Currency and its possible development

This is a little thought about货币本质. Last night when I was trying out some new online services, it occurred to me that if we could remove all the limitations that money has, then the applications of money would be endless.

What is money? What is its value? What happens if we break down the three key components that make up money and its value?

记账单位(quantified value)
交易媒介(transfer value)
价值储藏(Store of Value)

We often don’t even realize these three distinct characteristics of money, let alone what it means to separate them. For example, if our currency of choice is the U.S. dollar, we’ll find that:

Everything is priced in US dollars;
Our tools for transferring monetary value are based on the US dollar (banking system automated exchanges, bank settlement systems, etc.);
Our storage currency is USD.
But what if this isn’t necessarily the case?

Rethinking “medium of exchange”

Let's imagine a few different scenarios of large remittances. We load large piles of banknotes into armored vehicles and transport them from one place to another. I find this ridiculous because the entire process is essentially an exchange of monetary value, but it is very troublesome to use paper money. We can make this process simpler through more efficient means (such as checks, electronic transfers, etc.), but even so, it is still a hassle because the process is time-consuming and costly.

If all monetary value is just a form of expression, and the transfer of monetary value is just a form of transportation, then why can't we organize this expression into the simplest and most efficient way for us? I think this idea is absolutely feasible in today's world. For example, now I can immediately click on my taskbar to start a video chat and connect with my friends all over the world immediately. It's all so simple, so what can't be achieved?

Rethinking “Store of Value”

When value is created, it is absolutely there. When we realize it later (we can earn money through work, exchange some products and services, or cash out from investments), we may choose to store money in some way for future needs. Whatever method we choose, it will cause fluctuations in other ways of storing money. Usually, we store the value of money in local currency, unless there is excess or real demand, we will re-assign it through investment or exchange for other currencies.

If you can…

What would happen if we took the familiar currency and used it strictly as a unit of account, but gave up the other two properties?

What if we could bypass the current bank intermediary system at the touch of a button and use an internet-like system that is cheaper and more convenient to transfer money?

What if, when we get a salary or acquire some wealth, we can choose completely freely and fluidly in何种货币to store it (whether it is dollars, pounds, yen, gold or sheepskin)?

To make this clearer, here is an example:
If I'm a Filipino currently visiting Japan and I just got paid $100 from a US client, it would be great if I could immediately store that money in £64 (since I actually live in the UK) and then walk into a Japanese sushi restaurant (which only deals in Yen) and buy sushi in 5 minutes without having to do any currency conversion.

It could get even better: if I could open my messaging app while sitting at a sushi restaurant, chat about parkour in the group chat, and instantly, in the same app, donate some money in狗狗币to the Jamaican bobsleigh team (who were trying to get into the Winter Olympics that year), and at the same time send 250比索to my team mate who was walking home from the gas station because he had just mentioned in the group chat that he was short of money.

Think about what I just did. My initial unit of account was in美元, which is what I get paid in. My final store of value was in英镑, and I didn’t have to go to anyone to exchange it, I just did it on my phone. I also want to mention that I can transfer some of my money directly to a sports team in the Caribbean on the other side of the world through a messaging app. This app only needs an internet connection to work, and it can access some peer-to-peer network protocols, which bypass all the banking intermediaries and become my own "medium of exchange". If this is still in doubt, think about how Skype can enable video chat by just connecting to the internet and using the appropriate peer-to-peer protocols, bypassing the previous telecommunications middlemen.

Change your mindset

The examples above are just a glimpse of the world. In five minutes, I can present five completely different denominations of currency that are thousands of miles apart in culture and geography, and in one case, the currency has not even been issued by the government. I want to participate in local货币交易, or some汇款活动and国际集资, all through my phone. And I can sit in a restaurant and just tap my finger, and all parties can receive the remittance almost simultaneously.

BitStore service application interface

Looking ahead

What if I told you that the engineering infrastructure for all of the above operations is already built and available today, and that it only takes a little creativity,区块链technology, and the like, through the BitStorm platform, ShapeShift.io, and Telegram Messenger, to put it all together and put it into action? And I told you that this particular project is currently the fastest growing venture capital in the world, and will reach十亿美元in investment this year.

What will continue to become possible in Bitcoin? What new services will serve another six billion people? How will central banks and governments respond when money becomes一种选择而不是强制? (Think of capital controls in Venezuela and Argentina versus the willingness of the Bristol Pound to participate.)

“The future that has been presented to us has not been evenly distributed.”

These are the words of William Gibson. This tells us that we should pay close attention to recent developments in technologies such as FinTech and blockchain. A lot of progress has been made in a short period of time, but we are only beginning to see the tip of the iceberg of future technological possibilities. Advances and developments in these and related fields will undoubtedly bring us more questions and more creative insights into how we think about money, the nature of money, and the role it will play in the future of society.

I’d be willing to bet that we’ll be involved in some very interesting developments and advancements in the coming years.