Envisioning the future of money

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Our free 52-page report on the technological future of money.

Transcript of Envisioning the future of money

  • the technological future of Money a study on the technological exponents of change shaping the future of money
  • Envisioning is an independent research foundation based in Brasil. Our global team of academics, hackers and designers study technology to understand accelerating change. We share our work with our own tools, methodology and design.
  • This briefing on the future of money is the first in a series of explorations on the future of global systems; including industries, sectors and economies. Starting our research on the technology of money is a matter of timing: we believe an industry-toppling, government -shifting, sector-disrupting revolution is underway. Think Napster, but bigger. Much bigger. http://www.flickr.com/photos/peasap/935756569/
  • Indeed, hiding in plain sight, money is a technology. As a human invention, it is no different than passports, agriculture or space flight, and like networks and computers, it obeys the same accelerating laws ( ). From beads to gold, it has changed shape, and from changing hands to routing data, the transfer of money has accelerated, expanded & multiplied. Today, this ancient technology is transforming societys concept of power and how it is held. http://www.flickr.com/photos/stuckincustoms/5896504098/
  • While governments are facing coalescing citizens and the financial industry is perpetually covering its ass. Yet, technologies and their communities have flourished as digitized money flows freely through their networks. Internet-born currencies, network-only banks and HFT algorithms have become free agents operating at breakneck speeds with no regard to existing laws or powers. The playing field is not just leveling, it is changing. http://www.flickr.com/photos/zigazou76/6970321441/
  • Our fractured financial landscape shows no sign of moving toward more order. In the following pages, we identify individual technologies that are shifting power between long-siloed entities of institutions, networks and individuals. http://www.flickr.com/photos/spyker3292/5555247954/
  • These power shifts are well underway. Banks and governments know they are losing their grip on customers and citizens. Technology shows no sign of slowing down. This leaves us perpetually future-shocked, trying to grapple with narrower slices of understanding. This is our attempt to explain what is happening. http://www.flickr.com/photos/polubeda/4271425107/
  • fall of fiat The future of money looks nothing like its past. Handling money today feels like faxing when you could be texting: it works, but is a mind-boggling, convoluted and antiquated process. Banks create scarcity by centralizing money. This scarcity is artificial. A wealth of startups and communities are working around the limitations of money-as-a-system by developing technology-backed alternative currencies. Reputation systems, attention economies, digital currencies are all inventive solutions to measure value in decentralized economies. With the notable exception of cryptocurrencies, virtually all existing currency systems are the result of a shared belief in the currency system itself. Some systems claim their value through fiat (Euro), others through commodity (silver), but they all share a single, centralized belief, be it in the future prosperity of the EU, or the utility of silver. Decentralized currency systems have the freedom of being entirely unpredictable and detached from convention. Bitcoins and their value are derived over time from a computational mathematical function. Ripple creates financial capital from a monetary honor system. The future of decentralized currency is fast, unpredictable and ruthless. 8
  • 5 ATTENTION ECONOMIES With the internets persistence, the attention of an individual is becoming a scarce and increasingly valuable commodity. When attention is paid, spent, given, taken or transacted it becomes influence, which then develops as capital. Social media has developed the first mechanisms for quantifying it tweets, likes, comments, reblogs, etc. 1 Reputation Economies The reputation of an individual or an institution can be easily measured and assessed online. As the network, in the form of social media, provides more opportunities for individual influence through comments, reviews and likes, it provides more context, cause and character for decision-making. This creates accountability and transparency and ultimately drives individuals and institutions to be good. Timebanking Timebanking is a means of exchange used to organise people and organisations around a purpose, where time is the principal currency. For every hour participants deposit in a timebank, perhaps by giving practical help and support to others, they are able to withdraw equivalent support in time when they themselves are in need. In each case the participant decides what they can offer. Everyones time is equal, so one hour of my time is equal to one hour of your time, irrespective of whatever we choose to exchange. Because timebanks are just systems of exchange, they can be used in an almost endless variety of settings. Klout Klout measures individual influence based on the ability to drive action across the social web. Any person can connect their social network accounts and Klout will generate a score out of 100. Klout also provides people with opportunities to shape and be recognized for their influence. envi.si/14pPz7D envi.si/17LJzrH More than 25% of Generation Y reported high interest in a hypothetical infomediary who would manage consumers digital identity and footprints envi.si/1a2s9xk 9
  • Bondsy Bondsy is a smartphone application for friends to trade things you cant put a price on. When you arent forced to pay with money, things get a lot more interesting. You are more comfortable transacting with friends. Its important to highlight: everything is private on Bondsy. Pricetags are freeform, so you can ask for anything in return. When you want something, tap Grab and make an offer. 2 Peer-to-Peer Economies Peer-to-peer economies occur when the production, transaction and consumption of goods happen between individuals, not companies. Peer-to-peer economies are not new, but the internet has allowed more people to connect and trade, leading to an expansion of currencies (time, attention, resources, influence) and the platforms through which they are traded. envi.si/168wPgN New Rules for the New Economy (1998) Wired founder Kevin Kelly spoke about the future value of connectivity at a time most pundits still debated whether the internet would ever take off. envi.si/17QLZsH 10
  • 3 Digital Currencies In a normal banking system, the value of money is chipped away by several middlemen before it gets to the end user. Digital currencies are powered by the network they are decentralised and peer-to-peer, making them powerfully frictionless. Cryptocurrencies rely on cryptography and a proof-of-work scheme (mining by using supercomputers to decipher hashed algorithms). They are generally capped and have no inflation to maintain scarcity and value. Identified by cryptographic keys, with an open-source client where transactions must be verified by the whole, the movement and growth of cryptocurrencies are fully transparent, traceable and anonymous. Butterfly Labs received over 20.000 pre-orders for their dedicated Bitcoin miner envi.si/1bsD4OP Namecoin Ven Currency Ven is a digital social currency used to share, buy, sell and trade in the world of Hub Culture and beyond. The value of Ven floats against other currencies and the price is based on a basket of currencies, commodities and carbon futures. Namecoin is a peer-topeer generic name/value datastore system based on Bitcoin technology. It allows you to securely register and transfer arbitrary names, no possible censorship, attach values to the names (up to 1023 bytes) and trade and transact namecoins, the digital currency NMC. envi.si/1bsCOiw envi.si/16NTiAO 11
  • Bitcoin Rethinking Money (2013) Bernard Lietaer and Jacqui Dunne explore the origins of our current monetary system, built on bank debt and scarcity to paint an alternative picture of how we could improve our existing implementations. Bitcoin is the first practical implementation of a cryptocurrency. Though more than half of all Bitcoins have already been mined since its creation in 2009, it will take until 2140 for the last one to be found. envi.si/19qTutM envi.si/16oflOx Mt.Gox Mt.Gox is the worlds largest Bitcoin exchange, handling a majority by volume of currency exchanges involving the cryptocurrency Bitcoin. Mt.Gox was established in 2009 as a trading card exchange, but rebranded itself in 2010 as a Bitcoin business and quickly became a dominant player in the field of Bitcoin exchanges. envi.si/1dndAUM 13
  • 4 Decentralized currencies With the notable exception of cryptocurrencies, virtually all existing currency systems are the result of a shared belief in the currency system itself. Some systems claim their value through fiat (Euro), others through commodity (silver), but they all share a single, centralized belief, be it in the future prosperity of the EU