Is MintChip the flavour of the future?

The Royal Canadian Mint has been taking pride in its innovation for a number of years. Some of that innovation we have seen, such as colourized circulating coins, tri-plating for a unique magnetic signature, new security features on our high-value coins, and some really unusual treatments such as selective oxidation. One area where the Mint has been working without talking much is the idea of electronic money.

Now it may sound a bit unusual to think about a corporation such as the Mint, which has a mandate to strike coins, working on using microchip technology to produce a cashless society, but it really does make a lot of sense. Electronic transactions are becoming more and more common. It isn’t even unusual now to encounter situations where cash is not an option. WestJet does not accept cash for inflight purchases, for example, nor does the snack bar at Billy Bishop Airport in Toronto.

So if electronic money is on the rise, it makes sense for a corporation in the business of making money to look at this as a potential new business area. Although I am proud to be a “coin guy,” I don’t think electronic currency is a bad thing. Currency is something that evolves. There was a time when “money” meant land or livestock, before it evolved into simple bullion; now it is nothing more than a token used to represent money that exists on paper, and while it has gone in and out of favour, it still works. I am sure that 100 years from now, carrying cash will seem as logical as walking around with gold nuggets in your pocket.

Today, electronic currency is limited mostly to debit cards, credit cards, and gift cards. The first two are certainly the most common, while the third is not always reloadable. The problem with both debit cards and credit cards, at least in the minds of those of us who don’t want Big Brother looking over our shoulder every second, is that they leave a paper trail. Even if you don’t engage in illegal financial transactions, you may not be comfortable with your bank knowing where you spend every cent of your money. For some people it feels a bit intrusive, especially since we live in a society where we have a right to expect reasonable privacy in our personal lives. It is one reason why I think digital cash will never totally replace other forms of money.

It is possible that those who want anonymity may choose to return to using bullion of a defined weight and purity. Obviously, the folks in Ottawa were paying attention. Back in 2012, the Mint took the wraps off its MintChip, a new form of digital money. While it is still in the early stages, the chip is basically a digital wallet. You will be able to spend it like cash, and reload it from a bank account, but transactions will be tracked to the chip, which can be transferred from person to person. While transactions can be tracked to a chip, there is no way of knowing who has that chip at any given moment. That means that it is as close to real cash as possible. Assuming it works.

Last year, the Mint had a competition to see if programmers could develop applications for the new chip. The proposals didn’t produce an off-the-shelf solution, but it did prove that the chip had the potential. At this time, the Mint has developed it a bit further and begun limited in-house testing. I don’t know how long it will take, but I suspect we’re going to hear more about this in the future. What really worries me is that we may have to develop a new system of grading. Can a new microchip qualify as MD-63?

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