penny. The cost to produce a penny has surpassed its value. The coins in circulation will still be considered legal tender and hold their value, but the mint will cease production and in the fall businesses will be asked to return coins to the bank to be melted down. I expect we’ll see a good charity push to help consumers clean out their coin dish and cars. Canadian children might need bigger orange boxes for UNICEF this Halloween – though even they have gone digital (see UNICEF’s Little Orange Box goes digital this Halloween)
On the heels of the death of the penny, the Royal Canadian Mint announced Wednesday that it is preparing to launch a digital currency called MintChip. The intention is to bring cash into a digital form. Mintchip will offer a trusted, secure and easy-to-use currency for small transactions – such as a child receiving and spending their allowance.
MintChip technology, which has five patents pending, uses a secure chip to hold monetary value and a secure protocol to transfer the value from one chip to another. The currency can be stored on MicroSD cards, on USB sticks, or remotely in the cloud. It has been compared to Bitcoin as an anonymous digital exchange of value, but this is actual currency (Canadian currency at first, with ambitions to expand to other currencies) with a stable value and central control.
To raise awareness and gain momentum, they also announced a developer contest with prizes of ~$50,000 in gold from the Canadian Mint for the Best Person-to-Person App, Best Business-to-Consumer App, and Best Micropayment App. {Think of how much Mint Chip ice cream that could buy}. Prizes will be awarded for the apps that best demonstrate the benefits of the MintChip technology and have the greatest potential impact on digital payment technology.
While previous digital money attempts have not been hugely successful, it is possible the Royal Canadian Mint has learned from others mistakes. They certainly have the trust and legitimacy to launch the technology. Opening the technology to the creativity of developers may ensure they find the killer app and change the future for the nickel, dime and loonie too.
