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introduction - theory - practice - London - ( revisions )
Presentation to Digital Money Forum
DMF - London - April 2nd, 2003
Open Money - Context and Application
This presentation has three parts - I will cover some theory and practice of virtual money in twenty minutes and leave time for questions, which are usually better entertainment.
First - this presentation is about virtual money, which will probably be digital money, but since it's not necessarily so, please be prepared to adjust your sets. And, please also be assured - this isn't just another can of beenz.
This main interest of this forum is of course the application of digital technologies to mainstream money. Digital conventional money is (potentially) big business, which is why we're here today and tomorrow - with all due thanks to the sponsors for their generosity and Hyperion for their excellent organisation.
There's a sense in which digitizing conventional money is like modernising railways - increasing safety, tilting trains, maglev etc - largely a matter of improvements to what's already in place. It's a matter of staying in the tracks.
But while there's potentially much money in managing money, it still seems quite hard for newcomers to make it pay. For instance, the Guardian recently, on a micropayments system that failed -
"The problem was that merchants hated the anonymity part, governments hated the alternative currency part, banks hated the competition, and internet users could not be persuaded that they even needed micropayments at all."
This is a familiar story - it's tough talking money with banks and governments. For a start, they think they know everything about what it is, and it's counter-productive to suggest there might be anything they don't already know better than anyone else. But in the end, if they don't know what it is, they do know where it is and that does generally seem to be the key issue.
In reality, it seems that conventional money is increasingly unreal and insubstantial - most of our current assets are merely items of account, with nothing really behind them. This is the basis of open money / virtual money / community currencies - information in accounting systems.
Open money is NOT merely a different technology for moving the "hard" stuff around - it's a whole new sort of stuff in itself. Indeed, the technology and application of open money is to the technology of conventional money as aviation engineering is to marine, or as ac systems are to dc, as light from a laser beam is to a light from an incandescent bulb.
Virtual money doesn't need to be digital - it can be on paper, handshake, or by nod and wink - but it's a very good fit for digital technolgies.
It's also an entirely new context, or almost so, and one without the stringent requirements and entrenched vested interests that so constrain developments in conventional money.
So, just as the Wright brothers didn't try to fly a locomotive, it makes sense for the digital development of virtual money to take full advantage of the space available in that domain.
And if, as we project, virtual money transfers will soon account for at least 20% of gdp in developed nations, the opportunity for rapid growth is worth consideration.
Which brings me to my second point - that I don't expect you to believe much of what I'm saying today, or even any of it - at least, not yet. But I do also fully expect that you will get it in the end.
The shifting of a major paradigm is more frequently discussed in the abstract than observed in the real world, or noticed by people in general. It took some time for the round earth to replace the flat and for most people the change was not significant. Likewise, the theory of relativity didn't greatly affect the price of fish or the operation of the railways.
However, there are a lot of people who use money, some of us on a daily basis, so a significant shift in what money is can be expected to have some impact on all of us.
So, this is an advisory. There's more to money than you presently suppose, and that's actually good news.