Identity is the New Money. David Birch

Чтение книги онлайн.

СКАЧАТЬ benefit. This would take us into a different kind of online world, a different online experience where privacy becomes an active, rather than passive, part of life.

      New money

      The second area of profound technology-driven change I want to discuss is money. In order to further explore ‘identity is the new money’, we will have to explore what ‘money’ means. One of the problems in discussing money is that this simple English word means several different things to economists and technologists – in the classic definition it is a unit of account, a store of value and a medium of exchange. I want to focus here on money as a generalized means of exchange between buyer and seller to enable transactions, and on money as the subset of the means of exchange that does not involve credit, or in other words, cash. Identity changes the requirements for, and use of, both kinds of money, both the pounds or euros that denominate all transactions and the transactions that still use the physical notes and coins themselves.

      That LA Times vision of 2013 had one of the protagonists go to an ATM and draw out $20 bills. When I travelled to Austin, Texas, for the South-by-Southwest interactive festival in 2013, I didn’t take any US currency with me nor did I get any bills out of an ATM while I was there. I paid for everything using cards and my mobile phone. In other words, I paid using my identity.

      Time for change

      This, and similar experiences, show that signs of change are already starting to be detectable. Contactless cards and mobile phones, Bitcoin and Isis, Amazon gift certificates and World of Warcraft Gold – we have the technology, as they say, and in Chapter 4 I look at the ways that it is changing money and explore the reasons why things are changing now.

      The technology enables change, of course, but it isn’t by itself the trigger for the shift that is coming, which will involve not only the widespread use of completely new mechanisms for exchange beyond debit cards and PayPal, but also new stores of value. We’ve seen a great deal of innovation to date but it hasn’t yet reached the core, the institutions and, yes, the paradigms of money.

      Innovations in payment technology must not be confused with the basic construction of a monetary system.3 Ours is actually a relatively recent invention. It is barely forty, and having something of a mid-life crisis. When Richard Nixon ended the convertibility of the US dollar into gold in 1971, we entered a new world of fiat currency. From that day on, dollars have been backed by the full faith and credit of the United States and nothing more. All the world’s currencies are now ‘pure manifestations of sovereignty conjured by governments’.4 That’s why the talk of ‘virtual currency’ is misplaced: all currency is virtual.

      More than a decade ago, Michael Klein, then Chief Economist of the Royal Dutch/Shell group of companies, said that monetary regimes have changed around once per generation.5 They aren’t going to stop now. It is time for another regime change.

      We’ve been here several times before. Around four hundred years ago, things were going horribly wrong with money in England. If you had asked people about the future of money at that time, they would have imagined better quality coins. What in fact happened was revolution and a new paradigm. A generation later Britain had a central bank, paper money – although the smallest banknote, five pounds, was worth a month’s pay for a professional6 – as well as a gold standard, current accounts and overdrafts.

      We are at a similar point now, with a mismatch between the mentality and the institutions of paper money in the industrial age and a new, post-industrial economy with a different technological basis for money. In a generation or so, there will be a completely new set of monetary arrangements in place. Just as the machine-made, uniform, mechanized coinage introduced by Isaac Newton in 1696 better matched the commerce of the industrial revolution, so we can expect some form of digital money will better match the commerce of the information age.7

      Reputation and retail

      So what will link changing identities with changing money as these trends converge? In a word, trust. In a world based on trust, it will be reputation rather than regulation that will animate trust in economic exchange.8 The ‘social graph’, the network of our social identities, will be the nexus of commerce, administration and interaction.

      In our distant past we were just as defined by our social graph as we are now.9 There were no identity cards or credit reference agencies or transactional histories of any kind. In the absence of such credentials, you were your reputation. Of course, managing and maintaining reputations among a small social group of an extended family or a clan was not a scalable solution as civilization progressed and moved on to growing trade as the source of prosperity. In the interconnected future, however, there is every reason to suspect that the social graph will resume its pre-eminent position since, as I will explore, it is the most trustworthy, reliable aspect of a persona. This is where the link with money begins to take shape. As the anthropologist Jack Weatherford wrote10:

      The electronic money world looks much more like the neolithic world economy before the invention of money than it looks like the market as we have known it in the past few hundred years.

      Far-fetched? I do not think so. In 1696, there was no cash in England with the result that ‘no trade is managed but by trust’.6 With trust, you don’t need cash. A wonderful example of this can be found in the three long strikes that shut down the retail banks in Ireland for months at a time between 1966 and 1976 (see Case Study: Ireland without Money). The economy did not collapse in the absence of cash (which soon ran out), as personal cheques and IOUs provided the circulating means of exchange. There were, at the time, some 12,000 retail shops and (perhaps more importantly) some 11,000 public houses that provided transaction services. Antoin Murphy’s seminal work on this reports:11

      It appears that the managers of these retail outlets and public houses had a high degree of information about their customers – one does not after all serve drink to someone for years without discovering something of his liquid resources.

      Identities and credentials are easy to create and destroy. Reputations are much harder to subvert since they depend not on what anyone thinks, but on what everyone thinks. Reputations are a sound basis for interaction. People make judgements based on other people’s reputations, and behave better out of concern for their own.12 There would have been precious little chance of pretending to be someone else at the local pub in Ireland in the 1970s and as a consequence the social graph was able to provide the necessary infrastructure: the landlord knew whose IOUs were good and whose were not.

      What does a modern society based on these reputations look like? I can make an informed projection in one particular area. When it comes to commerce, reputation replaces money.

      Identity implications

      At the dawn of the Internet age, the Nobel prize–winning economist Paul Krugman wrote that:10

      There will be a distinction between electronic cash and electronic money because of the need for small transactions where neither the buyer nor seller want [sic] the buyer’s creditworthiness to be an issue.

      This apparently common-sense distinction will vanish, which takes us to Chapter 5 of the book. If we suppose that some form of identity infrastructure comes into existence and reputation becomes the basis for transactions, then what might the implications be? It might be fun to focus on the ­Tomorrow’s World gee whiz of Google glasses, but for this book I have chosen to focus on the very specific issue of electronic money for a few reasons.

      Firstly, because almost all money is already electronic. In the UK, the notes and coins in circulation are a mere 4.5% of the broad money supply. New technology makes it possible to get rid of money’s mundane rump.

      Secondly, because losing that rump has economic implications СКАЧАТЬ