If one defines physical bank notes – as in cash – in the digital world as the ability for conducting consecutive payments anonymously – that are not linked to any external system, no Internet, no mobile phone – on platform with deep optical design, machine readable imaging, on-chip multiplexed diffractive optical neural network and embedded authentication securities to create, manage and facilitate digitalization of interoperable and secured protocol transactions
Such device with scalable resistance to tampering; defends against counterfeiting and against double spending, while creating a trusted online-offline payment regimen, with or without the Internet. Most other solutions announced as secure seem to be vulnerable to superior tampering and counterfeit digital cash in wallets, and in most cases cannot provide finality of settlements in the offline mode and therefore are limited in number and volume of transactions.
We redefine the way we think, design and use of “digital” that facilitates “physical” bank notes and multiple services in peer-to-peer as well as multiplex financial networks
What does Monet do?
The design that we developed ground-up over several years of research is based on the following:
The digital bank notes are a freely negotiable bearer bond and acceptable medium (legally or by market demand) in the hand of its holder. It does not require any third-party verification
Neither governance (or central bank) nor third party entity authenticates any transaction made with that particular digital bank notes nor does it keep any record of users’ transaction. In other words, both anonymity of the transactors and transactions are generally maintained
The digital bank note remains as a liability on the book of the governance (or central bank) until reserved assets are returned, in part or full, to its holder – either for reissue or its end-of-life (EOL)
The physical nature of the note ensures that no double-spending is possible with the same note by its current holder. In case of digital bank note, the main issue that a central bank has to resolve is the issue of double spending without depending on third-party verification
The digital bank note is available anywhere anytime that the bearer cannot be blocked by the custodian from making a remittance or charged differentially by the custodian on the basis of the counter-party to a transaction
The digital bank note co-exist and, therefore, interoperable along-side physical cash, debit cards, credit cards, retail loyalty reward points and digital currencies of other sovereign nations, thus create an open foundation for monitoring risk and stability of the financial system.
So, why can’t this be implemented with mobile devices and apps?
A recent Bank of England feedback study published on January 25, 2024 (See here), and our response to that findings are as follows:
[BOE Findings 1] respondents support a mixed payment where a digital cash co-existed with other forms of money:
[Our Response]: a dedicated hardware device like the Monet could be resilient in ways that a smartphone is not.The Monet – with voice-video-gesture recognition and language enabled touch-screen SmartCard device – could embed deep optical codes locally, secure store of value, be network-independent and operate for long periods on a local power source. If there is an infrastructure failure, a smartphone device may prevent the interruption of digital transactions
[BOE Findings 2] broad support for tiered access to digital wallets, with the ability to provide varying levels of identity information:
[Our Response]: physical banknotes have several fiducial security markers that are opaque to visible light but transparent or translucent to infrared light. The digital banknotes in the Monet have these fiducial objects that are placed in the field of view of an imaging system that appears in the image produced, for use as a point of reference or a measure. Photogrammetric data or on-chip diffractive optical neural network and photonic matrix multiplication require smartphone devices with advances to optical signal processing and processor perform rigorous AI and machine learning tasks with high integration and low power consumption characteristics
[BOE Findings 3] physical nature of cash means that there is no digital record when it is used for payment, so it can be an anonymous means of payment and prefer cash transactions for this reason, among others:
[Our Response]: the most recognizable characteristics of digital banknotes in the Monet is that they preserve the anonymity of the sender, the transaction and receiver that is designed to include many of the attributes of cash (e.g., ease of use, portability, offline function). On the contrary, the mobile transactions are immutably recorded and, therefore does not offer positive and inclusive experience
[BOE Findings 4] respondents agreed that the Bank should provide the core infrastructure and that payment interface providers (PIPs) should not hold end-users’ funds directly
[Our Response]: the Monet is distributed through Channels (banks, non-bank financial institutions and other regulated intermediaries) provide the network-effect and settlement mechanism to the financial network. A ‘network-effect’ is the phenomenon, and typically positive, by which the value or utility a user derives from a good or service depends on the number of users of compatible products, therefore, resulting in a given user deriving more value from a product as other users join the same network
[BOE Findings 5] broad agreement that in-store, online and person-to-person payments should be a priority, but business-to-business and government-to-person payments are also considered valuable payment options including cross-border payments, as well as offline capability:
[Our Response]: multiple formats in the Monet facilitate a dedicated protocol of interoperability as well as conventional online, offline and mobile technologies, as well as custom devices and device-less solutions engineered for interoperable access while securely storing and transferring cash in digital banknotes. At this time, for simplicity, the financial system, the machine intelligence – intelligence at user-interface of a wallet-device (or Endpoint-AI), at the Channel and at the origin-destination (O-D) points – on the interoperable platform (also as Endpoint-OD) are risk-neutral
[BOE Findings 6] design choices to support financial inclusion ranged from offline availability, tiered access and in-person assistance (especially people who are blind, partially sighted, physical or cognitive challenges) to community-supported or public provision:
[Our Response]: that could affect their ability to use technology, where the Monet device could also incorporate AI/ML-based language technologies that enhance accessibility for people with disabilities. For example, unlike accessing cash, loading value to a device can be done without leaving home. In a multiplex financial network where individuals and entities are involved in different types of relationships – store of value, means of payments, credit, medium of exchange, etc. – and they interact through various channels of communication for transaction. A potential problem with centrality is the following: if a node with high centrality links many others then all those others get high centrality. In many cases, however, it means less if a node is only one among many to be linked.
Building Monet for digital banknotes with AI/ML-enabled with intelligent (voice-video-gesture) payment and interoperability has, at least, four major benefits:
First, and most directly, security in design: simplest way to counter-train and defend deep-fakes, fallback on global outages, resilient to the fragility of the single-point systems which otherwise, a recent research of MIT found that, too much (18x -20x) compute will be needed to expend each counter-train with strongest defense on finding attacks compared to and for learning to defend voice-gesture payments where digital banknote is a freely negotiable bearer bond, acceptable medium (legally or by demand) in the hand of its holder, anonymity of transactors and transactions generally maintained, ability to set limit, interoperable and does not require third-party verification
Second, reduce cost of cost logistics: Cash logistics service refers to a physical security design, printing, movement as well as handling of cash from one location to another. The cash logistics also includes cash-in-transit, cash centers, ATM replenishment, cash to large retail services, etc. The global cash logistics market was valued at $16.83 billion in 2020, and is projected to reach $33.28 billion by 2030
Third, high-frequency-low-value transactions: In Europe, for example, 72% of the transactions at the POS (representing 47% in value terms) and 83% of person-to-person (P2P) transactions (57% in value) are made in cash. The significant difference between number of transactions and value is due to the more frequent use of cash for low-value transactions
Finally, resiliency of the financial system: diffusion of liquidity, for example, may cause risks in centrality and quantity of money transfer and fees associated with it. Spreads are rarely very large for the major cryptocurrencies, and with tight margins a transferal or transaction fee could wipe out any potential profit. The financial institution networks which are established for each layer (liquidity-credit-exchange) offer; (a) multi-bank reporting enables customers to check their multiple accounts simultaneously and (b) real-time transfers from customers for mass payments or direct debits to multiple banks at one time
