Negroponte Evangelizes Internet Bearer Transactions in InformationWeek (was re: Peer-To-Peer Payoff)

R.A. Hettinga rah at shipwright.com
Mon Oct 18 04:32:24 PDT 2004


Negroponte sat on the board of DigiCash, once...

Cheers,
RAH
-------

<http://www.informationweek.com/shared/printableArticle.jhtml?articleID=49901099>



Peer-To-Peer Payoff



By Nicholas Negroponte,    InformationWeek
 Oct. 18, 2004
 URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=49901099



 The next 25 years of information technology will blur boundaries between
previously well-formed and discrete concepts, entities, or states of being.
For example, work and play, nation and individual, rich and poor will be
interpreted differently, with more overlaps than differences because of the
porous nature of "being digital." A fully interconnected world with a
common language is a very different place than one delimited by distance
and Newtonian physics. Without question, the generation of kids born a
quarter of a century hence will have totally different views about some of
the most basic tenets of society, from love and family to business and
pleasure. Of these basic elements, I have chosen to focus on one: money.
How will transactions change over the next 25 years? Perhaps surprisingly.

Cattle are widely considered the oldest form of money, used over 10,000
years ago to make payments and to account for debts and credits. The
inherent value was in the cow itself. Only much later, after the Stone Age,
did currency emerge in which its worth was established by convention and
trust, using objects like shells and shell imitations. Modern coinage and
paper money can be traced to China 500 B.C. and 100 B.C., using metal and
leather, respectively. Paper banknotes emerged at the end of the 17th
century as a promise to pay the bearer a sum on demand. These were
handwritten and signed by cashiers. Only in the middle of the 18th century
did printed, fixed denominations start to appear. It then took another 100
years for fully printed notes to emerge without need for filling in the
name of the payee and signing each one individually. We call this stuff
cash.

Today, cash has been replaced increasingly by electronic credit and debit.
In excess of three trillion dollars is moved around the planet daily.
Conversions occur, accounts are changed, addressers and addressees are
modified. But no money moves in the sense of coins or pigs going from my
pocket or pen to yours. Everything is a scheme of pointers. The bits used
to achieve such accounting don't have value unto themselves. They're only
the means.

Some people, including myself, believe the next step is for some of those
bits to have value. That is to say, consider a string of bits to be like a
virtual cow or shell. In order to distinguish these bits (like telling the
difference between a beautiful seashell and a piece of coal), they would
need an agreed identity. To avoid forgery, they would need a unique and
secure ID. And to stop multiple spending of the same bits, there would need
to be a clearing process or a means to reveal the identity of anybody who
tries to double-spend. All of these requirements are easily achieved in
both traceable and anonymous systems of E-cash. In these cases, the money
does move. The bits are money. The more you have, the richer you are. This
is the future, though maybe only in part.

A parallel and more intriguing form of trade in the future will be barter.
Swapping is a very attractive form of exchange because each party uses a
devalued currency, in some cases one that would otherwise be wasted. Many
of us are too embarrassed to run yard sales or too lazy to suffer the
inconvenience and indignity of eBay. But imagine if you weren't. The unused
things in your basement can be converted into something you need or want.
Likewise, the person with whom you're swapping is giving something of value
to you which is less so to them. With minimal computation, three-way,
four-way, and n-way swaps can emerge, thereby removing the need for any
common currency.

Swapping is extended easily to baby-sitting for a ride to New York, a
mansion for a two-hundred-foot yacht, or leftover food for a good laugh. In
some cases, people will swap for monetary or nonmonetary currencies.
Without question, we'll see new forms of market-making and auctions. But
the most stunning change will be peer-to-peer, and peer-to-peer-to-peer-
... transaction of goods and services. If you fish and want your teeth
cleaned, you need to find a dentist who needs fish, which is so unlikely
that money works much better. But if a chauffeur wanted fish and the
dentist wanted a driver, the loop is closed. While this is nearly
impossible to do in the physical world, it's trivial in cyberspace. Add the
fact that some goods and services themselves can be in digital form, and it
gets easier and more likely. An interesting side benefit will be the value
of one's reputation for delivering on your promises--thus, identities will
have real value and not be something to hide.

The point can be generalized beyond money. Peer-to-peer is a much deeper
concept than we understand today. We're limited by assumptions rooted in
and derived from the physical world. Information technology over the next
25 years will change those limits through force of new habits. Let me cite
just one: I think nothing of moving millions of bits from one laptop to
another (inches away) by using the Internet and transferring those bits
through a server 10,000 miles away. Imagine telling that to somebody just
25 years ago.

Nicholas Negroponte is the founding chairman of MIT's Media Laboratory and
the author of the seminal work on the digital revolution, "Being Digital"
(Knopf, 1995).

Illustration by Dan Brown

Return to: 25 Years Of InformationWeek


-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'





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