Two hundred years ago in an era dominated by agriculture, most of the people in the US had little use for money. Then the industrial era arrived and a majority of Americans were paid for their labor in cash and used it to obtain the necessities of life.
Now we are in another transition. So how should we think about money in the Internet age? How is the traditional role of the dollar, pound, euro, etc. being disrupted by the changes the Internet is bringing to the economy?
I’m referring to money as a form of exchange of value which can be easily transferred. There have been barter exchanges for many years, even before the Internet. That’s not what this post is about.
Below are some of the answers I found.
First there’s Bitcoin. Despite the woes of the Bitcoin exchanges earlier this year, Bitcoin has been, in some quarters, proposed as the Internet’s new version of money. However, its major difference from traditional currencies is its independence of government control. Beyond that not unimportant aspect, Bitcoin doesn’t seem to be based on a fundamental difference in how money is viewed or used.
While the Internet made it possible, Bitcoin hasn’t so far really answered the question: what is the Internet doing to money? What is money in an Internet economy?
Last year, in his book “Who Owns The Future”, Jason Lanier focused on what he described as “off the books” activities in the Internet. In other words, things we do that used to have a monetary value, but are not now monetized. (More on Lanier’s proposals in another blog post.)
I’ve also mentioned before the inadequacy of GDP as a measure of economic activity, when much of it is not monetized. Continuing that theme of a need for a different kind of accounting, in its Networked Society City Index 2014 report released this month, the Ericsson company states: “GDP will be redefined to capture a new understanding of sustainable value creation and wealth in cities and in nations.”
Then, in a recently posted TED video, Michael Green presented his alternative Social Progress Index, which is intended to capture some of that non-monetized value by assessing the quality of life. But how can people measure this so it can support individual exchanges and thus provide incentives for more social progress?
The TimeBanks movement is, in a sense, in the business of creating a currency based on social progress. For almost two decades, this group has been getting people to provide and receive social services through a system of credits based on the number of hours of service a person provides.
Value can go beyond social contributions to social reputation. More than ten years ago, Cory Doctorow, the science fiction writer, coined the term “Whuffie” for a currency based on social reputation. As social media have developed, the idea has been recurrent, more recently – as in this article “Why Social Accountability Will Be the New Currency of the Web”. There was even a short-lived Whuffie Bank.
Perhaps the most far reaching approach to design a form of money for the Internet age has been Dan Robles’ Ingenesist Project. His focus is on measuring the intangible value of the Internet’s products – its social connections, knowledge and creativity. And then using that as a form of currency that could be exchanged. His goal is nothing less ambitious than “to solve the under-mining problem that there is no accounting system for intangible assets. Only then can there be intrinsic value in the conservation of those assets.”
I’d suggest going to his website for more detail and the many videos which I can’t begin to elaborate in this short post.
What we do about measuring the products and services that are generated in the digital world is still unclear. Perhaps one of the ideas I’ve listed will lead to the world’s dominant form of currency or perhaps something else will arise. But I would expect that the way we’ve thought about and used our money in the past will indeed be changed – and not all that far into the future.
© 2014 Norman Jacknis