Based on proposed common protocols, purpose money is designed to work with ledger technology and different forms of money. Photos Busakorn Pongparnit/Getty
Amazon will join banks and fintech players in participating in various pilot use cases to test the “purposeful” use of digital currency.
Specifically, the US e-commerce giant will partner with Fazz and Grab to provide escrow arrangements for online retail orders, where the payment will only be transferred to the merchant later. when the customer receives the goods.
The trial is one of many launched in Singapore, following the release of a technical white paper detailing the concept of purposeful money. The document proposes software prototypes specifying the conditions for using digital currencies, such as central bank digital currencies (CBDCs), encrypted bank depositand stablecoins on a distributed ledger, according to the Monetary Authority of Singapore (MAS), which published the white paper.
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With purported funds, the sender can specify conditions such as validity period and type of outlet when transfers are made across different systems.
“The purported funds are bearer instruments, transferable on a peer-to-peer basis without intermediaries,” the report notes. “[They] contains digital currency as a store of value and programming logic that represents its use based on programmed conditions. Once the conditions are met, the digital currency will be released and once again it becomes unlimited.”
The white paper details the four-tier technology stack used in digital asset-based networks, including the access layer and the foundation layer. For instance, the programming logic of purported money is characterized as a service, while digital currency sits on top of the asset class. Once the digital currency is bound, it moves between the service and asset layers.
Based on proposed common protocols, purpose money is designed to work with ledger technology and different forms of money. The MAS says this standardized format will allow users to access the digital currency using the e-wallet provider of their choice.
The central bank of Singapore said the white paper includes technical specifications detailing the life cycle of digital currencies, spanning from issuance to redemption, as well as a protocol for communicating with digital currencies. number that supports it. The document also includes operating and business models that outline how arrangements can be programmed so that funds are transferred only when service obligations or terms of use have been fulfilled.
Available through the MAS website, white book was developed in collaboration with the International Monetary Fund, Banca d’Italia and the Bank of Korea, along with many other financial institutions and fintech companies, including OCBC Bank, JP Morgan’s Onyx and Bank of America DBS. Amazon, Fazz and Grab also contributed to the white paper.
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Fazz and Grab will be participating in another test with three other financial institutions to test the purported use of funds in supporting cashbacks and other incentives for customers. This test use case is intended to reduce obstacles for merchants, such as manually adjusting sales revenue and the time it takes to launch new sales campaigns.
The white paper further supports the MAS Orchid Project, whereby source code and software prototypes are released for public access, as part of efforts to accelerate the development and adoption of digital currencies. Governments, financial institutions and institutions can exploit open source codes and prototypes to facilitate their own research and testing, MAS said.
The industry regulator in May last year also revealed asset tokenization pilot plan and evaluate the feasibility of autonomous transactions, using smart contracts powered by the blockchain.
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