Just about everything in our world is changing: the climate, the way we live, the way we make a living. Most of those changes are due to the advent of technology and the economy that propagates that technology around the world. At the heart of all of it, is money, the economic blood that flows through the system, collecting, storing and distributing value between people and enterprises, across distance and time.
Money, too, appears to be changing, impacted by the same electronic digital technology that is changing everything else. But will this new digital money simply be more convenient, or will it actually change the nature of our economy?
One big area where we see this happening is in developing countries where mobile money provides financial services in the form of secure digital transactions, ushering in a new era of a cashless economy. They allow rural farmers and vendors to easily process payments, even in outlying areas, allowing them to participate directly in the world economy. This is a big deal says Kosta Peric of the Gates Foundation, who is featured in the film, especially when you consider that some 2 billion people do not have access to any kind of modern financial system. You can’t build a business without one. “You need loans, you need a safe way to pay for things, you need a way to track your wealth. If you don’t have all of that, how can you grow? There is no way. But in developing countries, even people who don’t have a bank account, have a mobile phone.”
That is why cell phone-based mobile banking has exploded. Indeed some 3.5 million jobs in sub-Saharan Africa are attributed to mobile technology. And mobile money loans, sometimes in very small amounts, can be enough to get a small business off the ground for rural entrepreneurs with enterprises far too small to attract venture capital, but big enough to bring a new business owner out of poverty. It is happening in large numbers.
Rachel Botsman, author of What’s Mine is Yours, is also featured in the film. Botsman, who has written extensively about collaborative consumption, says that the way the financial system is set up, it locks a lot of people out. “The system centralizes wealth and control of production and that’s really had a large effect on economies and innovation and the way people live. What’s most exciting in the entrepreneurial community – it’s kind of a blowing up of power, you see this power moving from the center to the edges and that’s incredibly exciting because you can suddenly exchange in new ways, you can bring people into the financial system who have been previously excluded.”
Mobile payments began in Uganda in 2008. Four years later, 9 million people are using it. A farmer in Uganda grows maize and raises goats. He gets paid with mobile money. It goes straight into the bank. He saves. Eventually he can buy a tractor. Eighty percent of Ugandans are farmers. Who has made this happen? All of us. Telecoms have come. Government has created a conducive environment. People have embraced it. If cash is king, then the king is dead.
Says Botsman, “In a few years, we’ll be going to Africa to learn about banking.”
It’s a new paradigm. We need to unlearn the old one. The Africans don’t have to. The power that banks once had, to decide what ideas move forward, has become democratized through crowdsourcing. This trend will continue to grow as entrepreneurs reach out to their future customers to pull them into the market, offering a future equity stake if they have to. Crowdfunding is revolutionizing various aspects of the capital market, in everything from venture startups to philanthropy.
And what exactly are people putting in the bank?
Says Peric, “In the virtual world there will be things that will have value that are not expressible in money today. As money is a physical asset in the real world, reputation is going to become a digital asset.”
New assets for new times, it appears that perhaps the worth of an individual might be measured by as much as a function of his reputation as by the amount of money he has.
Says Botsman, “In the past, reputation was largely contained within small villages and groups. There was really no way of aggregating, measuring or tracking. Technology changes all that because we now leave very visible trails of behavior that we can measure and use in different ways.”
Says Molly Turner, Head of Public Policy for Airbnb, “Reputation systems will incentivize people at the top to be more respectful more courteous and more humane in their interactions, because they are being recorded.”
Some of you might be old enough to remember, “Smile, you’re on Candid Camera.”
Can reputation be converted into other forms of assets?
Certainly there are already facets of our economy where this is already being done. Consultants, for example, trade on their reputations, as do artists, musicians and other entrepreneurs. Doctors and tradespeople are finding themselves increasingly in the same position with the advent of Angie’s List and other online rating services. Perhaps some day you will find yourself paying for drinks on a sliding scale in some establishments based on what a nice person you are. Who knows?
These changes are already in the works. Where they will takes us is difficult to say right now. But as Kosta Peric says, “The key is to see the change coming before it hits you.”
Image courtesy of Ericsson
RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining romp that is currently being adapted for the big screen. Now available on Kindle.
Follow RP Siegel on Twitter.