Background: Director of Innovation at Consult Hyperion, a consultancy the author helped to found. He is a widely quoted expert on digital identity and digital currency, with decades of real-world experience in these fields.
Length and Readability
233 pages of text, plus short forwards/acknowledgments/appendix
This is the sort of book you read when you want a 360 degree view of a topic that includes both ancient history and potentially far-off futures. The author brings his broad experience to bear with specific case studies and useful historical context.
This is a complex subject, however, so you can’t skim past the challenging bits and expect to understand the whole.
Recommended for anyone interested in a thorough analysis of money, past present and future. The author is a recognized thought leader in digital money, and unlike many pundits he has decades of real experience to share. His case studies include success and (just as usefully) failures.
What is the “Big Idea” in this book?
Money sits at the intersection of “Society” and “Technology”. When either – or both – of those things change course, money goes along for the ride. History is very clear on that point.
- The printing press made it possible to create paper-based currency rather than just using coins made of precious metals.
- Telephony initially allowed money to travel at the speed of light and later provided the systems needed to support credit and debit cards.
- Financial crises like the one in the U.S. in 1907 forced the creation of the modern Federal Reserve Bank system and the inflation caused in part by the Vietnam War ended the dollar’s link to gold prices.
- The recent Financial Crisis and trust in technology gave rise to bitcoin as an alternative to central bank issued money.
Now, two global trends are set to change the nature of money once again. The first is increasingly universal access to the Internet, with broadband access now available to 4 billion people around the world. The second is mobile phone technology, which allows for both immediate access to the Internet and affordable computing power greater than that which put men on the moon.
How this changes “Money” is anyone’s guess, but the book does a lot of heavy lifting considering various options in the last section: “The Future: Money That Understands Us”.
A few of the key points:
- Because trust is a precondition for any monetary system, our personal social identities can eventually provide a new solution for that requirement. Wonder why the new iPhone has facial recognition? The digitization of your unique facial characteristics is one way to assure that only you have access to the money stored on a phone, or your Facebook account or any other means of identifying you.
- Crypto-currencies represent a disruption for the current financial system for two reasons. First, they allow for peer-to-peer transfers outside the global banking system. Second, they maintain decentralized independent ledgers of transactions rather than residing in one institution.
- Technology allows for new kinds of money. In addition to old-school central and commercial banks “Creating” money, crypto currencies allow anyone to set up their own monetary equivalent. Communities of people can also establish their own money for trade between themselves.
The key takeaway of this book is simple but provocative: “How will the future of money be organized? “Probably not by today’s central banks” (Chapter 17). The author’s best guess is that “Communities rather than countries will be the natural currency issuers of the future.” Those communities may be spread around the world, enabled by mobile phones and drawn together in a common social graph.
Facebook bucks, anyone?
Anything Wrong With It?
If you fundamentally mistrust any currency except gold or silver and (maybe) real cash money, you are in the wrong shop with this book. The author believes most physical cash should be abolished, and other forms of technology-enabled money should take its place. Like, yesterday…
To his credit, he does highlight the fact that paper currency is still growing in popularity in Great Britain (the same is true in the U.S., by the way). But he sees that trend as profoundly undesirable, equating the continuation of cash with consciously enabling illegal activities and suboptimal societal outcomes.
Birch calls out the most common error that futurists tend to make, but it also applies to his efforts here: underestimating both how long change actually takes and its eventual impact on society. He only paints with broadest strokes when it comes to predicting the future of cash to accommodate this reality. Personally I found this approach honest and useful, but this is not a “Should I buy bitcoin here?” type of book.
The Author’s Website:
Other Reviews of the Book:
From The Economist (registration required): https://www.economist.com/news/books-and-arts/21724374-new-book-argues-mobiles-are-future-predicting-future-money