To Boldly Spend

17 minute read
As humanity reaches an inflection point for space exploration, the challenges of transacting off-world are now being taken seriously. Innovators are already searching for answers

J.P. MorganAN OP-ED

Two weeks before Christmas Day, in 2021, a small New Shepard rocket launched from the cold, barren desert of West Texas. Just a couple of minutes after liftoff, the vehicle propelled its six passengers above the Kármán line, the broadly accepted demarcation that represents the boundary between Earth’s atmosphere and outer space.

These six passengers on Blue Origin’s third crewed spaceflight enjoyed a few minutes of weightlessness as the craft’s parabolic arc took it beyond 100 km above sea level. During this brief period, they helped set a record for the most human beings in space at any time, ever. That number was 19.

They joined 10 astronauts living on board the International Space Station, plus three people flying a long-duration mission on China’s new Tiangong space station in low-Earth orbit. As a harbinger of things to come, nearly half of these people were space tourists. What’s more, the 19 people in space had reached their destination by way of four different vehicles, two of which were developed in part or mostly with private funding.

These few minutes in mid-December offered a glimpse into the future of spaceflight. Governments, certainly, will be heavily involved in the years ahead as humans move beyond low-Earth orbit, out to the Moon, and potentially one day on to Mars. But private companies are playing an increasingly important role—and thanks to the rise of commercial spaceflight, we are finally seeing the dawn of private space tourism. For now, these steps are tentative, such as with New Shepard’s missions, or the handful of people staying on board the International Space Station alongside professional astronauts. But the trend is clear: more humans are going to space. And, with government plans for lunar bases, and private companies dreaming of Mars, in the future they will likely go further.

What are the implications for the finance world? Indulge us in some informed speculation, and let’s think seriously about how this future might unfold. After all, everyone from economists to space agencies already are.

Clearly, as humans venture further into space, human needs will follow them. At first, the focus will likely be on the basics, such as air, food, water, communications, and power. However, as more humans make the trip, they will start to need additional services, such as entertainment and the ability to pay for things. In low-Earth orbit, of course, any banking needs can be done by tapping into terrestrial banking networks. The International Space Station is connected to the internet, after all.

But further out, at the Moon, it seems unlikely that payment services will be furnished entirely through Earth-based networks. And at Mars, where round-trip communications can sometimes take as long as 45 minutes—provided that NASA’s Deep Space Network has the capacity—it seems highly likely that financial and payment services will be partly, if not completely, independent of humanity’s home world.

“Once we get away from near-term thinking, maybe even just a couple of decades into the future, we’re going to pretty quickly see the notion of value change in space,” says Christopher Newman, a Professor of Space Law and Policy at Northumbria University at Newcastle. Traditional objects of value, such as gold, will largely be worthless. The early focus, rather, will be on the essentials needed to keep humans alive, such as food, water, and oxygen. Taxes on these consumables, or credits based on the consumables themselves, such as oxygen tokens, may form the basis of a new currency. “Our concept of money could be completely different on other worlds,” Newman says.

How humanity reached for the stars

To understand how we’ve reached an inflection point for exploration and commerce off-world, and therefore what might realistically transpire during the next half century, we need to consider how we got here.

Six and a half decades have now passed since the Soviet Union launched the first satellite, Sputnik, into outer space. During the 15 frenetic years that followed, the two Cold War superpowers sought to outdo one another in spaceflight achievements as they battled for hearts and minds around the world. The United States eventually came out on top, landing a dozen Apollo astronauts on the Moon across six missions. The last of these occurred 50 years ago. Since this final Apollo mission, human spaceflight contracted into low-Earth orbit, and no human has traveled more than a few hundred kilometers from the surface of the Earth.

As the Cold War thawed, budgets diminished. But this inward trend finally began to reverse about two decades ago with two important developments. The first is the rise of commercial space ventures. In 2002, SpaceX was founded, a company that would disrupt the global launch industry, and become one of the world’s most important players in spaceflight. In 2023, SpaceX will launch more rockets annually than any other country or company in the world, operate more satellites than any other actor, and will carry more people into space than China, Russia, or anyone else. The success of SpaceX has inspired hundreds of other entrepreneurs to start space companies, and they in turn have attracted tens of billions of dollars in private capital to invest in everything from Earth observation satellites, and new rockets to asteroid mining.

The second driver is China’s commitment to a serious space program. A year after SpaceX was founded, China launched its first astronaut into orbit. Since then, China has built the second strongest space program in the world, including landing its own rover on Mars and exploring the far side of the Moon.

“This is definitely a different era,” says Lisa Callahan, a Vice President at Lockheed Martin who oversees civil and commercial space. “You can just look at it by the number of new companies that have started up in this area, the amount of money that’s going into space right now, and the number of new space agencies that are out there.”

One consequence of this newfound momentum is an increasing array of projects aiming to take humanity for extended stays off-world. Four US companies are designing and developing private stations that may begin flying in low-Earth orbit as early as 2028. Just as NASA and its international partners have plans to develop research facilities at the South Pole of the Moon later this decade—under the Artemis Program—China has plans for a lunar station as well. SpaceX wants to go further still with Starship, a vehicle the company is building to, one day, settle Mars.

As humans live, work, and play in these new environments, they will want to buy things. How they do so will depend on where they are, and how long they stay.



Expedition 1 docked at the International Space Station on November 2, 2000, carrying an American commander and two Russian cosmonauts. Humans have lived continuously in low-Earth orbit ever since then. The vast majority of these have been government astronauts, but a few of them have flown as space tourists. These private fliers required no means of making payments in space, because they purchased all of their needs in advance of their stay on the station, which is operated by the United States, Russia, and about a dozen other governments.

But the proportion of tourists will start to change. It is probably safe to expect that one or two private space stations will be flying before the end of the decade. NASA and other national space agencies will likely be customers, but these facilities will also be open to private citizens. The possibilities range from basic space tourism to much more exotic uses. One of the four companies developing a private station is Texas-based Axiom Space. They have already announced plans with a United Kingdom-based media company, Space Entertainment Enterprise, to attach an ‘entertainment arena’ and ‘content studio’ to the Axiom station. Later this decade, this large, spherical module will allow artists and producers to live stream content from orbit, creating a unique space for making videos or music, and perhaps even enabling new types of sporting contests designed for a weightless environment.

Payments in low-Earth orbit are likely to co-opt the ever evolving payment rails we use here on Earth. Astronauts on board the International Space Station have internet access. That means they can connect to their terrestrial bank accounts and pay bills. This is likely also to be the custom for space tourists, who will want to be connected to the web as they look out windows at the blue marble below and snap selfies. It’s likely that space-based operators will sell perks such as showers and spacewalks that tourists will want in orbit. If these or other services aren’t paid for in advance or with a pre-loaded charge card, then in theory these tourists can connect to the internet and make use of digital wallets, credit-card networks and other payment processors—although it could be a slow and painful experience until connectivity improves.

To the moon

Beyond low-Earth orbit, however, space payments are going to require new approaches. Around two dozen countries have signed on to NASA’s Artemis Program, which aims to return humans to the Moon later this decade. China, too, has the Moon in its sights. Both countries have the long-term goal of establishing a settlement there, and encouraging commercial growth as well. It is, therefore, not all that far fetched to imagine Moon bases within the next two decades. This is the next logical step, because the Moon is relatively close to Earth, just under 400,000 km away.

Initially, this activity will be government-led, so any private transactions and payments would be limited. But over time, there would likely be commercial businesses that operate primarily on the Moon. These could be tourist businesses, or they might be enterprises engaged in harvesting raw materials. Ice at the lunar poles, for example, could potentially be melted for drinking or irrigation, or broken down to create breathable oxygen or rocket fuel. Or consider the ample silica in the Moon’s soils, which could be used to build large solar arrays to provide power. And that’s when the payments situation becomes more complex, says Gonzalo Martín de Mercado, a business development officer at the European Space Agency (ESA). “The situation becomes quite interesting, because on Earth we are used to constantly being able to communicate with one another,” he says. “But it probably will not be viable to do that on the Moon back to Earth.”

This is a challenge for financial transactions. When a credit card is swiped on Earth, the transaction happens almost instantaneously, confirming the validity of the card, and its funds, and transferring money to the vendor. On the Moon, there is at least a two- to three-second time delay in communications due to the time it takes light to travel back to Earth, which could lead to a timeout of traditional credit-card transactions.

Perhaps more importantly, the cost of data transfer will be high between the Earth and the Moon. Firstly, data throughput will be limited by latency effects. Secondly, there’s the cost of the infrastructure required to facilitate these communications—either line-of-sight antennas or satellite relays in orbit around the Moon. The government may build some of this infrastructure for its own communications, but private sector investment will likely be necessary for commercial use. Lockheed Martin, for example, is working on a communication service called Parsec that will use a satellite network around the Moon to facilitate communications between lunar settlements and Earth. Infrastructure like that will not come cheap, and one would expect the cost of data transfer will be passed onto users. For this reason, phoning home for every financial transaction could cost more than the goods or services being purchased on the Moon.

This will likely necessitate a separate banking entity. This entity would conduct local transactions, and later have to synchronize that activity with a ledger, or financial institutions, back on Earth. One way this might work is through blockchain. Proponents argue that blockchains have the potential to simplify the infrastructure and jurisdictional requirements of the traditional banking system, and so may provide an appropriate framework for off-world banking. Space, after all, is unlikely to be dominated by any one nation. What’s more, if a blockchain served as an intermediate record between Earth and settlements off-Earth, it could help prohibit fraud – an obvious concern when transactions are being reconciled in different locations at different times.

Banks are already thinking about how blockchains could be used to facilitate space transactions. In 2021, J.P. Morgan partnered with a satellite company called GomSpace to demonstrate the concept. It installed blockchain technology on several satellites to show that it was possible establish and maintain a ledger between the objects. Then, the engineers executed transactions between two satellites in low-Earth orbit. “We were trying to identify what payments in space could actually look like, and how we would enable that,” says Tyrone Lobban, Head of Blockchain Launch and Digital Assets at Onyx by J.P. Morgan. “We wanted to prove specifically that if we had this network that was completely divorced and dislocated from the payments systems on Earth, that you could actually make value movements between satellites. We achieved that.”

However, extending such a system through space is not easy, Lobban says. Present-day satellites have limited power and memory capabilities, which are needed for lots of blockchain transactions. And blockchains require constant synchronization of transactions across the network, which will pose problems if large constellations of blockchain-enabled satellites are not established.


Next stop: Mars?

These challenges—plus those time delays and data costs—will only become more extreme as humans push out toward Mars. When this happens will depend on a number of factors, but it’s possible SpaceX may be able to self-fund its founder’s stated ambition of human settlements on Mars within a couple of decades. Mars is, on average, more than 100 million km away. Although the time delay can be as short as several minutes between the two planets, round-trip communications can also take as long as 45 minutes, depending on the distance between Earth and Mars at that moment. This is a far more expensive proposition than the Moon. It would require communications satellites in orbit around Mars at a cost of hundreds of millions of dollars. And then there is the government-operated Deep Space Network on Earth, which comprises the large satellite dishes that can pick up signals from Mars and other deep space probes. Any commercial augmentation of this network for a Mars settlement would doubtless be expensive, with the communications costs commensurately high.

But that’s not all. There are blackout periods, which occur when Mars is located opposite of the Sun from Earth. Without this line-of-sight, days or even weeks can pass without Mars and Earth being able to talk to one another. NASA, China, and other operators of spacecraft on and around the red planet regularly deal with these blackouts by pre-programming operations. But it would make synchronization of financial transactions over large distances a difficult problem.

At some point, settlers will probably wonder whether they need Earth-based banks at all. Martian settlers will buy goods produced on Mars, and then use them on that planet. While it is popularly believed that the purpose of asteroid mining is to bring precious metals from those bodies back to Earth, a more practical use may be delivering asteroids to Mars so that their minerals and metals can be used there. So, if a Mars company gets metal delivered by a Lunar-based asteroid mining company, what need is there for a financial institution on Earth?

“Because of all this, I think Mars will become sort of an independent planet over time,” says the ESA’s Martín de Mercado. “It will operate in its own way. And that will require it to create its own financial institutions and financial mechanisms for people that will be independent of Earth.”

What sorts of financial institutions this will lead to, and the nature of those transactions, is anyone’s guess.

Into the unknown

Northumbria University at Newcastle’s Christopher Newman says he believes that because commodities such as oxygen and water will have great value beyond Earth, they may well become bartering chips or even the basis of a currency. For example, workers might literally be paid in credits that can be used to buy a week’s worth of oxygen. Certainly, there is no reason to think that US dollars will be printed on Mars, as they’re not printed outside of the United States today. In fact, given the costs associated with getting paper or metal coins into space, it is probable that there will be no physical money once you’re off-planet. It’s far more likely it will be transacted as a digital currency in some form or another.

What actually becomes the basis of such a currency on Mars, whether it is oxygen credits or cryptocurrency, will probably come down to who sponsors the settlement on the surface of Mars. For example, if a company is mining some commodity on the red planet, it might pay workers in a traditional currency, as with coal miners on Earth. However, it seems more probable that such settlements will have a frontier mentality, where the currency might be tokens for basic room, board, and oxygen, or for trading in whatever commodity is being produced there.

An important factor in all of this is the Outer Space Treaty, which dates to 1967, but still holds sway for worlds beyond Earth. Essentially, this prohibits sovereign claims of territory on the Moon and Mars. A NASA astronaut can plant a flag on the South Pole of the Moon, but the United States cannot own that territory. However, what happens if a private company lands a fleet near ice reserves on Mars? And then starts to produce water, oxygen and hydrogen for use by Mars settlers? Perhaps we might end up with private enterprise governing these areas.

"It's a different era. Just look at the amount of money going into space"

As space settlements evolve, they are going to present challenges to the fundamental governance of space as it exists today, Newman says. Under the Outer Space Treaty, a nation is responsible for the actions of its entities in space, even as far as Mars and beyond. But how will that be enforced? For far-flung locations such as Mars, in practical terms there is almost certainly a limit to the effectiveness of Earth’s influence.

The laws on these new worlds, therefore, may be a mix of existing treaties and some sort of frontier justice. Payment systems rely on a legislative framework to prevent fraud, ensure fairness and maintain economies. These are likely to vary depending upon the culture of where the settlers come from. For example, Western culture may take a capitalistic approach to transactions, with corporations happy to tax a settler’s air. But other parts of the world might wish to enshrine other values. If humans have a right to air, is it therefore acceptable to buy, sell, and trade breathable air as commodities? Probably not.

“I think the Moon is okay to draw a sort of precedent from what is happening on Earth, because we’re close enough that we’re not going to see some of the difficulties inherent in the distance to Mars, or a colony floating above Venus,” Newman says. “But once we start getting there, we really lose the ability to predict beyond science fiction ideas.” Only if that fantasy starts to become reality, will we know for sure.