Money is a widely distributed machine whose purpose is to compute the value of goods and services. In order to function, money needs certain vital qualities.
Money has to be mobile, so as to move from hand to hand with ease. Money needs to be flexible: incarnating itself as coins, paper, bonds, stocks or zipping electronic impulses. Money needs psychological acceptance: The population must unblinkingly accept the fact that a plastic card or flimsy paper is of great value.
Money needs consistency and staying power: Money can’t be allowed to hyperinflate to nothing in a week, or to be usable only on leap years, or to change its colors with the fashion seasons. Money needs to be perfectly fungible: One dollar is always exchangeable for any other, no matter what its source. And, lastly, money needs authority to issue it, to manage it, to back its value and to chase off rival systems of money.
Societies have been known to disarm and give up warfare, but nobody de-banks and gives up money. It would be easier to give up religion, maybe even language. Money evolves. It writhes around energetically, trying to fulfill its contradictory roles and to become all things to all interested parties. That is not possible, so money therefore periodically breaks down and blows up. Previous terms for these episodes were bank failures, financial panics, runs on currency, debt crises, liquidity runs, national defaults, bubbles, hyperinflation. As new calamities arise, we will give them new names.
Money is a form of computation: As money is transferred from one eager owner to another, it computes the value of goods and services. At its best, the machine automatically arbitrages the value of goods and services between different monetary systems. Money fluctuates in value against other currencies, sometimes wildly. We cannot invent a stable money any more than we have ever invented a fully stable computer operating system. Why? Because we don’t want fully stable computers. Only boring people with no sense of invention or enterprise would use them. Money that worked perfectly would lack all entrepreneurial opportunity. We don’t use money merely to generate wealth. We use money to create new methods of generating wealth.
The movement of money has reached top speed now. We can’t exceed the speed of light. But, in the future, money will be handled much more quickly, and it will travel over very long and very crooked paths.
Instead of a plastic card for a bank, we could have a plastic card with a bank. The stone-pillared edifices that used to house banks are full of nightclubs and gyms now; people bank electronically, they use ATMs. An ATM is merely a device to spit paper. Why not make every card an ATM? Tomorrow’s microchips won’t lack for capacity. A cell phone is like yesterday’s switching station, a laptop is yesterday’s supercomputer. Why settle for a bank account when you could buy a cheap bank-on-a-chip?
Instead of price tags, we could have radio frequency identification tags that calculate price as you touch the item. Once they’re stamped with an inked price, objects have to settle for that value, but why dont prices change instantaneously in response to demand?
Instead of credit ratings to acquire capital, credit records could become capital. If I’m superb at shopping, a super-user whose word is law for those who trust me for recommendations, how come I’m not paid to shop? Maybe Mr. A minds his p’s and q’s and never touches his capital–while Mr. B is a player who plunges into debt and escapes it repeatedly.
Instead of “socially responsible investment,” we might be confronted with money that refuses to let itself be spent. Electronic funds might double check themselves against a blacklist before they move from one chip to another. Touch a terrorist bank account, and you might find yourself with not just a refusal of funds but also with instant taps on your phone and e-mail.
Instead of secret bank accounts, entire secret banks: offshore data havens tucked into satellites or old dead oil rigs or blast-proofed caves outside Kandahar. Black electronic money is encrypted data that does not let itself be recognized as money. Like jewels sewn into a coat lining, a self-perpetuating spool of ones and zeros refuses to admit that it is wealth.
Imagine that you no longer read speculative articles in financial magazines. You don’t pay to read ink in magazines. Nobody does that kind of data transaction anymore. Instead, imagine yourself confronted by an electronic Web page that is eager to read you. Once it learns who you are and how much you have to offer, it make a ferocious effort to convince you that the money game is transforming, with profoundly new players, unimaginable new rules. Then it offers you money to believe what it says. It demands that you act as its broker and send it to all of your friends.
Bruce Sterling is a futurist, journalist and science-fiction writer. He is living in Belgrade, capital of Serbia and Montenegro, and witnessing markets in transition.