[Dave Birch] I had the pleasure of meeting Heather Schlegel (who blogs as heathervescent) at SXSW and determined then to persuade her to come to London for the next year’s 15th annual Digital Money Forum sponsored by Visa Europe, Barclaycard and Monitise with support from ACI Worldwide. I’m delighted to say that Heather has kindly agreed to attend and present the results of her research on the future of transactions, which I think will really help the debate and discussion to evolve further this year.

My research found five major trends impacting the Future of Transactions

[From heathervescent: Evolution of Currency]

These five factors may not come as a complete surprise to those of you who have attended previous Digital Money events, but Heather’s take on them might be. Her research has emphasised the role of communities in the evolution of digital money, a factor that more and more of our clients are looking to bring into their strategies for the exploitation of new technology in the transaction space. Let’s begin with the uncontroversial.

Mobile Transaction Technology is exploding. This not surprising to anyone following this industry. But we’re watching the explosion of the hype-curve

[From heathervescent: Evolution of Currency]

Absolutely. I’ve been boring people at conferences with this for years, saying that even if you believed all the hype about the mobile phone, you would still not be grasping the magnitude of the shift coming. The mobile is becoming the focus for transactions of all kinds (and I continue to maintain that in the long run, it is the mobile management of identity transactions that will reshape reorganise not only commerce, but society, the most).

Alternate Currencies (including gaming currencies like WoW Gold, corporate currencies like frequent flyer miles and social capital “currencies” like reputation and wuffie) are being used in their own niche communities. And some of these niche communities have very high transaction rates

[From heathervescent: Evolution of Currency]

One of the topics that has fascinated me the most since I first began to get interested in electronic transactions is alternative currencies, and in particular the idea that once efficient electronic transaction mechanisms are in place in the mass market then the cost of switching between currencies, the cost of experiment with new currencies, falls. In which case, which of the thousand flowers might bloom? Heather once again made me think and reflect by examining the potential from her perspective.

Non-Financial Transactions create stronger bonds. When you have a community that is formed around non-financial transactions (like time-banks or swap/barter/pay it forward) the transactors create stronger bonds than if the transaction was only a financial transaction.

[From heathervescent: Evolution of Currency]

Without hinting at the potential strategies that might be important for some of our clients, I think I can say that ensuring that what they provide is not “only a financial transaction” is seen as an ingredient. There are a number of approaches that are worth trying here: transparency, for example, which is already seen as being a mainstream opportunity (what with open data, mashups and so on).

We want to communicate more information with each transaction. We’re rating our restaurant experiences on Yelp. Writing recommendations on LinkedIn. Giving feedback about people on Honestly. And the technology products for more fine grained  communication about each transaction are getting developed. We want to share more information about each transactions we have – regardless of the kind of transaction. This last trend is very important – and one of the most subtle. [From heathervescent: Evolution of Currency]

These well-founded observation, about the elements of a reputation economy, reinforce my own prejudices about the longer term where a cross between eBay stars and NSTIC provide a low-overhead framework for trade, and therefore prosperity. These are all great points and well worth the discussion and debate they will engender at the Forum. But I think Heather’s most important trend is this one:

Communities are being created around transactions. Whether this is in these niche communities with an alternate currency, within forums or craigslist for traditional economy transactions or non-financial transactions; communities are being/have been formed around transactions

[From heathervescent: Evolution of Currency]

This is surely correct. The future isn’t a single currency but hundreds of currencies, each of them centred on a community. Some of these communities may be geographic, some virtual, some brand-based, some personal. Who knows? The idea that the only community that counts being the nation state is seen many as a physical law, on par with gravity, but it is a construction: money doesn’t have to work that way and is in the process of rescaling for both supranational communities (perhaps only for the unit of account?) and other non-national communities.

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers

1 comment

  1. I like the post. There is one issue that I believe is often overlooked when discussing alternate currencies. Governments and central banks worldwide make billions yearly by controlling the issuance of currency, through seigniorage (look at http://www.bankofcanada.ca/about/backgrounders/seigniorage/ for background). How can we reconcile the future model with the current legal and political framework? I would love to see contributions on this topic, because I fear government intervention will sabotage free market.


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