The history of credit cards versus Bitcoins and other digital currencies: chronicle of an announced “delay”?

At the beginning of the last century the first credit cards were born, which could only be used in the premises or stores that issued them. It was not until the late 1940s that the first credit card was born (Diner’s Club, which was actually invented at a lunch where one of the diners kept his wallet) and at the beginning of the 1950s banks joined in this trend. There is no doubt that this payment mechanism was disruptive for its time, but it was not until the late 1970s that the first credit cards began to operate in Chile.

Imagine for a second a store clerk in 1950, who, when requesting payment from a customer, presented him with a plastic, with the promise that this “plastic” was used to pay and that he would not be defrauded. Perhaps we can imagine the seller’s conversation with his customer, where the former clearly does not trust this innovative system (as Jerry Maguire said, “show me the money”) And the client tries to explain that this is the future, and that if he does not join, he will be left out of the market.

Today we cannot imagine a world without credit or debit cards. We can pay for goods and services anywhere in the world from our phone, with good security standards and even making a profit every time we use them.

In terms of market disruption, the history and evolution of digital currencies (Bitcoin, Ethereum, Ripple, among others), either as a means of payment or as an investment, has not been very different from that of credit cards. The only big difference is speed. The first big step of digital currencies was taken by Satoshi Nakamoto (he, she or they, nobody knows who he is) in 2009 and today there are thousands of digital currencies, with an approximate value of 1.6 trillion dollars, which are traded on exchanges securities (such as ETFs), there are ATMs from where I can make money and I can even pay for the children’s school with this type of currency.

In short: it is a phenomenon that I believe exceeded the expectations of even the most optimistic. Recall that not long ago, senior executives of investment banks in the USA launched curses against Bitcoin, and today Bank of America, Citigroup and Wells Fargo are giving their clients access to investments in that and other digital currencies.

There is no doubt that digital currencies have changed, or will change very soon the paradigm of payment methods, investment instruments (for example, “tokenization” of buildings or commodities), as well as the role of central banks and their monetary policies (how do I measure the money supply?). This phenomenon presents us with great opportunities, challenges and risks that if we are not prepared as a country, we will be late for the dance. As Stephen Hawking said: intelligence is the ability to adapt to change.

The use of digital currencies, and especially the use of the technology that this entails (blockchain), has been in Chile for a long time. We may still be a little blind to the potential that these technologies present to us for the development of the country, but at least we know that it exists. However, there is no law, norm, circular or instruction (except for the SII that says that taxes must be paid for eventual profits), which takes charge of this phenomenon.

There are good intentions from some sectors, such as the Fintech bill and the idea of ​​the Central Bank to launch its own digital currency, but apparently we are going to have to wait seated until we can see a green light. The funny thing is that it is the market itself that is pressuring the authorities to regulate them, when it is normal for it to be the other way around.

What can we do while Congress “recognizes the existence” of digital currencies and their eventual uses? A lot of. For digital currencies to work, the ecosystem that surrounds them must be aligned, which is made up of: Central Bank, CMF, SII, UAF, banks, stockbrokers and exchanges of crypto currencies, among others.

How to align the ecosystem? We can let things happen or make things happen. In this case, we lean towards the latter option. Given the importance and macroeconomic impact of the matter, I believe that the Ministry of Finance is setting an example in the market of how to make things happen, organizing the different market players in search of a viable systemic solution.

Credit cards took almost 40 years to enter Chile, and several more years (decades) for their use to become widespread. Are we going to wait the same to get on the bandwagon of digital currencies? Let’s remember what the Roman politician and senator Cicero said a few years before Christ: “It is human to err and foolish to remain in error.” We have a chance, let’s not remain in error.

*Felipe Divine partner Onorato / Delaveau

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