Posts tagged money

The following is my response to a Quora question about the future of money:

Money as we currently use it has its legacy in the agricultural age when securitized commodities were the preferred currency. This was then optimized for velocity in a globalized industrial economy when gold pegging was finally completely eliminated in favor of a pure debt-backed currency. Now that the flaw of a debt-backed currency -its dependence on indefinite exponential growth- has blown up in our face, we are in the process of figuring out how to optimize monetary policy and currency design for a network-centric, information/knowledge-driven digitally lubricated economy.

The medium of exchange will likely be various forms of social media, as they mirror the real-world relationship web upon which we exchange value.

An important part of the current financial impasse is the dilemma of a reference currency, namely the US dollar. Global financial coherence is overly dependent on this reference point, which is analogous to an end-point on a network- the buck stops here. In liquidity, everything is relative, and in a network-centric economy there is no center, and all end-points can be routed to all other endpoints, so it is the relationship map which enables coherent exchange.

Facebook is great at hosting an online network, but they don’t know anything about currency design. So facebook can be a medium of exchange, but its more likely that successful currencies will emerge from users themselves. Currencies are meta-data; they are information about an interaction that took place. So relevant currencies will likely emerge from stuff like user-tagging, voting, and other feedback mechanisms.

The key question, in my opinion, is not what those exact currencies will be, but rather what the platform for enabling widespread user-driven currency innovation is.

The storage of value in an economy centered around access rather than ownership may have the selfsame architecture. So value is not stored in static places, it is stored along trust networks, “in the cloud” if you will. Instead of owning shares in the means of production, we will have access to a cyclical stream of production, consumption, and feedback, and our share of this access will be dependent upon our networks’ opinion of our contributions.

There will be multiple units of account to better model the many subjectively-defined forms of value which exist in the real world. A globally integrated information system (the internet) solves the need for a standard unit of account because all transactions can be resolved with enough context and metadata just as all bugs are shallow with enough eyes on them.

The following is my response to a Quora question about the future of money: Money as we currently use it has its legacy in the agricultural age when securitized commodities...