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[Dave Birch] I bumped into a friend earlier today and he mentioned something about AOL. I was a little surprised at first but because I didn’t know that they still existed, but we then had a conversation about what their future strategy might be. I imagine that they are still obsessed with content, and portals, and other 90s stuff, because when I asked if they were looking at payments, like Facebook, my friend gave me a look like “are you crazy?” and the conversation moved on. But look at what this strategy has delivered to similar businesses in the Far East.

In Asia, such ‘nanopayments’ have been making big money on social networks for years. In 2007, China’s Tencent raised $523million in revenue – that’s four times as much as Facebook, in a country where the average monthly wage is less than $20 – with operating profits of $224 million.

[From How nanopayments finally came of age | News | TechRadar UK]

Well, you might argue, that proves that a well-structured and desirable portal such as AOL might be able to generate significant income from, let’s say, advertising. That’s not the Tencent business model.

Yet only 13 per cent of revenue came from ads. Two-thirds came from internet services like games and digital goods: ‘gifts’ such as virtual flowers, background music for users’ profiles, virtual pets, fashion items to dress avatars in, and so on.

[From How nanopayments finally came of age | News | TechRadar UK]

I’m reluctant to call Tencent’s currency “virtual” at a time when we still call the $ “real”, but it’s been jolly successful. I’m not suggesting that printing your own money is the solution to all financial problems — to be honest, AOL has probably missed the boat on that one — but it does seem to me that money itself is one of the more interesting business models for the next phase of the online era.

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[Dave Birch] Wow. Willem Buiter is a pretty serious person. He’s Professor of European Political Economy at the London School of Economics and Political Science; a former chief economist of the EBRD and former external member of the MPC. He is an adviser to international organisations, governments, central banks and private financial institutions. In May, he wrote a terrific piece for the Financial Times Maverecon blog. I hope Willem doesn’t mind but I’m going to include some extensive quotes from his piece here because I want to pick out some detailed points that he makes about cash from within the much larger discussion about interest rates that is actually his focus. He begins with the bold thesis that in order to allow negative interests rates than amongst other things we should

Abolish currency. This is easy and would have many other benefits. The main drawbacks would be the loss of seigniorage income to the central bank… Advanced industrial countries can move to electronic and bank-account-based means of payment and media of exchange without like problem. [From FT.com | Willem Buiter's Maverecon | Negative interest rates: when are they coming to a central bank near you?]

I agree with him that we could move to e-payments without a problem, because of technological advances made in the last couple of decades, and I’ll come back to this point later on as it is my focus here. But I think it is worth reflecting on a couple of other well-informed perspectives that Willem illuminates in his article, because he illustrates some characteristics of cash that may not be obvious to people who don’t spend their time thinking about the transition from physical to virtual money (ie, almost everyone). He notes, for example, the odd conspiracy between the Chancellor of the Exchequer (Scottish marxist and solicitor Alastair Darling, at the time of writing, previously the Scottish marxist journalist Gordon Brown), the Bank of England and organised crime.

The only domestic beneficiaries from the existence of anonymity-providing currency are the criminal fraternity: those engaged in tax evasion and money laundering, and those wishing to store the proceeds from crime and the means to commit further crimes. Large denomination bank notes are an especially scandalous subsidy to criminal activity and to the grey and black economies. There is no economic justification for $50 and $100 bank notes, let alone for the €200 and €500 bank notes issued by the ECB. [From FT.com | Willem Buiter's Maverecon | Negative interest rates: when are they coming to a central bank near you?]

The euro example is particularly noteworthy. Two-thirds of the euros in “circulation” (they are not actually circulating, of course, they are stuffed under mattresses in Eastern Europe) are in the form of these 100, 200 and 500 euro notes that I am pretty sure I have never seen. ATMs only give you 20 and 50 euro notes and I would imagine that many retailers would be reluctant to accept 200 and 500 euro notes (as noted monetary scholar Andy Warhol once said, if you try to use a $100 in the supermarket, they call the manager). Those notes, as Ian Grigg pointed out on the Digital Money Blog, do however provide some form of competition.

For foreigners in developing countries and emerging markets with high-inflation-prone monetary systems, the disappearance of the US dollar notes and the euro notes could be a setback, as these provide welcome stores of value when domestic inflation rages. It has been estimated that as much as 70 percent of all US dollar bills (by value) are held outside the USA (not all by people wanting to hedge against hyperinflation at home, of course) and that up to 50 percent of all euro notes (by value) are held outside the Euro Area. To those people I would say, I feel your pain, but this is the time to replace exit with voice. Go and create a polity that will support a government that does not abuse the printing presses.

[From FT.com | Willem Buiter's Maverecon | Negative interest rates: when are they coming to a central bank near you?]

Easier said than done, but you can’t help feeling that if Zimbabwe’s ruling elite had had to keep their money in Zim Dollars rather than US Dollars, they may have made some different decisions on quantitative easing. Let’s imagine that Willem’s plan is adopted though. What would the retail payments landscape look like? Well, not entirely unfamiliar, because ee suggests not getting rid of all cash entirely.

As a concession to the poor, we could keep a limited number of 1$ and 5$ bills (1€ and 2€ coins and 5€ bills) in circulation… The carry costs (safe-keeping, insurance and storage) for large amounts of cash are likely to become prohibitive if you have to do it all in fivers.

[From FT.com | Willem Buiter's Maverecon | Negative interest rates: when are they coming to a central bank near you?]

This doesn’t seem right to me. Cash isn’t a concession to the poor: it forces them to pay higher transaction costs than their better off neighbours. And if the amount of cash falls, then the cost of the whole infrastructure of ATMs and cash registers, armoured vans and night safes will fall on the poor, thus further raising their transaction costs. Personally, I think it might make more sense to simply switch off cash the way we are switching off analogue TV. Then, if the market decides that it what low-value currency in circulation, then the market can provide it (I’m reading George Selgin’s book The Button Makers which describes just how this happened in industrial age Britain) or, just as some governments subsidise digital TV boxes, so they could subsidise the issuing of pre-paid payment cards (or, far better in my opinion, pre-paid mobile money accounts rather like M-PESA). So Willem may be underestimating what technology can do here: replacing cash in this way isn’t a problem. Getting people to accept the idea might be though:

My good friend and colleague Charles Goodhart responded to an earlier proposal of mine that currency (negotiable bearer bonds with legal tender status) be abolished that this proposal was “appallingly illiberal”. I concur with him that anonymity/invisibility of the citizen vis-a-vis the state is often desirable, given the irrepressible tendency of the state to infringe on our fundamental rights and liberties and given the state’s ever-expanding capacity to do so.

[From FT.com | Willem Buiter's Maverecon | Negative interest rates: when are they coming to a central bank near you?]

Charles is right to raise this point, although I think that the public may be less attached to anonymity then he might think. Other than the privacy taleban, most people — other than, say, drug dealers or sex workers — don’t care and my experiences back in the days of Mondex and VisaCash (and Oyster, for that matter) suggest to me that people would rather register their cards or accounts so that they can get their money back if they lose the card than remain genuinely anonymous. I think Willem underestimates the ability of technology to deliver anonymity (or better still, well-managed pseudonymity) here, and I’ll also come back to this below when discussing the technological advances that we could use to deliver on Willem’s vision. Finally, Willem summarises thus:

Do we really want to retain cash just because it (1) allows us to hide some of our legitimate financial transactions from the government (as insurance against government abuse of the information), and (2) is a source of revenue to the central bank? These arguments pro are surely dominated by the two arguments against currency, (1) that, as currently construed [...] currency imposes a zero lower bound on nominal interest rates and (2) that it subsidises the grey and black economies and makes life easier for the global criminal and terrorist fraternity.[From FT.com | Willem Buiter's Maverecon | Negative interest rates: when are they coming to a central bank near you?]

Do we really want to retain cash? I don’t.

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[Dave Birch] I interviewed Professor Leo van Hove from the Free University of Brussles (VUB) for a podcast today. He’s starting work on a project trying to obtain a systematic and accurate estimate for the social cost of cash in the European Union. As always, his depth of knowledge and informed assessment of the situation were second to none. He set me thinking, again, about the dynamics around cash. It’s crazy to carry on using it. The high social costs, the market-distorting cross-subsidies and sheer inconvenience mean that it ought to be vanishing, even though it’s actually gaining market in share in the U.K. I found some figures from the Bank of Portugal in European Card Review for something I was writing for the Digital Money Forum blog. Portugal has the highest ATM penetration in Europe, which is one of the reasons why cash is very expensive there, as these figures show. The only payment instruments that pay their own way in that market are direct debits and credit cards. All other payment instruments lose money and cash costs about 25 times as much as it brings in. In other words, there is a massive cross-subsidy to cash from other parts of the banking business, which loses about €1.77 every time someone deposits cash in a bank branch (or withdraws it). No wonder it seems inexpensive to the retailers, who bear none of this cost. The big picture is that payments cost 0.77% of Portugal’s GDP (against the 0.5% average for Europe as a whole) and revenues only bring in about two-thirds of the costs. Isn’t there an old saying about holes and digging? When is cash going to be priced correctly?

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At the outbreak of any major crisis, there is always the question of ‘why didn’t we see this coming?’. The financial crisis? Oh, many saw it coming alright … yet few managed to make others believe a meltdown was not only possible, but most likely, and none managed to mobilize believers-decision-makers to act upon their belief to an extent that would have prevented the crisis from happening (or the latter proved insufficiently equipped/organized to do so).

Adam Gordon of FutureStudio reflects upon the relationships between belief & action in foresight contexts in his most recent post over at The Future Savvy Journal. He refers to a letter from Peter Schwartz explaining the added value of scenario thinking in assessing and acting upon future challenges. They help to keep various options open, alternatives about what the future might be like, hence serve as a tool-to-think-through & to learn, and pave the way for action. According to Peter Schwartz:

“The problem is that decision-makers believe that they are forced to pick one right answer: the most likely scenario. Their approach to decision-making does not afford them the opportunity to consider apparently low probability but highly consequential scenarios. The answer, therefore, to the “believe” half of the question is a decision-making process that considers several scenarios: compelling stories about alternative futures that incorporate the analysis of “outliers” and describe three or four plausible paths forward.
Good scenarios force decision-makers to challenge their own assumptions and reconsider what is possible. As a result, they can take seriously those scenarios that seemed less likely at first, but whose plausibility increases over time.”

It is also a people matter in the sense that to make radical, systemic changes happen, various roles or skills are needed (e.g. to understand the complexity of the challenge at hand, to network and form the necessary alliances to tackle it, to draft innovative solutions, to scale and sell these, to monitor progress and motivate etc.). Seldomly these are found in one person or one type of person, even one group of people only. Also because of this aspect, the action part of the equation of systemic change is a complex one and no one, easy recipe can be prescribed to orchestrate massive change as such. Nevertheless, insight in these matters is growing, both academically and practically, which will hopefully serve as well in the many futures and societal challenges ahead of us.

[Dave Birch] National currencies are (like nations) a relatively recent invention. And fiat national currencies are an even more recent invention. We tend to see them as a physical law, much like the speed of light, but in reality current monetary arrangements are of human making. And they are transient: money didn’t use to work this way, and there’s no obvious reason for it work this way in the future. So what are the alternatives?

There are a few people out there beginning to wonder if the Totnes Pound (or, more likely in my opinion, the Tesco Pound) mightn’t be a good alternative for the weekly shop and a better long-term hedge than Sterling (which dropped like a stone after a recent speech by the Governor of the Bank of England — not because of any change in the real economy, but because of a speech). There seem to be proto-alternative currencies popping up all over the place at the moment, so there are a few people out there who are doing more than just moan about the fiat currency:

An East Sussex town is introducing its own currency in an effort to encourage shoppers to support the local economy.

[From BBC NEWS | England | Sussex | Lewes launches its own currency]

Personally, I’m unconvinced about these “think global, act local” currency initiatives, but they do deserve study.

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Will there be a world currency, a universal currency? is the “universal credit” beloved of science fiction writers even remotely plausible when some people think that a single currency for Europe is unworkable (and when some people — eg, me — think that a single currency for the UK is economically sub-optimal). In science fiction, the assumption appears to be that some kind of universal single currency represent not only progress but an implicit goal in itself.

Why? Perhaps it’s because creative people (eg, science fiction authors) don’t really think about money because it’ is just (as Bruce Sterling pointed out to me in a podcast I made with him) boring. Maybe it’s something more though. I have a vague memory, which may well be wrong, that the author Brian Aldiss in his Billion Year Spree, a history of science fiction that I can’t find online to search an can’t be bothered to go and look for in my loft, said that it’s because science fiction and heroic fantasy are written for teenage boys and the one commodity that they do not have is money. This may well be part of the explanation, but it seems to me just a likely that it’s because many people don’t really understand what money is or how it works, so speculating on where it might go is outside their envelope. I’m the other way round: I find it hard to imagine time travel (if it does get invented in the future, where are they?) but easy to imagine Google issuing its own currency.

When I was pottering around the World Bank bookshop in Washington I came across The Future of Money by Benjamin Cohen of University of California, Santa Barbara. One of the key questions that the book addresses is whether the dynamic of monetary evolution is a tendency to the one currency because the minimisation of global transaction costs is driving factor or an explosion of currencies because new technology minimises transaction costs in other ways? He concludes that “the power of scale economies notwithstanding, monetary geography is set to become more, not less, complex” and he compares the future to the “heterogenous, multiform mosaic that existed prior to the era of territorial money”. Setting to one side the fact that he knows fantastically more about the topic than I do, I disagree slightly with his conclusion here. As a technologist, I suspect that there will be more different kinds of money, not just more currencies, than ever before. At the end of the transition to e-money, the marginal cost of introducing another currency will be approximately zero. So we will be in the “let a thousand flowers bloom” mode and might reasonably expect a rash of experimentation. At the end of this period, who knows whether dollar bills or Bill’s dollars (an old joke, beloved of us e-cash types) will be more successful?

There are a couple of other things I disagree with him about. One is the issue of anonymity: Cohen says that one of factors that may make it difficult for e-money to substitute for physical notes and coins (”p-money”) is that e-money cannot reproduce the anonymity of p-money but I think that technology can offer more than he thinks in that area. The other is geography, which I’ll go into below.

What might the far future really look like? It’s hard to say, except that it won’t be like the past. There won’t, probably, be widespread barter for example despite the ability of networks to reduce the associated transaction costs. As Nick Szabo says

mental transaction costs are a problem even if there are no commodities like fish with storage costs. A world of pure barter has O(N^2) prices for N commodities, and the mental transaction costs in such a world are correspondingly much higher than a world with a single currency and O(N) prices. So even a market with no transport or storage costs for any commodity whatsoever, but with sufficiently high mental transaction costs, will converge on a single currency.

[From Unenumerated: Logical emergence of money from barter]

Hold on. Doesn’t Nick’s argument here extend from the trading of salted cod in Newfoundland to the trading of Xenodollars in Frankfurt? Won’t mental transaction costs take over once financial transaction costs have fallen to a particular level? I’m not to sure about this: as Hayek pointed out a generation ago, people who lived in “border areas” in days of old seemed perfectly capable of understanding multiple monies (and surely we are all on the border now: the border between the physical world and cyberspace) so there’s no reason to think that they couldn’t do again. More importantly, however, the exchange of medieval moolah took place without mobile phones and 24/7 F/X markets.

If I’ve already told my mobile phone that I want to collect U.S. dollars because I’m going to go on holiday to New York as well as World of Warcraft gold pieces because I feel like a relaxing weekend of Orc slaughter, then my mental transaction cost subsequently falls to zero. My mobile phone is perfectly capable of negotiating with yours…

• Have you got any WoW gold?
• No, will you take British Airways miles?
• Yes, but as they are worthless junk (*) it will be at a 95% discount
• Alright, fair enough, here you go…

Cohen’s cogent analysis of direction forced me to reassess some of my own fairly superficial thoughts on the topic, with the result that I firmed up on one axis of the projection. I think his view of geography is wrong: perhaps in the future, all money will be local, it just that local will mean something different in the connected world. Reed’s Law readies will all be local to someone, so perhaps community currency might be the best description. Whether the community is Totnes or World of Warcraft won’t matter, but the shared desire to minimise transactions costs for “us” at the possible expense of transactions costs from “them”, will. Since the overwhelming majority of retail transactions are local, most people’s transactions most of the time will be in their local currency with minimal transaction costs. A small number of transactions will be in “foreign” currencies (ie, someone else’s local currency).

There’s another refinement to this vision. Going back to Nick Szabo again, these currencies may not be money in the conventional sense at all but what might be termed “near money”. Cohen refers to the cross-elasticity of demand between currencies but if the cost of using near money is low enough (because of new technology) then just as tally sticks switched from being a mechanism for deferred payment into a temporary store of value and then a means of exchange, so technology might go down the same path again but with some more modern implementation. Back to Nick again:

Commodity prices now reflect more the value of commodities as stores of value and hedges or media of exchange, i.e. their values as money substitutes or hedges, than they reflect demand for their industrial consumption.

[From Unenumerated: The "hoarding" and "speculation" in commodities]

So what does this mean? Nick goes on to develop a bigger context:

Speaking perhaps a bit metaphorically, we are witnessing the rise of new and privately issued fractional reserve currencies. They need not and effectively cannot legally be called “money” by their “issuers”, nor can they effectively be used directly in most contracts for payments. But they can be used indirectly to hedge payment terms or investments denominated in flawed, that is in inflating or otherwise unstable, government currencies in which normal contracts and instruments are generally denominated. The results are synthetic “currencies” that, in their economic behavior, may be almost indistinguishable from a tradtional commodity-backed and privately issued fractional reserve currency.

[From Unenumerated: Commodity derivatives: the new currencies]

To paraphrase Cohen’s conclusions, a new era of monetary competition will mean that monetary policy will become even less effective than it is now and governments will need new kinds of fiscal policy to “manage” the economy. My conclusions are that the long-term outcome will surely be that technology is not used to develop replicants — electronic means of exchange that simulate, as perfectly as possible, physical means of exchange — but to develop new means of exchange that are better for society as a whole. Thus e-money as a vehicle for synthetic currencies that could be used directly in contracts as payments ought to be the science fiction writers’ new monetary paradigm. No more “that will be ten galactic credits, thank you”, more “you owe me a return trip to Uranus and a kilogram of platinum for delivery in 12 months”. Well, that’s what my payments autodroid bot (ie, mobile phone) and your payments autodroid bot will agree between themselves anyway.

[Dave Birch] We might often think about the impact of digital money on the economy and business, and indeed society, but what about it’s impact on our language. Here’s an example. I’m going to have to stop using the time-worn vernacular “as bent as a nine-bob note”. Up until decimalisation in 1973, the British shilling of twelve pennies was known as the “bob”. Hence the ten shilling note was the ten bob note. For some odd reason, and I really can’t remember why, I never saw the replacement 5p piece as a bob, nor have I ever referred to a 10p piece as two bob, but for a long time I called a 50p piece a “ten bob piece” (in fact I can distinctly remember once asking my younger brother for ten bob and being genuinely surprised when he had no idea what I was talking about). So ten bob was a sizable amount of coin of the realm whereas nine bob meant something that was clearly fraudulent (as in “the Enron P&L statement was as bent as nine bob note”). But there was in fact at least one nine bob note: the Irish “Newports Bank” issued a nine shilling note in 1799, and a specimen was sold at auction in the U.K. for three thousand euros. So what is to be our post-cash alternative: as bent as a… what? As bent as a card with a magnetic stripe on it… no, wait… as bent as an IBAN with an invalid check digit… as bent as an SDA clone with an invalid digital signature… they don’t seem to have the ring to them, do they?

Our children will surely miss the rich language of cash once it evaporates into cyberspace. No more greenbacks or dimes, no more fivers or farthings. No appropriate slang term has yet arisen to mean — specifically — electronic cash. We need to put our thinking caps on: what is the 21st century addition to beans, bread, bucks, cabbage, chips, dough, lucre, loot, mazuma, moolah, wad or spondoolicks that will make its way into the thesaurus? I’ve always liked wonga, so I was thinking “vonga” (constructed from virtual + wonga) or perhaps “wenga” (I don’t know why, I just like the “e” in there). I also think it would be nice to have new verb to indicate payment by reputation transfer (”to rep” doesn’t seem good enough) but that’s a personal whim.

Or perhaps our children will keep the language of cash, dissociated from the technology. Thus, to draw on a commonly-used example, when I ask my kids “can you dial grandma for me” while I’m driving they know what the verb “to dial” means despite the fact that neither of them have ever seen, much less used, a telephone dial. Soon, the etymology of the verb will be opaque, and kids will come across it only in games of Trivial Pursuit. It’s just like the way many of us talk about making a buck many times a day without having the slightest idea what the origin of “buck” is.

“Creating money is easy. The hard part is getting it accepted.” — Economist Hyam Minsky (1986).
[posted with ecto]

Michele Visciola is a partner of Experientia, but is contributing these ideas as his personal contribution to the project.

I have some thoughts that I want to share with you after having read yours:

I believe that we will never get rid of money. Be realistic! Forget about virtual currency. We will keep living in the physical world in 2015. So let’s be real. A world with no currency would simply mean that we are regressing to a post-future era. A world without a reliable currency would mean the end of the history for all humanity. That has already been forecast several times; however, luckily enough, we are still debating about the future and I hope that in 2015 we will still be here armed with the willingness and desire to understand how to best deal with current challenges. Further, I also believe that we can easily imagine a world with one unique currency valid for everybody; but that would also imply an unrealistic scenario: a world where differences (such as origin, genre, class, education) have disappeared for ever and people can – e.g. - have the same opportunities everywhere, regardless of local economies. I am not a pessimistic guy, however I feel that achievements like this are out of reach for the next several decades.

I also believe that the main challenges we have to deal with today are dependent on two main tenets which are deep-rooted in our culture: first of all, our faith in limitless growth and, second, the regulations that allow the accumulation of unlimited resources in the hands of few, with no care for our general wellbeing. In western-like economies, we generally consume resources up to 9 times our capability to produce goods and new resources within the same timeframe. In fact, we consume vast amounts of energy to produce our goods and we throw things away even before the end of the normal life cycle they were designed for. We look at the future with no parsimony. We envisage an expanded future. We imagine our future to always contain more and more. To make that possible the legislators need to deregulate access to resources, and often completely obscure any reference to reality and to the wisdom of the past.

[This graphic is built through http://manyeyes.alphaworks.ibm.com/manyeyes/ service and property of IBM.]

I very much like the idea that we as individuals act under the pressure of three kinds of forces: the social, the political and the financial. However, we need to be aware that at this precise moment the social and political forces are subordinate to financial power and its forces. I believe that this is mainly because financial power has been able to embody and enact the 2 tenets I was referring to above. It has done so with perseverance and persistency. Financial power has shown no limit in its fantasy and has been able to literally invent unlimited wealth, even if only virtual. These virtual riches are in the hands of few, their creators, and can literally destroy any social or political resistance to counteract or simply control them. What is worse, they can completely obfuscate any reference to the production of goods and services and further put at risk the reality of many innocent savers and other citizens.

We do not suffer a clash of currencies; indeed we are suffering a clash of risk cultures (Ulrich Beck – Conditio Humana). The creators of virtual wealth do not have the same risk culture that is at the basis of individual behavior. In fact, we as individuals are limited; our rationality is bounded, our actions are contextual and therefore restricted by the boundaries of the social and physical contexts. We make our decisions trying to reduce the amount of possible bad consequences. We do not behave to maximize our potential gains. Our behavior is fit only when it shows a clear understanding of the constraints of the situations we live in. We are normally able to assess the possible outcomes of our decisions and also determine to what extent we want to act riskily. In a virtual financial world there are no more physical (goods), nor social (rules) constraints. As a consequence, the related culture of risk will easily consider any perceived limitation as a barrier to the immediate profit of the few manipulators of huge flows of virtual cash.

So let me jump to the conclusions of my few observations: I feel that there is an urgency to reduce the power of financial forces. Will that be possible by making the manipulation of values through digital currencies more transparent? For instance, is there any opportunity to reduce the mediator role of financial institutions? How can digital currency improve the perception of artificial richness and make it vanish as soon as one institution or few individuals accumulate more than is physically conceivable?

I also believe that we need to put our faith in the limitless growth of our resources and values under serious scrutiny. How might digital currency limit the greed of the homo economicus? Is there something that we can imagine as a future scenario in which social pressure and forces get financial power into the right perspective? How can the creation of commons incrementally expand the number of people who can have access to produced values? What are the new services that might consistently increase our capability to improve our wealth without destroying values?

One of the most important point in the picture I sketched in my other post is the cultural and geographical fragmentation of communities. Based mostly on ethnic and religious segmentation, this phenomena will be an acute driver of change. Why is that? simply because people from the same culture will be scattered in different countries, cities and continent; because these cultures will have trouble cohabiting with each others in the local; because these diaspora will stay connected all around the world, etc. What this means practically is that “friction and connection” are definitely interesting keywords to describe the near future (2015 is the near future right?). Frictions between different cultures who may fight against each others on one hand, and connections between people within the same diaspora (but geographically dispersed) or between cultures who may learn from each other.

Frictions and connections actually set up the scene for imagining issues regarding value exchange as they show the underlying factors that can explain the near future. The tension between the local and the global is also an interesting couple of factor.

[This graphics is built through http://manyeyes.alphaworks.ibm.com/manyeyes/ service and property of IBM.]

A list of questions I am thinking about sitting at the airport in Geneva:

Will these communities stop using regular currency such as dollar-euro-yen-yuan-… and use their own currency?

Will Hawala spread out of the islamic world to other communities? Which, back tot he factors I delineated above corresponds to ask whether the local connections between different in big cities communities may lead to the spread of a value system from one culture to another. Will technology-based currencies (M-Pesa) spread from developing countries to the developed world?

Will there be a growing bartering/micro-tasks platforms (such as the one I described in my post last week)?  Who will it serve? Will it be limited to specific communities? Will it be limited to techno-geeks?

Will be bartering be limited to obscure communities? Will current currencies be only used by the developed world? Or will the situation be more complicated with currencies to support legal transactions and bartering to support non-legal ones?

Which forms bartering systems can take? Will mobile and location-based applications will enable bartering process? Is this view too technology-centric and eventually only local population would manage to barter services and goods?

What would be the consequence of having more and more bartering systems? How would States react?

What about the inter-relationships between the digital and the physical? Would I be able to trade my google history against a free access to the local foodstore (which would actually correspond to a huge hydroponic plant connected to a server farm that provide enough energy to grow apples and cherries in winter?)

If my on-line material (history of interaction uploaded pictures, mass amount of emails, google docs and communications such as tweets and blogposts) is intrinsically valued, the ones who host them act like a bank. Who’s going to be such “bank”: mobile phone carriers? search engines? internet providers? internet hosts? what sorts of other services will they eventually propose?

Will there be some “esperanto“-like transaction system? a group of people/country/institutions tired with the tyranny of the euro-dollar which will propose its own attempt to replace them by a more valuable and user-centric money? Possibly by developing countries who both manage to have enough economical resources and intellectual workers to set this up around 2010 after the big subprime crisis? I find this scenario intriguing and may expand it a bit later on, especially because esperanto is close to “desperanto” (desperate) and I can quickly imagine the failure of the high expectations people would put in an esperanto-like transaction system.

• Scenarios of the Mobile World in 2015
• European Union Science & Technology Foresight (check also the Publications section)
• Towards the digital economy: scenarios for business
• World Economic Forum - Scenarios
• World Economic Forum - three 2025 scenarios
• Future Studios scenarios

We create our future as much as our past creates us. The relatively new digital world of the internet has offered us new methods of communicating, of discovering and of interacting. We have learned that we don’t have to simply copy familiar physical forms and adapt them to this new environment, but that we can use our collective imagination to invent new forms and tools, as dynamic and holistic as we are.

Friedrich Kiesler in 1939 defined this as co-realism: ‘an exchange of interacting forces’ and situates the idea of expanding human capacities within it. Here is an opportunity to transform our recent past as consumers and producers to that of active co-creators of our collective future— to create something new with all that we have learned from farming culture, academic enlightenment, master craftsmanship and industrial efficiency and use the essential elements to light a path through our new integrated physical/digital world.

Are we prescribing or determining form and behavior? Are we making means for a specific experience, or are we creating conditions for what has been called the experimental exercise of freedom? - Mies van der Rohe

KashKlash is a space to share thoughts on, and to shape, the future; a playground for visionary people like you, who, in a sense, are already living a few years ahead. One particular aspect of the future we are particularly keen to explore is related to exchanges in our culture. Let’s start from the basic consideration that people have always shared and exchanged things. Sure, it comes to us naturally. But today’s digital communication systems are changing and expanding this age-old behaviour: not only are there new things to share — pictures, music, ratings, writings, videos, data and information — but there are now also many more platforms and opportunities for sharing and exchanging to take place.

Can we consider such exchanges to be ‘economical’? Sure we can, as in the original Greek  meaning of “one who manages a household”: although these exchanges often don’t involve money, they are rapidly growing in importance. Yet, our current capitalist economy is based on the assumption that everything has a monetary value, and ought to be traded according to that value. What is challenging our imagination is that the uptake of digital technology is starting to undermine this assumption.

Consider a person uploading a picture on Flickr, with an open license.  She is making a ‘gift’ to the Flickr community in the sense that she does not expect to have any financial compensation in return, but she does get other things instead: e.g. the feeling of belonging to a community of peers, a great potential visibility for her picture, the recognition of the beauty of it, the happiness of having her friends and relatives virtually gathered around that picture, and so on. The exchange has become non-financial and is definitely shaping a different, or if you want, alternative, ecosystem. An alternative to the mainstream.

Of course we know that alternative economies are nothing new: Local communities worldwide have always practised sharing and trading things (both material and immaterial, like time) without the support of money. Even now in 2008 this local practice is still very widely diffused, yet it sits at the margin of the dominant economic model and has a reputation of being naïve. What is new, with respect to a few years ago, is the increased interaction between digital/global and physical/local sharing through digital, especially mobile, communication tools.

Personal/Shared Values vs. Monetary Value

The current world of physical currency offers a degree of anonymity that allows individuals and groups to disassociate what they produce with what they consume. What have we lost in blurring the association between the two? Does the web, rich with connections and openness, offer an opportunity to reclaim this lost territory? What are the implications of this? Can both forms co-exist? In the merging physical/digital world, will other types of compensation - time, skills, services, a sense of belonging, visibility, public recognition, identity and so on - be increasingly important?

What might replace money as it exists now? What could be sharable and what cannot? What impact could this have on people and communities? How could a post-money economy best be organised, especially given the failures of the current economic model? How do communities of sharing shape and maintain themselves? How do they build their values? Do they have explicit or implicit values? What are the differences between global/online and local/physical communities of sharing? To what extent can digital/mobile communication tools help people in both online and physical communities manage their sharing and exchanging practices? What would the rules, rituals and habits of this future world be?

To address these questions, we created KashKlash, a forum to debate, imagine and co-create this future.
It is worth noting here that the focus of this understanding is on a possible future ecosystem, rather than on the technological tools underpinning it. We want the technology to adapt to the landscape we are trying to sketch out, not to be pulled in a certain direction by technology.

We want you to feel free to express your view, even if you feel that it is loosely related to the subject of the discussion: this platform is a simply a playground for ideas coming from people who are in love with the future and we are looking forward to seeing the amazing jigsaw puzzle of insights that results!
Please experiment with your thoughts and transfer them to us through words, images, sounds, videos, whatever medium you prefer.
We know how powerful ideas can be when a suitable space is created for a diverse community of people to express them.

KashKlash is a public domain project, set up by Heather Moore of Vodafone’s User Experience group, where all the content is public and open for all to use, allowing everyone to gain from everyone else’s contributions.
Such an open and spirited climate should not be hampered by Vodafone’s involvement, and it should be clear to everybody that opinions presented within this project are not somehow attached/attachable to Vodafone but are opinions from individuals, belonging to them and to the public domain.