FUTURE
OF
MONEY
TABLE OF CONTENTS
Foreword
Executive Summary
Chapter 1
Introduction
Chapter 2
History of Money
Chapter 3
Payments gone global
Chapter 4
DLT & Blockchain
Chapter 5
Bitcoin - The OG
Chapter 6
Evolution of Stablecoins
Chapter 7
Rise of Altcoins
Chapter 8
Regulation - The necessary evil
Chapter 9
State’s comeback
Chapter 10
Commercial banks enter the ring
Chapter 11
Our take
Annexure
FOREWORD
In 2018, during an interview at Money2020 USA, Sopnendu Mohanty, the Chief Fintech
Officer of Monetary Authority of Singapore, responded with one-word replies:
Moderator: Cryptocurrencies?
Sopnendu: Overrated
Moderator: Blockchain?
Sopnendu: Underrated
My personal version of this conversation is that Cryptocurrency is the classic tail wagging the
dog moment for Blockchain. Over the last few years, the world has witnessed an
unprecedented wave of Crypto assets and the key question in my head was to try and
understand whether crypto is money in the first place and if so, what are the elements that
allow it to be qualified to be called a Currency. The endeavor of this report is to take our
ecosystem on a journey through the realm of blockchain, bitcoin, and digital assets, seeking
to uncover the future of money. We assert that while cryptocurrency in general and bitcoin
specific may not necessarily represent the future of money, it can be viewed as a digital asset
or a store of value. That doesn't take away anything from the fact that Bitcoin is the best
Crypto Asset that has existed so far and will continue to be so for sometime.
The true driver lies within the potential of blockchain and its embedded technologies,
propelling transformative changes in the financial services ecosystem and beyond. Already
revolutionising sectors such as finance, supply chain, and healthcare, blockchain and
distributed ledger technology (DLT) hold significant promise.
The surge in popularity of digital assets has prompted regulators and central authorities
worldwide to embrace this groundbreaking technology, integrating it into their financial
and monetary policies. This integration goes beyond a mere adoption of blockchain; it marks
a profound paradigm shift in the functioning of a nation's monetary system.
All through the journey over the last 12 years, Blume has limited its investments in the crypto
space to two founder-driven bets. I have spent a fair bit of time putting out our thoughts
during one on one conversations with founders and LPs of ours on what factors have been
driving our thought process. Earlier this year, Subhendu volunteered to work together and
we spared a lot on our respective sides and finally decided to take a plunge on putting out
this thesis together. At one point in time, we had views that were divergent enough that we
were going to put out the report in a pros and cons format but over a period of doing more
work, we finally converged our thoughts to bring out this report. Congratulations to
Subhendu & the Fintech Team @ Blume, its Investment Partners and extended team for all
the work and learnings and sharing it out in public domain.
Our two-part thesis delves into the history of money, its evolutionary journey, and the
defining impact of blockchain on the future of money. While part one focuses on selected
aspects, the second part will conduct a comprehensive exploration, presenting a deep dive
into the subject matter.
Ashish Fafadia
Partner Blume
Blockchain & Future of Payments by Subhendu & Ashish
How to Navigate Through the Thesis "Blockchain & Future of Money"
Our comprehensive thesis, titled "Blockchain & Future of Money," is a two-part
exploration that delves deeply into the realms of money, blockchain technology,
cryptocurrencies, and the emerging CBDC ecosystem. To ensure the thorough coverage
of these intricate topics and to establish a solid foundation for our argument, we've
meticulously structured our report.
Recognising the diverse stakeholders within the fintech and blockchain landscape, we
acknowledge that each stands to gain valuable insights from our report. Embracing the
concept that one size doesn't fit all, we've designed a framework for consuming the
content in a way that optimizes both time and impact.
The first part of our thesis provides a concise summary of innovative startup ideas rooted
in the CBDC & blockchain ecosystem. For those who desire a deeper dive into these
concepts, we expand upon them extensively in the second part.
Based on your familiarity with the subject matter, we've tailored specific
recommendations:
1. Fintech Natives: We recommend delving into the chapters ranging from 4 to 11 in Part
1. Upon completing these chapters, proceed to explore Part 2 in its entirety. This targeted
approach will maximize your understanding of the fintech aspects within the CBDC and
blockchain context.
2. Blockchain/Web3 Natives: If you are well-versed in blockchain or Web3 technologies,
we suggest beginning with Chapters 1 to 3 and then proceeding to Chapters 8 to 11 in
Part 1. Once done, immerse yourself in the comprehensive insights offered by Part 2. This
tailored path ensures that you grasp the core foundations of blockchain while also
covering the fintech angle.
3. Fintech & Blockchain Novices: For those who are relatively new to both fintech and
blockchain, we recommend embarking on a complete journey. Engage with all the
chapters within the thesis, as this holistic approach will furnish you with a solid grasp of
the multifaceted landscape we explore.
4. Founders: If you're a founder seeking a well-rounded understanding, we encourage
you to read all chapters of both Part 1 and Part 2. This comprehensive approach will equip
you with insights that span from startup ideas to technology nuances, fostering a robust
foundation for your entrepreneurial endeavours.
If a particular idea sparks your interest, feel free to delve further into Part 2 for an indepth exploration.
Happy reading!
Future of Money by Subhendu & Ashish
EXECUTIVE SUMMARY
In this two-part thesis on Blockchain and the Future of Money, we embark on a
comprehensive exploration of these topics, presenting a compelling case supported by
data and analysis. Our research delves into the role of cryptocurrencies like Bitcoin, which
is considered a store of value rather than the future of money itself. Additionally, we
examine the efficacy of stablecoins in facilitating peer-to-peer (P2P) and smaller
transactions, identifying their relevance within the financial ecosystem.
Furthermore, we envision the future of money and payments, with Central Bank Digital
Currencies (CBDCs) emerging as a pivotal element that is poised to replace physical cash
in the coming decade. Backed by central banks and driven by blockchain technology,
CBDCs promise enhanced efficiency, security, and financial inclusion, transforming
domestic payment systems worldwide.
As a key element in this transformative landscape, we delve into the potential of
Distributed Ledger Technology (DLT) and blockchain. Our analysis demonstrates that
blockchain technology, serving as the new digital equivalent of paper, holds the promise
of revolutionizing various aspects of the monetary ecosystem. We explore how
blockchain's establishing commercial banks as pioneers in the evolving financial
landscape.
Throughout our research, we back our arguments with data and analysis, painting a
comprehensive picture of the decentralized nature that provides transparency, security,
and immutability, making it a game-changer for financial transactions and recordkeeping.
Moreover, our thesis highlights the crucial role of commercial banks in driving crossborder payments by leveraging deposit tokens, a cutting-edge solution introduced by
major players like JPMorgan Chase (JPMC). These digital representations of fiat currency,
powered by blockchain, enable faster and more efficient cross-border transactions, the
transformative potential of blockchain and DLT in the future of money. By envisioning a
financial ecosystem driven by CBDCs and deposit tokens, we underscore the significance
of these technologies in fostering a more inclusive and efficient monetary system
globally.
As we explore the dynamic interplay between blockchain and the future of money, our
thesis seeks to offer valuable insights into the trajectory of financial services and
payment methods. We anticipate that our findings will inspire governments, businesses,
and individuals to embrace blockchain technology as the catalyst for a more advanced
and equitable monetary landscape. With meticulous research and thoughtful analysis,
we aim to contribute to the ongoing dialogue on the future of money and its inevitable
association with blockchain technology.
Future of Money by Subhendu & Ashish
CHAPTER 1
Introduction
Money has played a critical role in facilitating value exchange among humans for
centuries. As societies evolved and people settled into more permanent lifestyles, the
need for a medium of exchange became apparent. This report aims to explore how
digital innovations like blockchain and DLT (Distributed Ledger Technology)
(wherever abbreviations are being used, give a full form the first time and in the
annexure) will shape its future. The document covers a brief history of money, the
emergence of cryptocurrencies such as Bitcoin, stablecoins, and altcoins, as well as
the development and impact of CBDCs. We will examine the chronological evolution
of these digital assets and their potential impact on the payment industry, providing
insights into their market size, features, revenue streams, and competitive landscape.
We aim to also elaborate on a few select areas that are likely to see significant impact
due to the above developments and share our thoughts on why we would like to
invest in opportunity sets around these verticals.
Future of Money by Subhendu & Ashish
CHAPTER 2
History of Money
Money has been a fundamental aspect of human civilization for thousands of years. It
serves as a means of communicating value, allowing us to express to each other how
much we value a particular good or service, and to define the utility of an act or
gesture. While bartering was the earliest form of exchange, it was often an inefficient
process that relied on finding someone who wanted what you had to offer, and who
had something that you wanted in return. This led to the invention of money, which
allowed for more efficient exchanges.
Money is so deeply ingrained in our nature as primates that even chimpanzees can
be taught to exchange "money" (such as stones) for food, illustrating the universality
of the concept. Throughout history money has taken various forms and factors as
depicted below in exhibit.
EVOLUTION OF MONEY
DIGITAL
CURRENCY
ELECTRONIC
MONEY
CARDS
PAPER
MONEY
METAL
COINS
GOLD
BARTER
Future of Money by Subhendu & Ashish
The latest development in the evolution of money is the rise of cryptocurrencies,
which use complex algorithms and decentralized networks to facilitate transactions
without the need for traditional financial institutions. While the future of
cryptocurrency is uncertain, it represents a significant shift in the way we think about
money and its role in our lives.
Overall, money has played a vital role in human civilization, allowing for the efficient
exchange of goods and services and facilitating economic growth. As technology
continues to evolve, it is likely that money will continue to evolve with it, taking on
new forms and functions as we find new ways to communicate value and exchange
goods and services
Money has long been seen as a sacred source of liquidity, serving as the lifeblood of
economies around the world. While the concept of money is often associated with
the private sector and capitalist markets, the reality is that it has always existed
within the cocoons of the state, tied up in a complex web of regulations and
guarantees.
As the world of money continues to evolve, it is important to have a set of
characteristics that can be used as a yardstick for assessing various forms of money
and their impact on real-world financial transactions.
Future of Money by Subhendu & Ashish
Here are some of the features of money depicted in the table above that help us
assess various forms of money that we are going to discuss in the subsequent
chapters. The features are described in Annexure 1 in detail.
This yardstick will enable us to evaluate the new disruptions that have happened in
the forms of money. As humans settled extensively and initiated trade between
different settlements or civilizations, money exchange or payments played a crucial
role in the real economy. Money laid the foundation of modern trade and design of
labor. The exhibit below depicts various use-cases of money.
USE CASES OF MONEY
Future of Money by Subhendu & Ashish
CHAPTER 3
Payments gone Global
Global payments have played a crucial role in shaping international trade and
commerce, serving as the foundation for cross-border transactions. Despite the
disruptions caused by external factors such as COVID-19, the cross-border payment
ecosystem has demonstrated resilience and is steadily expanding. This sector is
poised for substantial growth, with an average compound annual growth rate (CAGR)
of 8.2% worldwide, led by the Asia-Pacific region. While there was a slight 5% dip in
global payments revenue between 2019 and 2020, it has since rebounded. According
to a study conducted by Mckinsey Global [1], the following 3-4 years will witness a
remarkable surge in this industry as depicted in the exhibit below.
GLOBAL PAYMENTS REVENUES INCREASED 11 PERCENT GLOBALLY IN 2021.
The global cross border landscape is witnessing innovations that are putting
immense pressure on the incumbents. According to a study by Capgemini by year
2026 new payment methods will take over which encompasses instant payments, emoney, mobile and digital wallets, DLT, QR code and account to account payments
where the traditional methods are cards, etc.
Future of Money by Subhendu & Ashish
The cross-border payment revenues are concentrated in a business to business use
case with more business globally adopting digital payment solutions. The exhibit
below by Mckinsey Global shows how the landscape is across the 4 payment
scenarios and their respective market sizes.
CROSS-BORDER REVENUES REMAIN CONCENTRATED IN BUSINESS-TO-BUSINESS
The current payment landscape shown below is quite exhaustive and has players
who have evolved to capture a variety of use-cases as the market is quite
competitive. This shows that the driving factor for innovation in the global payments
market will be in the hands of customers, be it business or individuals: they are going
to shape the direction of future services.
Future of Money by Subhendu & Ashish
MANY FIRMS HAVE EMERGED TO ADDRESS A VARIETY OF USE CASES IN CROSSBORDER PAYMENTS
However, the exhaustive list of players depicted in the exhibit above by Mckinsey
Global be it banks or tech firms/startups haven’t made cross-border payments easier,
cheaper or faster.
Another data from Oliver & Wyman in the figure below shows the high cost and
slowness of global transactions and the size of global fees.
Future of Money by Subhendu & Ashish
CROSS-BORDER TRANSACTIONS: VOLUME, COST AND TIME
The settlement time though depends on the kind of transaction. Credit card
transactions have been instant, conventional bank transfer being the slowest and
other kinds of payments remaining in between. The infographic below depicts the
speed of cross border transactions and where the scope of innovation or room to
disrupt lies.
Future of Money by Subhendu & Ashish
The overall challenges in cross-border payments are 7 fold and contribute to the
leakages and impacts businesses globally, especially small & medium enterprises.
1. Fragmented data formats*
2. Compliance checks
3. Limited operating hours
4. Legacy technology: Banks’ usage of monolithic technologies, in-house servers
and absence of API ecosystem
5. Higher Fees
6. Legal issues
7. Long duration for settlements – perverse incentive for banks to hold it in their
balances and use the monies
*Refer to Annexure 2 for in-depth understanding of truncated formats
In the next section we would look into how the multi-intermediary process adds to
the final cost of doing business in a global corridor. There is a high cost in processing
a cross border transaction be it remittance or B2B payment and the process remains
highly inefficient. A market analysis by Corpay [2] shows that the global premium
charged to send payment across borders varies between 4% to a full quarter i.e. 25%
with a global average of 3.39 %.
The figure below shows the major buckets of cost that drive the premium and the
second figure breaks it down into the contribution.
Future of Money by Subhendu & Ashish
The below figure shows the split of fees ranging from 4% - 25 % between various
players.
Payments
Claims & treasury
Operations
operations
Nostro - Vostro
FX Costs
Compliance
Overhead
Network
Management
Liquidity
These inefficiencies drive the cost of doing business high and squeezing the margins,
specially for SMBs. Moreover banks have underserved SMBs is a proven fact and more
so the start ups, they want to move to challenger banks according to a survey by
Capgemini. The SMBs would prefer players who can bundle core banking services
and non-core banking services.
Governments, financial regulators and Payment players (including Banks) need
innovation to gather mindshare of the SMB ecosystem and look towards new
technologies like DLT and blockchain technologies. In absence of a more
sophisticated system that enables payments faster at lower costs in a trustworthy
manner, financial inclusion and more balanced wealth distribution will remain as
theoretical papers at symposiums and universities.
And once in a while cryptos will keep raising its head with all its limitations which is
not a healthy thing in today’s uncertain and ever changing world where the biggest
casualties of crash in crypto values may not be common (wo)man but they will surely
be the highest impacted.
Future of Money by Subhendu & Ashish
The tables below by Corpay show that small and micro transactions do pay high fees.
AGGREGATE USD TO USD
AGGREGATE USD TO FOREIGN
Future of Money by Subhendu & Ashish
The figure above shows the cost per international transaction. The number of
intermediaries actually drive the cost and has ample room for innovation.
A report by Mercator Advisory Group [3] highlights that in 2020, 43% of SMBs
indicated they conducted international business as compared with 34% in 2019.
In the next chapter we will explore what DLT, blockchain and demystify their real
value.
Future of Money by Subhendu & Ashish
CHAPTER 4
DLT & Blockchain
Blockchain has become quite a buzzword these days. With the advent of NFTs, BAYC
& monkey jpegs blockchain technology has got its share of mainstream media. But
blockchain or distributed ledger technology is far beyond the hype and has power to
disrupt various aspects of our business and lives. The first use-case of blockchain was
payments technology, a cry to revolt against the age-old financial organizations.
Over the last decade blockchain has evolved from payments and impacting
industries like supply chain, healthcare, creator economy and retail.
A primer on blockchain technology
We would simplify blockchain for the reader and take you through the nuts and bolts
of this innovative technology. The idea of this chapter is to cut through the hype and
discuss how blockchain has been impacting payments and the finance industry and
what lies ahead.
31st October, 2008 is a historical day for all crypto and blockchain enthusiasts as
Satoshi Nakamoto, who is often touted as the Father of Bitcoin published the white
paper [4] on the cryptography mailing list at metzdowd.com describing a digital
cryptocurrency, titled "Bitcoin: A Peer-to-Peer Electronic Cash System”.
The white paper described a cryptocurrency called Bitcoin which took some time to
gain popularity. Though Bitcoin is revolutionary, what had more immense potential
was the underlying technology i.e. blockchain.
Blockchain in simple terms is a distributed ledger or a database that requires a
consensus between all the stakeholders to initiate a transaction/change in the
ledger. Hence the name Distributed Ledger Technology or DLT.
Future of Money by Subhendu & Ashish
These transactions/changes/records are called blocks. These blocks are linked using
cryptography. Each block contains a cryptographic hash of the previous block, a
timestamp, and transaction data.
Blockchains have 6 major features which make them one of the most accurate
databases ever created and that's why blockchain is a very secure and trustworthy
way to keep track of important things, like money or information. The features are
shown below in the exhibit
FEATURES OF BLOCKCHAIN
Future of Money by Subhendu & Ashish
Blockchains are built on 3 fundamental technological components which make
them quite unique and impart them with the potential to be a game changer in
many industries and application.
A Primer on Cryptocurrency
An understanding of cryptocurrency is necessary to comprehend the real power of
blockchain and DLT. Cryptocurrencies are digital assets whose ownership is recorded
on a blockchain and can be moved across individuals.
As mentioned earlier the block or an entry in a ledger is used to record the
transaction and using the consensus mechanism the finality of settlement happens
through the community of nodes.
Hence cryptocurrencies are also completely decentralized, not controlled by any
central or government authority. Each transaction takes immense computing power,
hence the nodes are also awarded a portion of the transaction or gas fees in order for
the network to operate independently of a controlling authority.
Future of Money by Subhendu & Ashish
Why do blockchains matter in payments?
Before we delve into the intricacies of how blockchain is going to disrupt the
payments industry let’s try to understand the ABCs of traditional payments workflow.
The workflow below shows the process in a pictorial form
“Blockchain kills intermediaries”
It has the potential to disrupt the payments industry by eliminating the middlemen
like banks, brokers and other intermediaries. This is because blockchain allows for
direct, peer-to-peer transactions without the need for a central authority or
intermediary to validate or process the transaction.
Future of Money by Subhendu & Ashish
The image below illustrates how a typical blockchain payment system works and a
simple example of a user A trying to send money to user B. The money mentioned
here is not the sovereign money but the network currency or the cryptocurrency
native to that blockchain.
Though these transactions come with a plethora of benefits listed in the value-wheel
below, these technologies have become a double edged sword:1. Fewer intermediaries
2. Greater Safety
3. High Speed
4. Low cost
5. Anonymity
Future of Money by Subhendu & Ashish
The table below shows the speed to typical blockchain transactions across popular
networks:
Blockchain does solve some of the problems of the traditional payments system and
naturally looks like a panacea for all problems corresponding to cross-border
payments. However the technology hasn’t picked up the way it was projected a
decade ago. New research indicates that the global payments transaction volume is
small relative to global crypto payment volume. The figure below shows that
remittance is the most matured use-case.
Future of Money by Subhendu & Ashish
The exhibit shows that on-chain remittances has been the most matured use-cases
owing to the stablecoin development and infrastructure innovation lowering gas fees
and increasing TPS across various blockchains. These remittances have been typically
p2p using stablecoins. However, owing to regulatory uncertainty enterprises and
businesses have not significantly adopted crypto transactions.
In the next chapters we will discuss how crypto currencies evolved over the last 15
years since the inception and what are the drawbacks of this futuristic technology
and the road ahead.
Future of Money by Subhendu & Ashish
CHAPTER 5
Bitcoin - The OG
Bitcoin came into existence with a seminal paper on 31st October 2008 by Satoshi
Nakamoto. The exhibit below depicts the important milestones in the history of
Bitcoin.
OCT
31
JAN
3
MAY
22
Satoshi has been speculated as a person or group of people who prophesied how
digital currencies and payments would look like and why bitcoin is the answer to all
of the issues with the current financial crisis.
Post that bitcoin’s growth has been a roller coaster ride with the highest value being
close to USD 65K. Post the peak bitcoin has been very unpredictable and nontrustworthy, the exhibit below by CoinmarketCap shows the price has been nothing
but a roller coaster ride.
Future of Money by Subhendu & Ashish
The Bitcoin community or popularly known as bitcoin maximalist have positioned it
as the the only cryptocurrency that truly matters and that all other cryptocurrencies
and blockchain projects are inferior and unnecessary.
However, bitcoin has failed to have the true properties of money as discussed in in
chapter 2. The very volatile nature of bitcoin doesn’t make it suitable for a means of
payment. The image below portrays the Bitcoin Volatility Index* and clearly shows
how bitcoin is volatile. The addition of high gas fees, congestion and block size
doesn’t make it a lucrative method of cross-border payments.
*The Bitcoin Volatility Index (BVOL) is a measurement of the volatility of the price of Bitcoin
over time. The BVOL is calculated by taking the standard deviation of Bitcoin's daily price
changes over the previous 30-day period and multiplying it by the square root of 365 to
estimate the annualised volatility.
Future of Money by Subhendu & Ashish
The example below show that Bitcoin hasn’t been fully embraced as a payments
mechanism because of volatility and regulatory concerns. These examples solidify the
case that Bitcoin will morph into a store of value and evolve as digital gold.
A few months ago, El Salvador adopted Bitcoin, but ever since, a whopping 86
percent of merchants in the Central American nation have not processed a
single bitcoin transaction. This was revealed in the First Business Survey 2022
report, carried out by the Chamber of Commerce and Industry of El Salvador
(Camarasal) between January 15 and February 9, 2022. - the data shows bitcoin’s
true utility is store of value.
Future of Money by Subhendu & Ashish
Despite its growing popularity, Bitcoin faced a number of challenges in its early years,
including concerns about its use in illegal activities and the security of its underlying
technology which are not completely unfounded areas of concerns.
Today, Bitcoin is widely recognized as the first and most popular cryptocurrency, and
it has paved the way for the development of many other digital currencies and
blockchain-based applications. As of Feb 2022 based on a Coinmarket cap report
there were 17000+ altcoins in circulation.
Bitcoin educated the regulators about the power of blockchain and DLT, and
regulators like central banks across the world have been hyperactive in embracing
this disrupting technology to drive innovation in monetary and fiscal policies. Despite
its ups and downs, Bitcoin remains an important and influential part of the
cryptocurrency and blockchain ecosystem.
Future of Money by Subhendu & Ashish
CHAPTER 6
Evolution of stablecoins
As discussed in the last chapter the high volatility index of Bitcoin created room for
innovation and startups cropped up building the next generation of cryptocurrencies
known as Stablecoins.
As the name suggests Stablecoins are cryptocurrencies which are stable in nature
owing to the pegging of the crypto assets to an asset like dollar, gold in the real
world. Few platforms have achieved pegging through algorithms. They use these
algorithms to manage the supply of the cryptocurrency and adjust the price based
on supply and demand
This pegging manages the volatility and price fluctuations and makes it lucrative for
financial use cases like remittance, cross-border payments and more importantly,
participation in Defi protocols. The first stablecoin, Tether (USDT), was launched in
2014, and was designed to be pegged to the value of the US dollar.
Post that the stablecoin ecosystem has seen quite an innovation in the
collateralization, algorithmic stable and hybrid models.
Stablecoins have gained popularity as digital money and are being used for daily
transactions like grocery shopping, online commerce, buying of digital assets without
the risk of significant value fluctuations.
Stablecoins over the years have picked up traction and been very popular. The TVL or
total value locked in the stablecoin ecosystem is close to 130 billion USD with USDT
being the market leader.
Future of Money by Subhendu & Ashish
Source: Defilama
The data is as of May 5, 2023. The market capitalization was much higher at 165 billion
USD 12 months back and dropped down due to few historical events These historical
moments in the crypto market would highlight the pitfalls of crypto currencies and
stablecoins.
Luna crash happened during May 2022 when the algorithm failed to stabilize the
ecosystems stablecoin UST. This led to a wipe out of close to USD 20 Billion from the
stablecoin total market capitalization.
The SVB crisis, considered the most significant financial crisis after 2008, had a
profound impact on the crypto markets, particularly affecting Circle's popular
stablecoin USDC. Unfortunately, USDC had invested USD 3.3 Billion in the declining
SVB bank, leading to the depegging of the stablecoin.
As a consequence, within 24 hours, billions were withdrawn from Circle's USDC
stablecoin, resulting in a significant drop in market cap from $43.5 billion to $37
billion. The stablecoin's price also plummeted below $0.87. The stability of USDC,
reliant on a 1:1 peg to the U.S. dollar, hinges on investor trust and demands equivalent
backing with U.S. dollar assets.USDC has subsequently regained its peg and Circle
has said it would transfer the reserves to BNY Mellon.
Future of Money by Subhendu & Ashish
These major events along with crises like Three Arrows Capital, FTX have led to doubt
in the mind of crypto enthusiasts and have been a red flag for regulators given the
impact on retail investors and larger implications of laundering, KYC and other
perceived issues around Cryptocurrencies. The regulatory crackdown on stablecoins
by governments around the world. In the wake of the UST collapse, regulators have
become more concerned about the risks posed by stablecoins. This has led to
increased scrutiny of stablecoin issuers and calls for stricter regulation and the
broader crypto market downturn has led to the low trust in the future of stablecoins.
Though stablecoin brings in the best of both worlds, stability of a fiat currency and
speed of blockchain transactions, the very nature of outsourcing its stability to a
real world asset or an algorithm doesn’t guarantee that these coins will be 100%
secure.
Future of Money by Subhendu & Ashish
CHAPTER 7
Rise of Altcoins
Bitcoin did pave a path for disruption in the cryptocurrency ecosystem and led to
the rise of altcoins or alternative coins. The coins which are basically not Bitcoin
got the alias as Altcoins. The altcoins served the same purpose that Bitcoin was
serving but were cheaper to obtain. These altcoins used blockchain technology for
the distributed ledger but varied in the kind of consensus algorithms they used.
As mentioned bitcoin was the OG of crypto-currencies but had certain limitations
like high gas price, limitation on transactions per second and price volatility. These
coins were designed to overcome those limitations and customize it for different
industries and use-cases
Altcoins have served as utility tokens in web3 products, store of value, mechanism
for payments or meme coins for banter.
One of such coins of interest pertaining to our study here is XRP. XRP is the
blockchain payments unicorn Ripple’s native currency which is used for quick
liquidity.
How does it work?
When a user sends a payment on the Ripple network, the payment is converted
into XRP, transferred across the network, and then converted back into the
recipient's local currency. This process is designed to be faster and more costeffective than traditional cross-border payment methods, which can involve
multiple intermediaries, high fees, and long settlement times.
Naturally Ripple platform looks like a great solution for cross-border payments
based on the ease of transactions and cost but it hasn’t picked up the traction that
it intended to.
Ripple has processed nearly $30B worth of volume and 20M transactions since
RippleNet was first launched. Though the numbers i.e the revenue, transaction
volume, clientele, geographies of operation are impressive but when compared to
the global scale of cross border payments happening annually, it’s miniscule.
Future of Money by Subhendu & Ashish
The reason some of the platforms like Ripple haven’t fulfilled their promise can be
linked to regulatory challenges. The XRP crisis emerged in December 2020 when the
U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs,
alleging the sale of XRP as an unregistered security. The lawsuit triggered significant
regulatory scrutiny, causing major cryptocurrency exchanges to delist or suspend XRP
trading. As a result, the value of XRP plummeted, and investors faced uncertainty over
the future of the digital asset. The legal battle between Ripple Labs and the SEC has
implications for the broader cryptocurrency industry and has raised questions about
the regulatory status of other cryptocurrencies.
As of July 2023, Ripple has achieved a partial victory in the SEC lawsuit; however, the
SEC's appeal continues, leading to ongoing uncertainty in the crypto industry. The lack
of clarity surrounding XRP's regulatory status still poses a dilemma for market
participants. Despite this, the recent positive development has had a notable impact
on XRP's price, with the token gaining 80% in just 15 days as depicted in the exhibit
below The situation remains dynamic, and market sentiment may continue to be
influenced by further legal outcomes and regulatory decisions.
Future of Money by Subhendu & Ashish
CHAPTER 8
Regulation - The necessary evil
"If we want our regulators to do better, we have to embrace a simple idea:
regulation isn't an obstacle to thriving free markets; it's a vital part of them." ~
James Surowiecki, Staff Writer, The New York Times
It goes without saying that regulation has a big role to play and will have the final say
when it comes to monetary and financial policy. Regulatory bodies are like airplanes,
they give businesses and the general public a safe haven to fly. Though the counter
argument could be that over-regulation could lead to curtailing innovation and ease
of doing business.
Cryptocurrency educated regulators on the power of DLT, hence the central banks
across the globe are leapfrogging and building out their digital currency strategies.
Blockchain’s initial success can be attributed to its anti-sovereignty set of beliefs.
These set of principles did give a launchpad for early believers to rally the value of
bitcoin and other crypto currencies. But we believe that regulation support and
adoption is needed to take the blockchain industry to the next orbit.
Regulatory bodies across the globe aren’t warm to the idea of cryptocurrency and
have been working on building rules & frameworks to suppress the adoption among
the general public. This ambiguity has dettered the adoption of crypto among
business and enterprises. In fact a survey by Ripple and US Faster Payments Council
[5] shows that 89% of the respondents mentioned regulations as the biggest hurdle
for crypto adoption. This view is as extreme and naïve as it can get because it has
been proven that the crypto system if not regulated in this complex world full of
geopolitical tensions and vested interests can be equally harmful as beneficial as they
seem to be.
Future of Money by Subhendu & Ashish
The survey also threw open that those in favor of crypto have not factored in any
of the critical attributes for money to have for it to be eventually counted as
currency.
Future of Money by Subhendu & Ashish
CHAPTER 9
State’s Comeback
Central banks, among the world's top 10 economies from east to west, have a storied
history spanning at least 150 years or more, signifying their enduring significance in
shaping global economies. These banks' sole purpose was to bring financial stability
to the state and control monetary flows. The first central bank Sveriges Riksbank i.e.
The Central Bank of Sweden was established as a joint stock bank to lend
government funds and act as a clearing house. For a long duration of time central
banks have played the role of stabilizing the economy and controlling inflation.
As discussed in earlier chapters, cryptocurrencies do have certain positive impacts on
the payments and finance industry but they come with their own fair share of
problems. The rise and usage of Bitcoin and stablecoins did prove the benefits of
blockchain and DLT to the retail consumer and business alike.
Despite cryptocurrencies existing for over a decade, widespread adoption has been
limited, and interest from the mainstream ecosystem has been sporadic. This can be
attributed to several factors, including regulatory uncertainties, high price volatility,
security vulnerabilities, and the absence of robust consumer protection laws. These
concerns have contributed to a cautious approach towards cryptocurrencies by
many individuals and institutions and the merits of introducing a new form of money
to their respective economies. We will explore these reasons and arguments in the
upcoming sections.
114 countries, representing over 95 percent of global GDP, are exploring a CBDC.
In May 2020, only 35 countries were considering a CBDC. A new high of 60 countries
are in an advanced phase of exploration (development, pilot, or launch). The exhibit
below shows a heatmap of countries currently working at CBDC and their stages of
development.
Future of Money by Subhendu & Ashish
Central banks are working with BIS, IMF and other industry bodies to come up with
CBDC which is just not a digital-native version of traditional notes and coins but goes
beyond the current digital money which is commercial bank money. Interestingly,
the rise of cryptocurrencies and their associated challenges has spurred central
banks worldwide to explore and innovate in the realm of digital currencies. Countries
like China, Singapore, and India are at the forefront of the Central Bank Digital
Currency (CBDC) revolution. CBDCs offer a government-backed digital alternative to
cryptocurrencies, aiming to address some of the drawbacks of traditional
cryptocurrencies and create a more regulated and secure digital monetary system.
The central banks also have reservations on the growing popularity of stablecoins
and are concerned about their potential impact on the financial system and
economy. The price volatility, breeding ground for illicit activities and money
laundering, and the unregulated sector of the crypto-currencies has encouraged
most of the central banks to embrace a digital money roadmap. In the next section
we will explore the differences between CBDC, commercial bank money and what
are the salient features of this new form of money.
Image Source: Atlantic Council
Future of Money by Subhendu & Ashish
Why CBDC?
CBDC being built on DLT and blockchain come with the good parts of the crypto
ecosystem which is programmability and interaction with smart contracts. Since
CBDC will be issued by central banks they will also have the feature of sacred
liquidity. Combined with these features CBDC becomes potent for greater financial
inclusion, cross-border payments, vehicle for economic and social policy making
usage of money customizable i.e basic necessities, specific locations or pre-defined
time period.
Overall the reasoning behind 90+ countries pursuing CBDC seems to be quite strong
and a welcome strategy for governments, businesses and consumers worldwide.
CBDC would be a new digital form of money issued by and hence a direct liability of
the central bank. It will be designed as universally accessible (available in offline and
online mode), hence will have all the 3 properties. The exhibit below shows the
proposed form of money that CBDC will power.
Future of Money by Subhendu & Ashish
The World Economic Forum projects that 10% of world’s GDP will be tokenized by
2027 standing at USD 16 Trillion [6]. This trend will impact all forms of business,
individuals and governments. A report by Crosstower and USISPF predicts that
India’s tokenized GDP would be USD 1.1 Trillion [7].
Advantages of CBDC:
Central banks globally are exploring use-cases and technology choices to implement
this new form of money and there are strong reasons for such activity. The financial
and economics research community has done deep research on the benefits of
CBDC and the below mentioned ones are the highlights
1. Design of monetary policies with ease
2. Financial inclusion for unbanked/underbanked population
3. Real-time payments
4. Ride the digitization bandwagon
5. Combating financial crime
6. Better UX for consumers and businesses
7. Hygiene, less space and less overhead cost of printing & moving cash
These major advantages along with features like finality of settlement,
programmability, data transparency has encouraged central banks to build out their
own CBDC implementation strategies which includes design choices, technological
architecture, etc.
“CBDC is the best stablecoin possible”
A study by Ipsos MORI and OMFIF [8] shows that there is a huge trust on the central
bank’s digital money endeavor than other players. The chart below shows that there
is high net confidence in digital tender issued by central banks.
Future of Money by Subhendu & Ashish
Implementation Options
IMF has broken down the CBDC architecture into two main categories: token based
and account based.
Future of Money by Subhendu & Ashish
The token based ownership will work like cash or popular digital currencies where
the ownership will be direct without the need of a commercial bank account and will
be held in digital wallets issued by central banks in conjunction with private players.
The UX will be very similar to current crypto wallets and there will be no
intermediaries for transactions to happen.
Account based ones will operate like traditional bank accounts needing a KYC before
transactions. The UX will be similar to current commercial bank money though will
still be more efficient as the finality of settlement will be much faster.
Future of Money by Subhendu & Ashish
Another categorization parameter is the type of user i.e. retail which will be widely
open for general public and wholesale which would be restricted to financial
institutions like commercial banks and clearing houses.
A 2X2 matrix can be envisioned based on the above categorization parameters and
use-cases of CBDC can be mapped.
The existing technology stack used by commercial banks will not be useful for
creating CBDCs. These digital assets will be created on private and permissioned
blockchains and will be managed by the central banks. RBI is working towards the
interoperability of the existing tech stack UPI with India’s CBDC e-Re to increase
adoption.
The retail CBDC whether token based or account based will gain more popularity as
it will enable different forms of payment scenarios running from P2P(peer to peer) ,
P2M (peer to merchant), P2G (peer to government). The retail and token based use
case will bring in a large user base of unbanked population into the digital currency
revolution.
Future of Money by Subhendu & Ashish
Customer Persona
Retail
Wholesale
Architecture
Token Based
Account Based
Will be popular for unbanked
population, low value
transactions, promotes
financial inclusion
Geographies: Africa, India
LatAm
Will be popular in urban
sections, gain transaction in
P2P payments.
Geographies: China, India*
Will be less popular, no
immediate use-case
Will be popular for interbank
settlements, cross-border
payments
Geographies: Global
Based on the above features and benefits BIS has come with a money flower
depicted in the previous page and below that aptly represents the feature set of each
money and the benefits.
Future of Money by Subhendu & Ashish
Status Quo
The global heatmap shows that close to 18 countries have their CBDC
implementation in pilot stage which means their respective CBDC is in circulation
and being used by a tiny cohort of consumers and merchants.
China is quite ahead in the race of CBDC though some critics believe it hasn’t gained
the pace that was expected.
Future of Money by Subhendu & Ashish
India has also started the pilot in Dec 2022
The users can do both P2P and P2M transactions. However there is an ongoing
debate on why India needs CBDC when it has a robust UPI ecosystem. Let’s deep
dive into the basic difference between UPI and CBDC and why India needs CBDC.
The deep dive is a must for builders and innovators looking to disrupt this space.
The PWC CBDC index based on BIS data depicted in the next page shows how the
retail and wholesale CBDC projects are performing and their current status.
Future of Money by Subhendu & Ashish
Future of Money by Subhendu & Ashish
In fact RBI Governor Shaktikanta Das recently clarified the differences between
CBDC and UPI stating - “In CBDC, you will draw the digital currency and keep it in
your wallet on your mobile. When you make a payment at a shop or to another
individual, it will move from your wallet to their wallet. There is no routing or
intermediation of the bank.”
The table below shows the major differences between UPI and CBDC.
Possible pitfalls of CBDC
CBDC might look like a panacea for all problems associated with payments, financial
inclusion and financial stability but it has its own fair share of pitfalls which we will
discuss in this section.
Future of Money by Subhendu & Ashish
Financial experts fear that eventual popularity of CBDC might lead to reduction in
bank deposits leading to a bank run [9].
The exhibit above shows few of the concerns that central banks have with CBDC
which includes disintermediation of commercial banks and bank runs along with
security and privacy being the major one.
This early analysis has led to commercial banks embracing blockchain in an
innovative way and creating value for their customers. Commercial banks have
entered the fray and have launched Deposit Tokens. We are going to cover deposit
tokens and what commercial banks’ play in the upcoming chapter.
Future of Money by Subhendu & Ashish
CHAPTER 10
Commercial banks enter the ring
JP Morgan & Chase is the front runner in blockchain innovation and have devised
strategies which look like an answer to the burgeoning CBDC craze. The 220 year old
bank partnered with Oliver Wyman and launched Onyx.
Commercial bank money could hold the keys to a safer tokenized economy.
The German Banking Industry Committee has been working on the potential
impact of Commercial Bank Money Tokens (CBMT) or Deposit tokens. Banks like
Wells Fargo in the USA, DBS in Singapore are also working on pilots.
How does it work ?
A depository institution issues deposit tokens on a blockchain to indicate a deposit
claim, which distinguishes them from stablecoins and CBDCs that are usually issued
by private entities outside of the banking sector. This distinction in the issuer
provides a significant benefit.
Traditional banking
infrastructure
Future of Money by Subhendu & Ashish
The exhibit above by Oliver & Wyman [10] shows how a simple deposit token
workflow would look like.
Since deposit tokens are essentially commercial bank money that has been
transformed into a new technical format, they can be easily integrated into the
banking ecosystem and subjected to the same regulatory and supervisory
framework that currently applies to commercial bank
Deposit tokens can mimic the current use-cases of commercial bank money which
includes domestic and cross-border transactions, trading and settlement and cash
collaterals. The token form catapults the commercial bank money to a new orbit with
functionalities like programmability and instant and atomic settlement ( both
payment vs payment & delivery vs payment) and interfacing with smart contracts.
Commercial bank money has always been the majority part of the circulating money
in the world economy, making up to 90%. The projections are that the CBMT or
deposit tokens will also be widely used in the digital asset ecosystem and benefit
the B2B use-cases most likely.
In 2021, the major banking associations in Germany collaborated on a paper [11]
regarding digital money, which presented various possibilities for deposit tokens or
commercial bank money tokens (CBMT).
These options include:
1. Each bank issuing standardized stablecoins that are supported by reserved funds
ring-fenced at the ECB.
2. A joint stablecoin or synthetic CBDC that involves the creation of a special
purpose vehicle (similar to Fnality).
3. Commercial bank money tokens or colored coins that represent bank deposits
with interoperability.
We will discuss in-depth opportunities that will be built using the core concept of
CBMT or deposit tokens in our next chapter.
Future of Money by Subhendu & Ashish
CHAPTER 11
Our take
Central banks and commercial banks around the world are recognizing the potential
of blockchain and DLT and are actively developing their digital asset strategies. These
digital assets are set to play a crucial role in the digital money and payments
ecosystem.
The future of digital currency lies in hybrid solutions that combine the best of both
worlds. By leveraging the stability of central currencies and the speed of blockchain
transactions, CBDCs have the potential to become an incredibly powerful tool in the
digital payments landscape.
We believe that in the near future, CBDCs will play a vital role in both domestic and
international transactions. However, the challenge of achieving interoperability
among various national currencies could limit their adoption on a large scale for
global trade. Nonetheless, these challenges present opportunities for builders and
entrepreneurs to develop innovative systems that facilitate the mass adoption of
CBDCs.
We see a bright future for deposit tokens (CBMT) in B2B and cross-border payment
systems. This innovation is likely to materialize faster than CBDCs since it involves
commercial banks without the need for central bank policy considerations,
infrastructure, and public-private partnerships. Most central banks are focusing on
domestic use-cases such as P2P, P2M, financial inclusion, and programmability in the
initial stages of CBDC adoption.
Therefore, commercial banks have a great opportunity to tap into the global
payments and trade finance market by offering tokenized assets. However, they
would require partnerships with protocols, platforms, and other entities to enable
this new payments ecosystem for their clients.
Future of Money by Subhendu & Ashish
As a builder, you have a strong foundation of 10 ideas for the upcoming CBDC
ecosystem and 4 ideas for the CMBT (Deposit Tokens) ecosystem depicted below.
These ideas cover various categories such as consumer, businesses, financial
institutions, and government, taking into account the current fiscal and regulatory
policies. These concepts will evolve as CBDCs gain acceptance among consumers
and businesses in the future.
Idea Board for CBDC Ecosystem
Future of Money by Subhendu & Ashish
Idea Board for Deposit Token ( CMBT) Ecosystem
Use these idea boards as a starting point for brainstorming and in-depth exploration,
but don't be afraid to think outside the box and push the boundaries of innovation.
The core features of CBDCs and blockchain, as discussed in previous chapters, should
be your guiding principles to create impactful solutions.
Additionally, the ideas are color-coded and accompanied by an impact barometer,
indicating their potential influence on the CBDC and deposit tokens ecosystem.
Consider factors such as the number of users, daily transactions, transaction volume,
and the speed and efficiency of conducting business while evaluating these ideas.
With this framework, you can build upon these 14 ideas and come up with new, bold,
and innovative concepts that further enhance the CBDC and CMBT ecosystems.
Embrace opportunities for disruption and transformation, always keeping in mind
the foundational principles of CBDCs and blockchain technology to drive positive
change and widespread adoption across all sectors of the economy.
In the second part of this thesis we will delve into concepts that revolve around the
CBDC and CBMT ecosystem. We'll explore their market sizes, unique features,
potential revenue streams, as well as their competitors - both existing incumbents
and new entrants.
Future of Money by Subhendu & Ashish
Acknowledgements
Completing this thesis, exploring the fascinating junction of finance and technology, has
been a collaborative endeavour that owes its success to the generosity, guidance, and
contributions of many. I extend my heartfelt appreciation to those who have been
instrumental in this journey:
First and foremost, my sincere gratitude to Ashish Fafadia for his perceptive feedback and
invaluable suggestions, which significantly elevated the calibre of this work. Your expertise
has been illuminating and instrumental in shaping the final content.
I am thankful to Karthik Reddy for providing the platform that allowed these ideas to take
flight and gain momentum.
To Udayan Pandey, Parvez Mulla, Jatin Madhra, and Joseph Sebastian from the Blume
Fintech Team, my profound appreciation for enriching the content with your contributions,
adding depth and perspective to the fintech and blockchain landscape.
Rohit Kaul and Disha Sharma from Blume’s Corporate Team deserve a special mention for
their innovative insights into the marketing campaigns surrounding this thesis, which added
a dynamic dimension to the project.
A special note of thanks goes to the entire Blume Team. Your unwavering support has been
pivotal in allocating the necessary time and resources required to bring this project to
fruition.
I also want to express my gratitude to Santosh Panda, Bimlesh Gundurao, and Pranav
Agarwal, who generously shared insights and experiences during interviews, enriching the
thesis content.
Lastly, I am indebted to my friends and colleagues whose encouragement, support, and
occasional distractions turned this journey into an engaging and memorable experience.
To all the individuals acknowledged here, as well as those who contributed in various ways, I
offer my heartfelt thanks. Your collective contributions have indelibly shaped and enriched
this work.
Warm regards,
Subhendu Panigrahi
Future of Money by Subhendu & Ashish
Annexure
Annexure 1
1. Liquidity by a central authority or sacred liquidity: Centralised control over
liquidity to ensure stability and accessibility.
2. Sacred liquidity:High importance placed on maintaining fluidity in financial
systems.
3. Secure finality of settlement: Assurance of secure and irreversible transaction
completion.
4. Inflationary/Deflationary: Referring to the impact on the value of money due to
changes in its supply.
5. Anti-fraud: Measures in place to prevent and detect fraudulent activities.
6. Trust: The reliance on the integrity and authenticity of financial systems.
7. Limited supply: A capped quantity of a currency, as seen with cryptocurrencies like
Bitcoin.
8. Fungibility: The property of money or assets being interchangeable without
distinction.
9. Form/Source/Technology: Varied forms of money, their origins, and the
technological basis for transactions.
10. Volatility: The extent of price fluctuations in a currency or asset.
11. Anonymity: Concealing the identities of transaction participants.
12. Programmability: The ability to encode specific functions and conditions into
financial transactions.
Annexure 2
What does Fragmented and truncated data format mean?
In cross-border payments, concise and structured messages are exchanged between
financial institutions using specific formats like ISO 15022 or ISO 20022. However, the
challenge arises from the multitude of formats available, with each institution favoring its
legacy systems, causing delays and inefficiencies during message conversion. Additionally,
banks use internal messaging systems that require external messages to be converted into
their preferred formats, resulting in further processing delays.
Future of Money by Subhendu & Ashish
Annexure 3
The 6 major features of blockchain are listed below:
Decentralization:
Blockchain is designed to be a decentralized system, meaning that there is no central
authority or intermediary controlling the network. Instead, transactions are verified and
recorded by a distributed network of computers, known as nodes.
Immutability:
Once a block of transactions is added to the blockchain, it cannot be altered or deleted. This
makes the blockchain an immutable ledger, which ensures that transactions are secure and
tamper-proof.
Transparency:
Blockchain is a transparent technology, meaning that anyone can view the entire transaction
history of the blockchain. This creates a high level of accountability and trust among network
participants. This is the feature of a public blockchain or permissionless blockchain.. However
permissioned blockchain or private blockchains have picked up interest in a lot of enterprise
use cases including payments and financial services.
Security:
Blockchain uses advanced cryptographic techniques to secure transactions and protect
against fraudulent activities such as double-spending or hacking. This makes the blockchain
a very secure way to store and transfer digital assets.
Smart contracts:
Smart contracts are self-executing contracts with the terms of the agreement between
buyer and seller being directly written into code. They allow for automated and decentralized
execution of contracts, reducing the need for intermediaries and increasing efficiency.
Interoperability:
Blockchains can be designed to work together, allowing for the exchange of assets and
information across different networks. This creates a more connected and seamless digital
ecosystem.
Future of Money by Subhendu & Ashish
DISCLAIMER
The content presented in this thesis represents the perspectives of the Blume Fintech team
regarding the future of money and the role of blockchain. It is intended to provide
educational and informative insights and should not be interpreted as financial advice.
All market data, prices, and graphs included in this thesis are based on information available
up until July 31st, 2023.
References to third-party sources, products, services, or organizations in this report are solely
for informational purposes and do not indicate endorsement or affiliation. The accuracy and
reliability of information from external sources are beyond the control of the author(s).
The author(s) retain the right to modify the content, format, and structure of this book/report
without prior notification.
By choosing to read and utilize this book/report, you acknowledge your understanding of
and consent to the terms outlined in this disclaimer. Should you disagree with these terms,
kindly refrain from using or depending on the information offered in this book/report. The
author(s) assume no responsibility for any liability, loss, or risk resulting directly or indirectly
from the utilization or application of the information presented herein.
Future of Money by Subhendu & Ashish
REFERENCES
1] The 2022 McKinsey Global Payments Report
2] Currency Conversion and Global Trade’s Hidden Costs
3] 2020 Small Business Payments Insights: SMB Attitudes and Banking- Charting a New
Course
4] Bitcoin: A Peer-to-Peer Electronic Cash System
5] Transforming the Way Money Moves
6] Towards a tokenized world
7] India’s $1 Trillion Digital Asset Opportunity
8] Digital Currencies: A Question of Trust
9] Central bank digital currencies: financial stability implications
10] Deposit Tokens emerging as a foundation for Stable Digital Money
11] Digitization of Bank Deposits
Future of Money by Subhendu & Ashish