End of Money

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* Book: David Wolman. The End of Money: Counterfeiters, Preachers, Techies, Dreamers--and the Coming Cashless Society. Da Capo Press, 2012

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looks at the emerging post-cash world.


Description

From the publisher:

"For ages, money has meant little metal disks and rectangular slips of paper. Yet the usefulness of physical money—to say nothing of its value—is coming under fire as never before. Intrigued by the distinct possibility that cash will soon disappear, author and Wired contributing editor David Wolman sets out to investigate the future of money…and how it will affect your wallet.

Wolman begins his journey by deciding to shun cash for an entire year—a surprisingly successful experiment (with a couple of notable exceptions). He then ventures forth to find people and technologies that illuminate the road ahead. In Honolulu, he drinks Mai Tais with Bernard von NotHaus, a convicted counterfeiter and alternative-currency evangelist whom government prosecutors have labeled a domestic terrorist. In Tokyo, he sneaks a peek at the latest anti-counterfeiting wizardry, while puzzling over the fact that banknote forgers depend on society's addiction to cash. In a downtrodden Oregon town, he mingles with obsessive coin collectors—the people who are supposed to love cash the most, yet don't. And in rural Georgia, he examines why some people feel the end of cash is Armageddon’s warm-up act. After stops at the Digital Money Forum in London and Iceland’s central bank, Wolman flies to Delhi, where he sees first-hand how cash penalizes the poor more than anyone—and how mobile technologies promise to change that.

Told with verve and wit, The End of Money explores an aspect of our daily lives so fundamental that we rarely stop to think about it. You’ll never look at a dollar bill the same again."


Interview

"Gizmodo: You talk about alternative currencies. One thing I found fascinating was this idea of paying with kilowatt hours. Can you explain the Kilowatt Card to our readers?

DW: Yes! Its tricky though. The guy who invented it is an entrepreneur, a chemist and an aviator in Virginia. He’s one of the people I wanted to talk to in this book, not necessarily because Kilowatt Cards are going to work, but because I just love this idea of people who look at the monetary system and say “Wow, that’s bizarre! Maybe I could come up with something better.”

The way the Kilowatt Card works is the unit of the currency is the amount of electricity required to power a light bulb and his total deal is that we need a currency based on real value. I’m looking at one pinned to my wall here; I will just read it to you. Its a 10 kilowatt card — Electricity Gift Card — that pays for 10 kilowatt hours of electricity in any residential account when redeemed at kilowattcards.com. No expiration date. Then it has an authentication code that I have to punch in on a website so I can’t use it again and again and again.

I’m not going to marshall a giant defence of this guy, but I’m just saying it’s a really provocative idea to take money back to real value that gets to the stuff that is of real value to a biologist, like food.

You hear gold bugs talking about that all the time, but the reality is that gold doesn’t have real value either. Gold is just heavy and it has played the role of “real money” for so long, people think that it has real value. However, food and electricity and blankets, these things have real value.

There are hurdles that he faces, especially with the current cost of paying for distribution being variable. That’s a big problem. But I am surprised that we don’t see that idea a little more. You know people talk about using fresh water as a form of currency, or at least charging for it. It will be interesting when you and I are old men. Will some of these basic basic commodities or utilities be used as units of currency?


Gizmodo: Your book touches on BitCoin, which must have been a nightmare because it was changing so much last year when you were writing. But you also cover all these other alternative digital currencies like Facebook Credits. One thing that came out of the Facebook IPO filing is that it probably needs to make a lot more money per user. It seems like Facebook Credits could be the answer for that. You suggest that you’ll eventually be able to pay for just about anything with Facebook credits.

DW: That’s the issue with an alternative currency, right? As long as they aren’t stepping on the government’s toes in terms of counterfeiting they’re totally legal and legitimate. The issue is: Are they widely accepted? There’s this very problematic chicken and egg deal of getting people to trust a currency and making it widely accepted.

The thing that makes Facebook Credits kind of instantly powerful is there are so many people already on Facebook. So whereas the guy who innovated Kilowatt Cards or the issuers of Ithica Hours, they have to essentially invite people into the tent. But Facebook has — whatever it is now, 800 million? A billion? — people in the tent already. And so I think that’s pretty provocative as far as the power of that kind of alternative currency to take hold in sort of a non-cutesy, non-fringe sort of way.

Some other alternative currencies, it’s like you use 25 of these peaceful universe card points for a massage and I’ll give you my graphic design input. And that’s sort of like the only kind of things that you can exchange. So if you want to pay your auto insurance or anything else you’ve got to go back to dollars. And maybe things like Facebook Credits will blow that out of the water. You can see that a little now, for example people using airline miles to pay for real things, like a hotel reservation or what have you.

Just one more thing because you raised a good point about this being such a moving target. As I was filing and researching and with the Bitcoin thing it came up again with Iceland. I was there trying to explore the wake of their banking collapse and the talk was like get rid of the Krona. Then fast forward and the Euro crisis hits and places like Iceland are like “thank God we don’t have the Euro!” On one level, editorially speaking, that’s difficult because it threatens to make my book look dated quickly. But for this macro point I like running into that. It was just an incredible reminder to me. The monetary system is like this moving target and it’s incredible that the dollar is so relatively stable and that most people I know just think it’s the only kind of “real” money there is. Yet we’ve only really been on a dollar not tied to gold for 40 years, kind of 90 years, but really with no connection to gold for 40 years.

In the Euro crisis this past year has shown us that too that the whole thing about currency units and real value and government issued money versus alternative currency, is this whole unknown. That was illuminating for me as someone again who never studied economics and took this stuff for granted that it’s solid, it’s stable, it’s here, that’s how it works. That’s not necessarily the case. It just feels that way when it’s ticking along pretty well. Does that make any sense at all?" (http://www.gizmodo.com.au/2012/02/lets-kill-cash-qa-with-author-david-wolman-on-our-moneyless-future/)