The rise of smartphones, social media, cryptocurrencies and digital assets has changed our lives profoundly over the last decade. In tandem, the relationship between governments, citizens and businesses has evolved, creating new sets of challenges and imbalances, but also opportunities.
This book focuses on the evolving digitisation of the financial industry and the impact this has on users. Particular attention is given to the emergence of new technologies such as blockchain, smart contracts and AI. The increasingly interconnected, data-driven digital economy, which includes many aspects of an individual’s and organisation’s life, has become a challenge for regulators, too. Matters are complex but also increasingly centralised, with a growing trend of distrust. Should we push for more decentralisation?
To shed light on this question we begin by providing an overview of key concepts and develop a high-level qualitative framework and approach to what we call ‘Redecentralisation'.Delving into those technology areas that form part of the tectonic plate shift of our financial system we explore the pillars of money and payments that are at a turning point with the replacement of key infrastructural components necessary for the future of what we call the Digital Financial Ecosystem. Digital identity and data privacy also form part of this broader puzzle.
We then look to the future to consider some of the latest trends and ‘what if’ scenarios. Where do we see Redecentralisation at play in the Digital Financial Ecosystem? What is the role of technology in this, e.g. Web3, the Metaverse and Decentralised Finance? Can Redecentralisation support an alignment of values across people, governments and businesses? What is the role of technology in this? And finally, do we need a new digital social contract to underpin and protect our digital lives?
Author(s): Ruth Wandhöfer, Hazem Danny Nakib
Publisher: Palgrave Macmillan
Year: 2023
Language: English
Pages: 230
City: Cham
Acknowledgements
Introduction
Contents
About the Authors
List of Figures
List of Tables
1 Three Definitions
1.1 Centralisation Versus Decentralisation and Everything In-Between
Understanding Centralisation
This Other Thing: Distributed Systems
And Then: What is Decentralisation?
Notes
2 Redecentralisation
2.1 From a Decentralised Past to a Centralised Present
2.2 Demystifying Decentralisation
2.3 The Three Spheres
2.4 A Framework for Redecentralisation
Decentralisation’s Seven Dimensions
2.5 Why Redecentralisation?
2.6 Nuovo Era: A Perspective on Technology and Finance
Notes
3 The Universe of Technology
3.1 Waves of Technology Innovation
Digitisation Versus Digitalisation
3.2 This Thing Called Internet
A Few Words on the Internet
3.3 The Advent of the Cloud
How Clouds Have Formed
Economics of the Cloud
3.4 Making Sense of Blockchain and Distributed Ledger Technologies
An Excursion into Blockchain
3.5 Demystifying AI
Navigating the AI Landscape
A Few Words on Machine Learning
AI Applications in Practice
What Are the Challenges of AI?
3.6 Concluding Remarks
Notes
4 Money and Payments: From Beads to Bits
4.1 The Mystery of Money
A Look into the Past: The Waves of Money
4.2 Welcome to the World of Payments
Recent Payments History
4.3 Typologies of Payment Systems
Centralised Payment Systems
Decentralised and Distributed Payment Systems
Centralised and Distributed Payment Systems
4.4 The Question of Finality in Distributed Payment Systems
4.5 Regulating Payments
E-Money Regulation: Europe as a Trend Setter
The Payment Services Directive: Opening the Floodgates to FinTechs
MiCA: Regulating the Digital Asset World
4.6 Concluding Remarks
Notes
5 Borderless, Digital Future of Money
5.1 The World of Cross-Border Payments
Big Tickets in Wholesale Cross-Border Payments
5.2 Retail Cross-Border Payments
Stablecoins… or Rather ‘The Emperor’s New Clothes’
5.3 The Next Step in Money and Payments: CBDCs
What to Consider When Designing a CBDC?
Country Approaches to CBDC
Some Select Retail CBDC Experiments
A Selection of Wholesale Domestic and Cross-Border CBDC Experiments
5.4 Concluding Remarks
Notes
6 Identity in the Digital Age
6.1 Identity Going Digital
NIST’s Definition of a Digital Identity System
6.2 Types of Digital Identity Systems
Centralised Digital Identity Systems
The Arrival of Self-Sovereign Identity
6.3 The Role of Trust in Digital Identity
6.4 Digital Identity and the World of Finance
6.5 Concluding Remarks
Notes
7 The Regulatory Dimension of Data Protection, Privacy and AI
7.1 Regulatory Action to Protect Our Data
How to Stay Private? The Emergence of Privacy Regulations
7.2 The International Dimension of Data Protection Laws
7.3 From Data Protection to AI Regulation
Approaches to AI Regulation: A Global Perspective
AI Regulation in Europe
7.4 Concluding Remarks
Notes
8 Digital Horizons
8.1 The Future is Web3
8.2 The Metaverse… or Verses
How Did the Metaverse Come About? and What Are the Use Cases?
Technology of the Metaverse and What is Missing
Energy Consumption in the Metaverse
Regulation in the Metaverse
Centralisation vs Decentralisation in the Metaverse
8.3 Decentralised Cloud
8.4 Security Considerations in the Light of Quantum Computing
8.5 Decentralised Finance
A Quick Excursion into NFTs
8.6 From Data to Smart Data: A Journey Beyond Open Banking
8.7 A New Social Contract for Our Digital World
Notes
Conclusion
Index
