Why Singapore’s Smart Nation plan needs a new kind of money to succeed

Disclosure: I work at Rate3 Network, a protocol that handles asset tokenization and identity management across Ethereum and Stellar blockchains. I’m also one of the editors of the SGDR blog.

As we grow accustomed to the sight of everyday Singaporean moms and pops tap their phones at their local grocery outlet for payments, one can’t help but marvel at the pace and receptiveness at which our young nation has welcomed innovation in payments with open arms. This is especially resonating, considering the strategic focus which we have detailed toward planning our e-payments infrastructure for the next five years.

Perhaps, this was always ingrained somewhere in our DNA. Lost between the sands of time was the fact that “money” at different points in Singapore’s history meant many different things – from Song dynasty coins in the 14th century, the Indian rupee and the Mexican dollar during the early 19th century, to even a whole smattering of silver dollar coins produced by far-flung nations such as Peru and Bolivia during the later half of the 1800s.

When it comes to how commerce was conducted and payments were settled, traders in early Singapore simply adapted to the circumstances as they unfurled.

How will we – as an aspiring, self-proclaimed “smart nation” –  adapt to the challenges of tomorrow in this regard?

This is where SGDR, a Singapore-dollar denominated, price-stable crypto asset (affectionately termed by the blockchain industry as stablecoin), will have an important role in helping to forge the next chapter of our journey toward being a smart nation.

But what exactly is a smart nation?

While this has been a phrase that has been bandied about regularly, you get the feeling that its definition and objectives have yet to be fully grasped by most Singaporeans – despite it having its own Wikipedia page which says: “Smart Nation is a Singaporean government initiative to harness infocomm technologies, networks, and big data to create tech-enabled solutions.”

Basically, the government wishes to build a high-tech Singapore with the latest technologies leveraging networks and data, which has long been touted to be the new “black gold.”

The initiatives in Smart Nation are meant to ensure that Singapore is well-prepared to leverage on this new macro trend, which capitalizes on data and computing power as basic building blocks. It is clear that the Singaporean government hasn’t simply just paid lip service to this lofty ambition – the meticulous details of the planned initiatives show otherwise.

The key to delivering on the value for many of these initiatives is automation, which itself can only be done if the basic building blocks that make up the task are programmable.

Why would today’s payments infrastructure be incompatible with Smart Nation?

Stablecoins like SGDR helps bring to the masses the benefits of cryptocurrency minus price volatility.

It allows for cheap, fast, and programmable transactions, which in turn will help unlock payment models that are not readily viable with today’s payments infrastructure, such as micropayments and event-driven payments.

To illustrate, fast and ultra-cheap transactions opens up the use case of paying an online video content provider directly without a middleman on a per-hour-watched micropayment basis, rather than on a subscription model.

The minimum per transaction fees, which incumbents charge, prohibits that today. For example, according to their website, Stripe charges 3.4 percent + S$0.50 (US$0.37) on each transaction. (This includes the fees which Stripe needs to pass on to banks and credit card network schemes like Visa and Mastercard. Custom bulk discounts are available.)

How can programmable money help achieve Smart Nation’s goals?

Conclusion