I’ve been thinking about the future of
money, as you do. I’ve been doing this because I’ve been a bit disappointed by ‘challenger’
banks that have emerged in the UK recently. Why? Because they’re just banks…
with a twist! Like they’re just a mobile app. Exciting stuff… but still a
version of the storage and transfer of money machines that have existed for
more or less two centuries.
My thought experiment (ongoing) is about what
we’d build if we didn’t have banks but did have our world of perfect information
and connectivity. Here’s some semi-structured thoughts about it:
Fundamentally (in any economy) I want to earn and use assets that enable
me to reach my implicit and explicit life objectives. Many of those objectives are about daily
survival at a level of luxury to which I’m accustomed. Some are longer term and
more complex. At the root are assets.
Assets are a lot more liquid than they used
to be because information about their value is more pervasive, as is
information about their value and market places that match supply and demand.
Historically the only liquid assets that a
person had were in the form of money, which can be transferred between people
without conversion if you’re all in the same base currency
Bitcoin and analogous currencies based on
the blockchain mean that different currencies can also be transferred without a
(significant) cost of conversion. This is also true for other assets, the
ownership of which could hypothetically be held in a blockchain
I can also share assets or use them on
demand in a way that was impossible up until about five years ago. I can do
this because trustworthiness is also an asset, albeit difficult to convert.
To make my relatively more and less liquid
assets usable I need to know how much they’re worth if I lease them, exchange
them or sell them at any one time. I need a kind of dashboard, which may well
use a currency as a measure of relative value… but I don’t necessarily need to
hold all of my assets in a liquid form, or even most of them.
This isn’t that crazy for anyone who owns
(or more likely part-owns) a house. Most of our assets are relatively illiquid although
I could use Airbnb to rent my house and rent another off the same platform for
less, thus potentially making me cash-positive in very short order
Without the dashboard – a kind of
Booking.com-cum-Amazon Marketplace for assets – it’s really difficult for me to
behave in this way because I lack information. And, of course, many assets in the
Industrial Economy come with legislated ownership rights and limits on their
transferability. Houses, cars, traditional financial instruments and so on.
But it’s interesting. Lots of digital
assets have value and are not regulated. Simple things like iTunes vouchers or
Starbucks credit, to more complex things like an unrealised investment in Kickstarter.
Unregulated, but potentially transferable assets, particularly in a
blockchain-enabled economy.
All of this makes me wonder whether the ‘bank
of the future’ is just an asset register into which I diligently enter all of
my assets (maybe by snapping them on my smartphone and using an algorithmic
application to ID them, or hooking up to government systems). Better still the
register can give me instant valuations on things, which I can make liquid
using all manner of services and peer-to-peer exchanges.
And even better still, maybe I can navigate
all my things in VR – think the Matrix gun rack scene but with fast fashion and
books about obscure historical events. Aces.
Chances of this happening? Tiny. People are
really used to money and to nice little numbers in accounts. But actually, the
first step is a complementary service that indexes and values your life’s
assets. And that is definitely feasible right now. It could even be monetised
by sending leads to eBay and similar services, as well as to advertisers.
Once
a major player emerges in that business then maybe the banks are fair game in a
world of zero interest rates and relatively free spending.
And there’s VR to be excited about of
course.
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