[Dave Birch] The future of money. Simple. It's the galactic credit, right? Like in Star Wars? (Or Star Trek, possibly). Wrong. We can't make a single currency work for Germany and Greece (or, for that matter for Liverpool and London). It certainly isn't going to work for Aldershot and Alpha Centuri. So if it isn't going to be a galactic credit, what is it going to be?
Now is a good time to be thinking about the future of money, because it is on the horizon. The weak signals of change are detectable. Contactless cards and mobile phones, Bitcoins and BA Miles, Amazon gift certificates and WoW Gold. We have the technology, as they say. But then we've had it for a while. Why now?
I think it's because money, as we know it, was 40 years old in 2011 and is having a bit of a mid-life crisis. When Richard Nixon ended the convertibility of the US dollar in 1971, we entered the world of “fiat currency”. From that day on, dollars have been backed by the full faith and credit of the United States only. They've been virtual.
Maybe it's time for real change. We've been here before. Around four hundred years ago, things were going horribly wrong with the money of Merrie England. By the 1690s there was a full-scale currency crisis. The economy was being undermined by the limited and poor quality coin base. With the nascent industrial revolution driving the demand for better money, there was pressure for change. Yet if you had asked people about the future of money at that time, I'm sure they would thought about better quality coins.
What actually happened was complete revolution. By the time Isaac Newton (who had been brought in as Master of the Mint for the Great Recoinage of 1696) died in 1727, Britain had a central bank, paper money, a gold standard, current accounts and overdrafts. I suggest that we are in the same position as industrialising England with a paradigm mismatch that explains the mid-life crisis. We’re using the mentality of the gold standard and the institutions of paper to try and deliver the money for a new economy. Money is depressed because it no longer recognises the world around it, it feels out of place and incongruous. It's tired and balding and grey, rather like your presenter, in fact.
We’re in a post-industrial revolution but we’re still using the money, and the institutions of money, of the industrial age and this time, the technology with unexpected consequences is not the tally stick or banknote but the mobile phone. In a generation or so, there will be a new set of monetary arrangements in place. New currency and new institutions. Can we guess what they will be like, any more than an English merchant of 1680 could guess that there would soon be a central bank, banknotes, uniform coins and a gold standard?
I don't believe in the idea of a universal currency, or for that matter a European currency, or for that matter a UK currency. The future, I suspect, will be more diverse. Not a galactic credit or a world currency or a euro or even a pound. Secure microchips, the interweb and wireless will deliver a platform for thousand, millions of currencies. That sounds complicated, but it isn't, because not only will you be using your mobile phone to pay for things but also to get paid. You won't have to be in the loop. There'll be an app for that.
Now, that doesn't answer the question of what these currencies will actually be, which is a fascinating topic. There are both left and right, revolutionary and reactionary approaches — the return to the gold standard or the switch to the Brixton Pound — that deserve to be explored. The market is beginning to experiment with fundamentally new kinds of money. Money based on bits, reputation, energy, time and who knows what else.
I have no idea what the money of 2050 will look like, but I can bore for Britain about what it might look like. And I can prove it to you in person if you come along to my favourite pub in the entire world, The Keystone, for a currey and a pint on Monday 19th November at 7pm for the Cafe Scientifique evening talk on "The Future of Money: The Galactic Guilder or the Guildford Groat?" by me.
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