A presentation on the "5Cs" who might make money in the future presented at the Russian Fintech Assocation in Moscow in August 2017. Many thanks to BCG for hosting and many thanks to audience for their thoughtful questions and interventions.
But who will want to issue these new currencies? Governments? Banks? One obvious category is corporates. When Edward de Bono wrote The IBM Dollar back in 1993, he looked forward to a time when “the successors to Bill Gates will have put the successors to Alan Greenspan out of business”, arguing that it would be more efficient for companies to issue money than equity. Another obvious category is communities, especially with sentiments around anti-globalisation abounding. Here in London we already have the Brixton e-Pound! The Local Exchange Trading Systems (LETS) from physical communities and the platinum pieces and Facebook credits from virtual communities will merge and surge, forming a panoply of private currencies that will make trade more efficient. Why save dollars for your retirement when you can save kilowatts, hours or calories?
Once we take cash out of society, the implications go far beyond economic efficiency and reduced transaction costs. Our view of money will change and, just as the people of Stuart England went from seeing money as coin to money as paper, we will go from seeing fiat currency to seeing a spectrum of currency types that seem alien right now.
In “local” transactions, business can work perfectly well with no currency and no banks. A generation ago Ireland’s economy was built up from such local transactions, so people were able to self-organise their own money supply. But, as I think we all understand, in the modern economy “local” means something entirely different. While none of us know how this is going to pan out, there is a clearly a redefinition of locality underway, and it has social networking, virtual worlds and disconnection technologies as inputs. One of my son’s localities is the World of Warcraft: if Zopa were to offer loans in World of Warcraft gold, my son could perform that same function as an Irish publican in the example above and provide an assessment of creditworthiness for avatars he knows. Everywhere is local now. Until the invention of the mobile phone and its connection with the internet, I think it was reasonable to assume that for small transactions there was no way of using identity, credentials and reputation cost-effectively or, indeed, at all. Which is why it made sense to continue to use notes and coins to settle retail transactions. But now? The replacement of notes and coins in this way all hinges on the trader recognising me. Once this has been achieved, the issue of trust can be instantly resolved by computations across the social graph.
The 5Cs (revised and updated)
Who will make money?
A discussion about the future of digital currency
David G.W. Birch
Russian Fintech Association (Moscow, August 2017)
David G.W. Birch
author, advisor and commentator
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BritCoin or BritPESA?
I look forward to a time
when the successors to
Bill Gates will have put
the successors to Alan
Greenspan out of
Edward de Bono (1993)
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
The Fiscal Frontier (1998)
in the future, everyone will be famous for fifteen megabytes
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