The 5Cs (revised and updated)
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The document discusses who might issue digital currency in the future. It presents five potential issuers of digital currency: central banks, commercial banks, companies, cryptography, and communities. The document suggests that while central banks issuing digital currency could provide GDP benefits, they may not want to issue a currency they can't control. Commercial banks and companies like M-PESA issuing digital currency is also a possibility. Cryptocurrencies issued through cryptography could be like "digital gold." And communities might issue currencies to reduce internal transaction costs.
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The 5Cs (revised and updated)
- 1. Who will make money? A discussion about the future of digital currency David G.W. Birch Russian Fintech Association (Moscow, August 2017) www.dgwbirch.com @dgwbirch V3
- 2. David G.W. Birch author, advisor and commentator Global top 15 favourite sources of business information (Wired Magazine); London FinTech Top 10 most influential commentators (City A.M.); Top 20 Fintech Influencer (JAX London); Top five Leader in IDentity (Rise); Top 10 Twitter account followed by innovators, alongside Bill Gates and Richard Branson (PR Daily); Top 10 most influential voices in banking (Financial Brand); Top 50 blockchain insider (Richtopia); Europe’s most influential commentator on emerging payments (Total Payments). 2 ThisisINSANE
- 3. Available at all good bookshops… • > 3
- 4. Agenda What is digital currency? Who might issue digital currency? Who do I think will issue digital currency? 4
- 5. Currency and Digital Currency Let’s agree on the terminology and then we can move on 5
- 6. Dumb Money and Smart Money 6
- 8. Digital Currency Strictly speaking a currency board, not a currency 8
- 9. Cryptocurrency Why would a central bank issue a currency that they cannot control? 9
- 11. Money Creators Five different ideas about the future of currency 11
- 13. Central Bank There are obvious +ve GDP benefits to a digital currency 13
- 14. Commercial Bank Swindon, City of the Future 14
- 15. Company M-PESA is a currency board too 15
- 16. Cryptography Private and public keys as “digital gold” 16
- 17. Community Reduce internal transaction costs, increase external transactions costs 17
- 18. What’s the Story? A future narrative 18
- 19. BritCoin or BritPESA? I look forward to a time when the successors to Bill Gates will have put the successors to Alan Greenspan out of business. Edward de Bono (1993) 19
- 20. Looking Forwards The electronic money world looks much more like the neolithic world economy before the invention of money than it looks like the market as we have known it in the past few hundred years Social anthropologist Jack Weatherford The Fiscal Frontier (1998) 20
- 21. in the future, everyone will be famous for fifteen megabytes engage dgwbirch limited post 1 Armadale Road, Woking, Surrey GU21 3LB, UK call +44 7850 863168 contact mail@dgwbirch.com visit www.dgwbirch.com follow @dgwbirch comment blog.dgwbirch.com connect https://www.linkedin.com/in/dgwbirch/ order amazon.co.uk “Before Babylon, Beyond Bitcoin”
Editor's Notes
- But who will want to issue these new currencies? Governments? Banks? One obvious category is corporates. When Edward de Bono wrote The IBM Dollar back in 1993[1], he looked forward to a time when “the successors to Bill Gates will have put the successors to Alan Greenspan out of business”, arguing that it would be more efficient for companies to issue money than equity. Another obvious category is communities, especially with sentiments around anti-globalisation abounding. Here in London we already have the Brixton e-Pound! The Local Exchange Trading Systems (LETS) from physical communities and the platinum pieces and Facebook credits from virtual communities will merge and surge, forming a panoply of private currencies that will make trade more efficient. Why save dollars for your retirement when you can save kilowatts, hours or calories? Once we take cash out of society, the implications go far beyond economic efficiency and reduced transaction costs. Our view of money will change and, just as the people of Stuart England went from seeing money as coin to money as paper, we will go from seeing fiat currency to seeing a spectrum of currency types that seem alien right now.
- In “local” transactions, business can work perfectly well with no currency and no banks. A generation ago Ireland’s economy was built up from such local transactions, so people were able to self-organise their own money supply. But, as I think we all understand, in the modern economy “local” means something entirely different. While none of us know how this is going to pan out, there is a clearly a redefinition of locality underway, and it has social networking, virtual worlds and disconnection technologies as inputs. One of my son’s localities is the World of Warcraft: if Zopa were to offer loans in World of Warcraft gold, my son could perform that same function as an Irish publican in the example above and provide an assessment of creditworthiness for avatars he knows. Everywhere is local now. Until the invention of the mobile phone and its connection with the internet, I think it was reasonable to assume that for small transactions there was no way of using identity, credentials and reputation cost-effectively or, indeed, at all. Which is why it made sense to continue to use notes and coins to settle retail transactions. But now? The replacement of notes and coins in this way all hinges on the trader recognising me. Once this has been achieved, the issue of trust can be instantly resolved by computations across the social graph.