The document discusses the evolution of money and its role as a technology that facilitates trade, highlighting the limitations of the barter system and the advantages of money. It argues that while traditional forms of money, like gold and fiat, have served well, advancements in technology, particularly cryptocurrencies like Bitcoin, represent a new frontier for value exchange. The future of money is envisioned as increasingly digital, enabling smart contracts and transactions between autonomous agents, which could revolutionize trade and economic interactions.

1. MONEY IS BROKEN;
ITS FUTURE IS NOT
CAMERON WINKLEVOSS @winklevoss
TYLER WINKLEVOSS @tylerwinklevoss

2. PART I
UNDERSTANDING MONEY

3. Money is the most widely used yet misunderstood
technology in the world.
“One reason why money is a mystery to so many is
the role of myth or fiction or convention...the money
around us, the money that we grow up with, appears
the only “real” money to us.”
-Milton Friedman, Money Mischief

4. The Context: Before money, all trade relied on barter, a
system of trade, whereby one individual exchanged
his or her goods and services for the goods and
services of another (i.e., in-kind transfer or swap).
ORIGIN
Why do we have money anyway?
Example: I’ll trade you my two bushels of corn for
your wheel of cheese.
The Problem: What happens if I want what you have,
but you don’t want what I have? The answer is,
nothing.

5. Trade Problem
Why do we have money anyway?
This trade deadlock is known as the Coincidence of
Wants Dilemma, whereby two people must want what
each other have, otherwise a trade will not occur.
Other limitations of barter are portability (difficult to
transport 10 oxen to the marketplace); divisibility (cannot
trade half of a horse); measure of value (no common way to
measure the value of goods against each other); and
storage (perishables like fruit do not last long).
The Solution: Invent a common “medium of exchange”, or
what we colloquially refer to as money.
The Answer: We have money because money solves a
trade problem.

6. 1 Scarce
2 3
4 5 6
Durable Verifiable
Portable
Divisible
Fungible
Storable
Difficult to
Counterfeit 7 8
9 Widely Acceptable
MINIMUM VIABLE PRODUCT
What does money need to be?

7. WHAT COULD WE USE FOR MONEY
IN A PRE-INDUSTRIAL WORLD?

8. FAILING FAST
• Money cannot be a gas,
otherwise, it would leak
out of your piggybank.
•Disqualifies 11 elements
including the noble gases.

9. FAILING FAST
• Money cannot be reactive
or corrosive, otherwise, it
would spontaneously
explode in your hand
(ouch!), or rust.
• Disqualifies 38 elements
such as pure lithium,
which ignites when
exposed to air or water, and
iron, which rusts.

10. FAILING FAST
• Money cannot be
radioactive, otherwise, it
would radiate away or
eventually kill you (yikes!).
• Disqualifies 38 elements
such as promethium and
einsteinium (i.e.,
lanthanides and actinides).

11. FAILING FAST
• Money must be rare, but
not too rare.
• Disqualifies 26 elements
such as copper, which is
too abundant and osmium,
which only comes to earth
via meteorites (i.e., too
rare).

12. FAILING FAST
• We are left with rhodium,
palladium, platinum, silver
and gold (5 of 8 noble
metals).

13. FAILING FAST
• Rhodium and palladium
weren’t discovered until
the 1880’s.

14. FAILING FAST
• Platinum’s melting point
(3,000 degrees Fahrenheit)
would have been too high
for pre-industrial furnaces.

15. FAILING FAST
• Silver and gold both seem
like strong contenders,
but...

16. FAILING FAST
Text
• Silver and gold both seem
like strong contenders,
but...silver tarnishes easily.
•Silver also has too much
industrial application (i.e.,
usefulness outside of being
a currency is a bug not a
feature), whereas, gold does
not; it’s just useless
enough.

17. FAILING FAST
• This leaves us with gold as
our best bet for money in
pre-industrial times and
silver as our only runner-up.
•Both metals have enjoyed
an ~8,000 year first-mover
advantage .
•Insight: If we were to replay
history over and over again,
gold would always emerge
as beta money, version 1.0.

18. OPTIMIZATION
We’ve built better money.
Why don’t we use gold for money today?
Portability:
Divisibility:
Storability:
Fungibility:
Difficulty to
Counterfeit:
Good Better Best
Good Better Best
Good Better Best
Good Better Best
Good Better Best
Physical Less Physical Digital
As we’ve made money less physical or “real”, we’ve optimized its parameters.

19. MONEY MATRIX
Originally hardware-only, today, money is primarily software and starting to become “smart” or
programmable.

20. 1
2
3
4
5
6
Money is a 10,000 year-old technology.
Government-backed paper money (i.e.,
fiat money) is a 40 year-old iteration on
this technology.
Your money is primarily digital, and has been
for over 50 years.
Money made of precious metal is no more
“real” than money made of paper or
computer bits.
Crypto-currencies like bitcoin have unique
technological intrinsic value when compared to
all previous money technologies.
These unique qualities give crypto-currencies
unprecedented money potential.
TAKEAWAYS SO FAR
7
8
Bitcoin is the world’s first-ever programmable
money or smart money.
The idea of money being something
physical is almost entirely a fiction.

21. PART II
THE PROBLEM WITH MONEY TODAY

22. THESIS
Money is, and always has been, a technology that
facilitates trade.
It does so by helping people exchange value more
easily (i.e., reduces friction). But today...
Money is no longer facilitating trade; it’s holding
it back!

23. INTERNET
These protocols work in
tandem and can be thought
of as the first, middle and
last miles of data transfer.
This network, which today we
call the Internet, transfers
packets of data back and forth
using specific communication
protocols developed over time.
Since the early 1960’s,
technologists have been
building the largest data
exchange network in the
world.

24. PROTOCOLS
The Internet protocol suite (TCP/IP) is typically divided into four layers:
1. Link Layer
Puts packets on the network
(e.g., Ethernet, DSL, ISDN)
2. Internet Layer
Routes packets over the
network (e.g., IPv4, IPv6,
IPSec)
3. Transport Layer
Establishes routes on the
network (e.g., TCP, UDP)
4. Application Layer
Delivers packets as web pages,
email, files, voice, etc. (e.g., HTTP,
SMTP, FTP, RTP)

25. DILEMMA
This network has become
very good at exchanging
data, but has no way of
exchanging value.
As a result, all components
of trade have become truly
global, except for money.
The Solution
Create better money.
The Problem

26. Good news: The Internet already has a value
transfer protocol, it’s called “Bitcoin” with a
capital “B”. It also already has a digital asset that
can be transferred over this protocol, it’s called
“bitcoin” with a lowercase “b”.
MONEY OVER IP
The Internet needs a value transfer protocol (VTP)
that can transfer digital value between users. In
other words, the Internet needs Internet money!

27. Better news: A new proposal called pegged sidechains
could allow for other value transfer protocols to emerge
and run parallel to the Bitcoin protocol, harnessing its
security and growing infrastructure.
Entirely new application-specific coins or AppCoins
would traverse these parallel protocols called
sidechains, “backed” or secured by the Bitcoin protocol.
Bitcoins would become the global reserve crypto-currency,
from which users could jump into and out of
these distinct AppCoins and their protocols depending
on their value transfer needs.
APPCOINS

28. PART III
THE FUTURE OF MONEY

29. FUTURE OF TRADE
Soon, money will no longer hold
trade back; it will begin to propel it
forward!
By allowing cryptographically-proven nano
transactions, AppCoins will open new vistas of
trade, previously unimaginable.
Not only will they facilitate trade between humans, they will
enable it between machines.

30. SMART INTERNET
Computers will interact intelligently to reduce network congestion and allocate
scarce resources accordingly.
A router being flooded by
traffic might require DDosCoin
in an effort to shut down a
denial-of-service attack.
A server might require
a sender to include
EmailCoin in an effort
to weed out spam.
OpenCoin would be rewarded
to developers based on their
contributions to open-source
projects.
StorageCoin would be
rewarded to computers
based on how much
storage capacity they
dedicated to the network.
This new ability to transfer
value will fundamentally
change the neurological
pathways of the Internet
forever!

31. AUTONOMOUS AGENTS
In the future, AppCoins will enable the first forms
of artificial life and usher in a ‘Second Machine Age’.
Computers, machines and things (e.g., refrigerator),
which today cannot open a bank account, will be
able to plug into these protocols and behave like
rational economic actors.
A new Trade Network will emerge, on which
these computers or “autonomous agents” will bid
for work and be hired.

32. AUTONOMOUS AGENTS
Agents will be anything from a self-driving car that picks
you up and takes you to the office, to a drone that delivers
you a tube of sunscreen on the beach, which it just
purchased from an autonomous kiosk.
On your trip, your self-driving taxi will negotiate with
roads for road-space using RoadCoin and pay other self-driving
taxis with SpeedCoin to get out of the way.
Agents who are profitable will be able to purchase more
software and hardware in order to spawn children. Soon, a
fleet of agents would arise to form an autonomous
corporation led by the parent agent.
Agents and autonomous corporations will be subject to
supply and demand and market competition. Ones that
provided poor services would become unprofitable and
shut down, or be reformatted and sold-off in a
bankruptcy proceeding to other agent bidders.

33. TRADE SINGULARITY
A Trade Singularity will be occur, whereby trade
between computers, machines and things, will exceed
trade between humans.
Uncreative tasks, both blue-collar and white-collar,
will become primarily automated.
Goods and services will become much cheaper and
living standards will be much higher.
Long-Term Trend: Humans who are creative will
win the day.

34. SMART CONTRACTS
Agents can be viewed as public goods because no one will
profit directly from them, but everyone will profit indirectly
(e.g., lighthouse, highway). As a result, there will be a funding
dilemma or free-rider problem.
So, how will we fund these public goods? Taxation is too
inefficient, but lightweight digital assurance contracts are not.
People will send PledgeCoin to a pre-defined digital escrow
address that will only use the funds when a certain target is
met, otherwise, it will return the PledgeCoins to their senders.
In the future, entire sectors of public goods will be built out by
these digital assurance contracts, which will come to replace a
lot of taxation. Want a better taxi? Create a smart contract!

35. IF WE FIX MONEY,
THE COMPUTER BITS ARE THE LIMIT
THANK YOU

36. REFERENCES IMAGES
Slide 1: FamZoo | Flickr
Slide 2: Nicki Mannix | Flickr
Slide 3: Omer Wazer | Flickr
Slide 21: Tax Credits | Flickr
Slide 22: Joanna De Silva | Flickr
Slide 27: Dustin Gaffke | Flickr
Slide 34: Museum of Photographic Arts | Flickr
Vectors: The Noun Project & FlatIcon
NPR | A Chemist Explains Why Gold Beat Out
Lithium, Osmium, Einsteinium…
Mike Hearn | The Future of Money
European Central Bank | Virtual Currency Schemes