Chapter 65 12.5 Peer-to-peer finance and super small money

The important impact of digital currency on the hive mind of the network economy has begun to appear.We anticipate five areas: acceleration.After the currency is completely separated from the physical entity, the velocity of circulation will increase.It will travel farther and faster.An increase in the velocity of money is equivalent to an increase in the quantity of money in circulation.The satellite is in the sky, enabling the global stock exchange to operate close to the speed of light day and night, thus expanding the global currency volume by 5%.Widespread use of digital currency will further accelerate the speed of currency circulation.

continuity.Currency made of gold, precious materials, or paper, presented in fixed units and paid out at fixed times.For example, ATM machines spit out $20 bills, and so on.Even though you use the phone every day, you only pay the phone company once a month.This is a "batch mode" currency.Electronic money is a continuous stream.It allows, in Alvin Toffler's words, to pay for recurring expenses "by trickle-by-second trickles from your electronic account."As soon as you hang up, the e-money account pays for the call, or—how about that? - Pay when you talk.Payment occurs simultaneously with usage.As the velocity of circulation increases, continuous electronic money can approach near-instant payments.And this will hinder the development of banks, which now make a large part of their profits from "money in transit"-the immediacy makes it no longer exist.

Infinite interchangeability.We finally have real malleable money.Once completely out of the physical world, digital currencies are no longer limited to a single form of delivery, but can happily migrate across whichever medium is most convenient.Discrete bills fade away.Accounts will appear at the same time as the content of the service or the service itself.The billing for the videotape can be integrated in the videotape.The invoice is right there in the barcode and paid with a single scan of the laser.Anything that has a charge can be used to recharge and pay.Exchange of foreign currency becomes a change of symbols.Money is as malleable as digital information.Certain exchanges and interactions that were not previously part of economic activity can be more easily carried out using money.It opened the door to the Internet for business activities.

accessibility.Sophisticated manipulation of money has hitherto been the private domain of professional financial institutions (the priests of finance).But just as millions of Macs crushed the monopoly of mainframe computers guarded by the high priests, so electronic money will break the monopoly of the financial Brahmins.Imagine if you can charge (and receive) the interest you deserve by dragging your icon onto the electronic note; imagine if you can decompose and set variable interest on the "interest receivable" icon, so that It grows with time.Or, if you can send money in advance, you might be able to charge interest by the minute.Or, program a personal computer so that it can differentiate payments according to the bank's prime loan rate—programming currency transactions for amateurs.Or, let the computer track exchange rates and pay bills in the least valuable currency currently available.Once the public can drink from the same river as the professionals—the river of electronic money—all these smart financial tools will immediately surface.Now, we may be able to add finance to our mix, and we're heading towards code capitalism.

privatization.The ease of acquisition, delivery, and generation of electronic money makes it an ideal candidate for private money.The 214 billion yen that Nippon Telegraph and Telephone Corporation has tied up in phone cards is just a limited type of private currency.The law of the Internet is: as long as the computer is connected to electronic money, whoever owns the computer owns not only the printing press, but also the mint.Quasi-money will suddenly appear (and disappear there) wherever there is credit. Historically, the vast majority of modern barter networks would have moved quickly to currency transactions; one might expect the same to be the case with electronic transaction organizations, but the blindness inherent in electronic money systems may not follow this trend.Whether the quasi-currency network can surface is a question involving $350 billion in taxes and fees.

The minting and issuance of money is one of the few remaining functions of government that has not been usurped by the private sector.Electronic money would weaken this insurmountable barrier.Doing so would provide a powerful tool for private governance.These institutions of private governance may have been established by groups of rebel nations, or by rapidly growing "peripheral cities" near world metropolises.The global use of institutional e-money for money laundering is beyond anyone’s control.