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Guest Column: The Peer-To-Peer Payoff

The next 25 years of information technology will blur boundaries between previously well-formed and discrete concepts, entities, or states of being. For example, work and play, nation and individual, rich and poor will be interpreted differently, with more overlaps than differences because of the porous nature of "being digital."

A fully interconnected world with a common language is a very different place than one delimited by distance and Newtonian physics. Without question, the generation of kids born a quarter of a century hence will have totally different views about some of the most basic tenets of society, from love and family to business and pleasure. Of these basic elements, I have chosen to focus on one: money. How will transactions change over the next 25 years? Perhaps surprisingly.

Cattle are widely considered the oldest form of money, used over 10,000 years ago to make payments and to account for debts and credits. The inherent value was in the cow itself. Only much later, after the Stone Age, did currency emerge in which its worth was established by convention and trust, using objects like shells and shell imitations. Modern coinage and paper money can be traced to China 500 B.C. and 100 B.C., using metal and leather, respectively. Paper banknotes emerged at the end of the 17th century as a promise to pay the bearer a sum on demand. These were handwritten and signed by cashiers. Only in the middle of the 18th century did printed, fixed denominations start to appear. It then took another 100 years for fully printed notes to emerge without need for filling in the name of the payee and signing each one individually. We call this stuff cash.

Today, cash has been replaced increasingly by electronic credit and debit. In excess of three trillion dollars is moved around the planet daily. Conversions occur, accounts are changed, addressers and addressees are modified. But no money moves in the sense of coins or pigs going from my pocket or pen to yours. Everything is a scheme of pointers. The bits used to achieve such accounting don't have value unto themselves. They're only the means.

Some people, including myself, believe the next step is for some of those bits to have value. That is to say, consider a string of bits to be like a virtual cow or shell. In order to distinguish these bits (like telling the difference between a beautiful seashell and a piece of coal), they would need an agreed identity. To avoid forgery, they would need a unique and secure ID. And to stop multiple spending of the same bits, there would need to be a clearing process or a means to reveal the identity of anybody who tries to double-spend. All of these requirements are easily achieved in both traceable and anonymous systems of E-cash. In these cases, the money does move. The bits are money. The more you have, the richer you are. This is the future, though maybe only in part.

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