It is not a revolution yet
but that is only a matter of time. Most
of the present incarnations are very experimental and simply extend competitive
ideas. The big leap has not been made
yet and when done it will change everything including our relationship to
credit and community.
What is important is that
the electronic tools are now eliminating the role of intermediaries. This is extremely welcome to you and I but a
serious challenge to governments themselves although they will not see this for
some time. Thus much good can be
accomplished while government either sleeps or hies off on the wrong path.
Properly executed its reach
will be global and foundational to the Communion olf Xanadu as described in my
Manuscript titled ‘ Paradigms Shifts ‘
A
Revolution in Money
APRIL
1, 2014, 6:05 PM 53 Comments
Imagine it’s 2040.
You go to the grocery
store, and when you look for the checkout counter there is none. There’s no place
to pay for your groceries because you already did.
When you walked into the
store, a sensor identified you, perhaps from a ring or watch you were wearing
that transmitted the information. Or perhaps you didn’t need to wear anything
special. Maybe a device in the store figured out who you were using a
combination of facial recognition, 3-D body shape identification and your gait.
Your unique identifier is
attached to your digital wallet, which transmits payment for the groceries
directly to the store. But you don’t pay in dollars. Your wallet has a dozen
digital currencies in it, all with different values based on a variety of
factors, including loyalty programs. At certain stores, you might pay with
their version of frequent-flier miles. At others, you might pay with the
equivalent of a virtual credit card — except the credit card isn’t issued by a
traditional bank.
You might also pay with
credit that you received through a peer-to-peer online exchange that connects
investors with people seeking short- and long-term loans. That’s how you got
your mortgage and financed your self-driving car, too.
Welcome to the future,
courtesy of the minds of some of the sharpest futurists around. The scenes just
described may sound as if they came from a futuristic movie or an episode of
“The Jetsons.” Yet, that’s just a middle-of-the-road view of the future; it
gets wilder from here.
If the last three decades
revolutionized the information and telecommunications industries, the next
three may upend the basic tenets of finance: currency, credit and banks, as
well as payment and transmission systems. Your children may even ask you, “What
was it like to see that old-fashioned building called a bank?”
In recent years, we’ve
already begun to see hints of an impending overhaul: the emergence of Bitcoin
and the ecosystem growing around it; the adoption of peer-to-peer lending
businesses like Lending Club; and the introduction of Square, the payment
system, to name just a few.
And even if you believe
Bitcoin is no more than a fad — and that may well be, given its volatility,
security issues and potential regulatory challenges — it has raised the
prospect of new virtual currencies and, at the least, cheaper and more
efficient transaction mechanisms.
“Money is a very interesting philosophical
idea in that we have all of humanity agreeing on this system,” said Ray
Kurzweil, a futurist, inventor and author. “So even though we may radically
disagree on some things — like let’s say the U.S. government and Al Qaeda — they
both respect money. So it’s remarkable how we have this universal respect for
this very esoteric virtual construct.”
Several prominent
dreamers, including Marc Andreessen, who led the team that invented the first
commercial web browser, say they believe that new virtual currencies will come
to dominate the way we pay for things in the future. “Bitcoin offers a sweeping
vista of opportunity to reimagine how the financial system can and should work
in the Internet era, and a catalyst to reshape that system,” he wrote recently.
Mr. Kurzweil, however, is
not so sure how easy it will be for new currencies to emerge. “We’ve built up
respect for currencies associated with nations,” he said. “People respect
dollars, mostly, I think, because of the track record, relative stability.”
Other futurists suggest
that there will be dozens of ways to pay for products.
“We are going to have individually issued
currencies. We already have corporations issuing currency: frequent-flier
miles, although people don’t see them as that from a legal perspective,” said
Heather Schlegel, a futurist and social scientist who recently started a
project called the Future of Money as an online documentary series supported
through — what else — Kickstarter, a crowdsourced investment tool.
Ms. Schlegel is hoping to
explore various new payment methods, transactions and what it all means. Some
of her exploration is beyond anything we can comprehend today: She considers,
for example, the kind of manipulation of the subconscious that happens in the
2010 movie “Inception” as something that could really happen in the future.
For all the promise of
new currencies and transaction systems, there is a long trail of failed
efforts. In 1998, a virtual currency called Beenz was introduced. Customers
earned Beenz when they visited certain websites and shopped at certain online
stores. It had the backing of investors like Lawrence Ellison, the chief
executive of Oracle. But for all its promise, it went bust by 2001.
Flooz was another
currency born during the dot-com era that ended as quickly as it arrived, as
did Internetcash.com. E-gold, a virtual currency backed by gold, also failed.
All of them were plagued by some customers trying to use them for illicit
purposes.
While the future of
currency may be the biggest question mark around finance, shifts in the
plumbing of transactions and the future of banks may be the most
transformative.
What happens when you no
longer need a bank to provide capital? Instead, investors and those looking for
credit — individuals and businesses — meet online. Is that a real possibility?
What are the regulatory ramifications? Are we more interconnected or less?
Where will people store money in the future? And will it be safe?
These are the questions
that fill not only the minds of today’s executives but also the minds of social
scientists and investors in Silicon Valley.
Of course, while the
future may look different, it may turn out to be familiar.
“Maybe nothing is going
to change, really,” Ms. Schlegel said. “Maybe a lot of these new concepts are
going to get rolled into the dollar and the dollar will evolve slightly,
because what’s happening is all these new ideas will put pressure on the dollar
to kind of be different.”
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