Last Monday, Cameron and I gave a keynote presentation at the 2014 Money20/20 conference in Las Vegas, Nevada. If it’s any indication of where money and payments are going, the two hottest topics at the conference this year were Bitcoin and Apple Pay. Two years ago, as far as the conference and attendees were concerned, Bitcoin didn’t even exist and Apple Pay certainly didn’t.
The premise of our presentation is simple; money is a technology that was designed to solve a trade problem, but today, it’s actually creating one.
We break our presentation into three parts, the first one taking you through a quick understanding of why we have money, what money is, what it has been and what it can be. I’ve found in my conversations over the past few years that money is the most widely used yet misunderstood technology in the world, so it’s helpful to begin any discussion about it with the right framework.
The second part of our presentation discusses why exactly money is creating a trade problem today. The long and short of it is that when the Internet and its protocols were being developed many years ago, computer scientists had not achieved the breakthroughs necessary to create a value transfer protocol (VFP) which would enable Internet money. As a result, every other component of trade has become truly global, except for money. The good news is that five years ago, Satoshi Nakamoto solved the Byzantine General’s Problem, and Money over IP has since started to become a reality.
We conclude our presentation talking about the future of money. Our belief is that crypto-currencies will enable a Smart Internet, whereby computers will be able to interact intelligently to reduce network congestion and allocate scarce resources accordingly. Crypto-currencies will also enable the the first forms of artificial life ushering in a ‘Second Machine Age’. While computers, machines and things (e.g., refrigerator) cannot open a bank account today, they will be able to plug into the Bitcoin protocol and behave like rational economic actors in the future. These computers known as autonomous agents (e.g., self-driving cars, drones) will own themselves, and if profitable, spawn children to create families or autonomous corporations. A Trade Singularity will occur, whereby trade between machines, computers and things, will exceed trade between humans. Uncreative tasks will become primarily automated causing goods and services to become much cheaper and living standards to rise.
Money innovation is inextricably tied to every significant accomplishment of humankind. When it falls behind, we are faced with an alarming problem; when it’s thriving, we are propelled to new heights never before imagined.
It’s a lot to wrap your head around, but I believe this is the way future is headed and I believe this future is a bright one.