You’ve heard of blockchain, the revolutionary shared ledger that powers bitcoin. But blockchain offers far more for money – and much else besides – than bitcoin alone.

Here are five forms of blockchain-based cash that are either already with us, or will be shortly.

Truly anonymous cash

Much has been made of bitcoin’s anonymity, due to the fact that it has been the currency of choice on the Silk Road and other online drug markets. Bitcoin can be essentially anonymous, if it is used extremely carefully. But the reality is that the transparency of the blockchain means transactions can often be traced. That’s bad news for criminals, but also for anyone with a legitimate reason for keeping their finances to themselves. A slew of cryptocurrencies has sprung up in the last two or three years offering much more robust privacy.

Monero and Dash are currently two of the most popular. But there’s a lot of buzz around a new generation of privacy-centric currencies based on Zcash, a powerful protocol that uses strong cryptography to hide the sender, recipient and value of every transaction from view. One thing is for certain: financial privacy isn’t going out of fashion any time soon. More and more robust forms of anonymous blockchain money are likely to appear in the future.

Fiat on the blockchain

At the other end of the scale, there’s the regular state-backed fiat money we all know and tolerate. However, turbocharged by the blockchain. A number of online payment services are already exploring how blockchain technology can make them more efficient by enabling fast and low-cost cross-border transfers, and early versions of the concept already exist.

Tether is backed by funds held in an audited, insured bank account. Tokens representing $1 each are created or destroyed for every dollar that is deposited or withdrawn through their wallet. These move around the world almost frictionlessly using an extra layer built on top of the bitcoin network. Whilst Tether dollars (USDT) are still ultimately dependent on the US government to guarantee their value, what the blockchain does is free them from the restrictions of the traditional payments system – preventing blocked or reversed transactions and high transfer fees.

Digital gold

Taking this principle a step further, it’s possible to issue tokens representing a share of any commodity on the blockchain. DigixDAO did just that after a remarkably successful crowdfunded campaign that raised $5.5 million in just 12 hours. Like Tether, they have real assets stored in insured and audited vaults. Tokens that represent units of gold (one ounce each) circulate on the blockchain – this time hosted on smart contracts platform Ethereum rather than bitcoin. Because it’s a blockchain asset, though, each unit is highly divisible, down to 0.001g or around $0.04 at current prices, and can be sent anywhere in the world instantly.

These features mean that gold can once again be used as a form of everyday currency fit for the 21st century. The final twist is that senders pay a small transaction fee in gold tokens, and these are bundled up and distributed to assets held and traded by those who pledged money in the crowdfunded campaign.

Private money

The blockchain allows any company to issue its own currency. This might take the form of a traditional loyalty token that trades on secondary markets due to the open nature of distributed ledgers. It’s reasonable to assume these will circulate as forms of parallel money and some will be used outside of their original networks. But the principle can be taken a step further – as in the case of the Incent project, which is current crowdfunding and will be hosted on the Waves blockchain.

As a universal currency of loyalty, backed by an expanding ecosystem of merchants, demand for Incent will drive its value every time a customer makes a purchase. Thus it forms a new kind of asset class that can be held as an appreciating investment or spent with participating businesses. This gives customers a new set of reasons for brand loyalty outside of the paradigms of conventional reward schemes.

Central bank reserves

Finally, we can’t ignore the huge interest in distributed ledger technology by banks and governments. A number of countries including the UK, China, South Korea and Dubai are pouring money into blockchain research. They are recognizing that it offers all kinds of benefits over legacy systems. It’s highly likely that in the next ten years we will see central banks issuing currencies on their own ledgers. To get more of an idea on how the blockchain is going to affect the financial industry you can also take a look at RegTech. RegTech is paving the way for tons of new financial solutions and opportunities.

Whilst commercial banks would likely still have a role in creating and administering part of the money supply, central bank-issued digital currencies (CBDC) could be extended to everyone so that households and businesses also had access to them – moving beyond the current system, which limits holdings of central bank reserves to financial institutions.

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Guy Brandon is a UK-based writer who specializes in blockchain technologies. He is the communications director for the Waves custom blockchain tokens platform and the senior editor for cryptocurrency business hub BitScan.com.

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