What is the future of money? Six differing visions

What will money look like in the future? Will it even exist at all? Peer into six differing visions for the stuff that makes the world go round.

If you could jump back 2,000 years and show a Roman citizen a modern pound coin, they’d know exactly what it was. But what about someone in the year 4,000?

We seem to be at a pivotal point in the evolution of money, but there is no consensus on what comes next, let alone what money might look like in two millennia. The best we can do is compare five different visions for the future of money and wait and see.

A very brief history of money

Before we jump into five very different visions of how money might work in the future, it’s worth reflecting on how money has evolved to date. You can be forgiven for never having given the subject much thought. Money is like air or central heating. You only question it when it isn’t there or stops working.

Proto Money

Almost every primitive society independently collected items without practical purpose but exhibiting scarcity, durability and intrinsic value. 

These collectables, from shells to teeth, were often made into jewellery, acting as stores of value. They are considered ‘proto money’. Once humans stopped being nomadic, they used credit systems to trade surplus production. When the mental gymnastics became too great, they needed money to function as a medium of exchange; proto-money then got an upgrade.

Commodity Money

About 600 BC, the Lydians started moulding gold into what we might recognise as coins, endorsed and enforced by a governing power. 

Gold and silver coins became the standard for the next two millennia until someone discovered that sacks of coins were a pain to carry around and put a target on your back. We’d have to wait a while for the chocolate coin variety at Christmas.

Representative Money

The simple alternative for carting heavy sacks of coins was a piece of paper acting as an IOU. Promissory notes can be traced back to ### China, but Venetians and Florentines of the Renaissance period really started the era of representative money.

Fiat Money

How money looked and functioned remained relatively unchanged for the next few hundred years. A gold standard operated from about 170#, but by World War I, it became inconvenient to back money with gold, so instead, we just had to trust the central bankers; welcome to fiat money.

Digital Fiat Money

The computer age, especially the internet, allowed the ledgers of this imaginary money and the growing mountains of debt governments owe themselves (a mere $34 trillion in the US and counting) to become bytes on a hard drive. 

In 2008, an antidote to this centralised fiat farce emerged, with Bitcoin, the first money outside central power, based on shared rules, not rulers. So, is the future of money decentralised, and if not, what comes next?

Six visions for the future of money

1 – Hyper-Bitcoinisation & the Citadel

Arguments about the future of money mirror the multitude of vicious culture wars raging across society. One faction in that battle is what are known as Bitcoin Maximalists—or Maxis for short. 

Maxis are all-in on Bitcoin, seeing the future of money as a zero-sum game. Within that vision, fiat is going all the way to zero, which means all your dollars, pounds or euros, savings, pensions and the contents of your penny jar. Anything tied to the prevailing financial system will be worthless.

Hyper-Bitcoinisation, the fittingly dramatic name for the Bitcoin takeover, might be a Maxi’s wet dream, but what will that look like?

It is unlikely to be a bloodless revolution. Remember, Bitcoin works with no central authority, so what follows would be completely new territory, a form of financial anarchy, or maybe Armageddon. 

Within the Bitcoin community, this scenario is described as the Citadel, describing the have/have not binary split of coiners vs no coiners, in spatial terms, separated by a huge wall. Think of hyper-Bitcoinisation as a kind of monetary feudalism. Remember, there are only 21 million Bitcoin to go around and no way of fudging the ledger, fiat-style, to magic more.

2 – CBDCs or Frankenstein money

Central Bank Digital Currencies, aka CBDC, represent a potential new form of fiat money borrowing elements of the ledger design of blockchain-based money, like Bitcoin. A kind of Frankenstein money.

This might mean the UK gets a digital version of the British Pound – Britcoin, with all accounts, balances and transactions recorded in a massive government-controlled digital ledger. 

Users would access their Britcoin accounts via mobile wallets, so they might not notice much difference on the surface. In fact, there could be some significant benefits:

• Increasing Tax Revenue
• Tackling Organised Crime
• Simplifying the benefit system

Of course, there is a huge BUT coming over the horizon because CBDCs wouldn’t inherit the democratizing features of Bitcoin, as their focus would be to further centralise the state’s power over money, not undermine it.

CBDCs would be permissioned and opaque and could be programmed not only to censor but surveil and control your use of money.

They might only grant permission to trusted bodies to participate and access data. An extension of the Cantillon Effect.

Given each central bank will want supremacy for its digital sovereign currency, there will be open competition between CBDCs, so forget the idea of a seamless global currency.

But arguably, the most Frankenstein-like aspect of CBDCs is the way they might cannibalise the programmable features of blockchain-based money in the pursuit of algorithmic governance of money.

• Money with an expiry date
• Restricting what you can buy
• Surveillance money
• Automatic deductions

3 –The Mandibles – Bye-Bye US Dollar

If you’re struggling to visualise the Citadel, that’s understandable. The evolution of money introduced earlier was glacial, happening across multiple generations and changing less frequently than Haley’s Comet appears in our skies. 

The average duration of a reserve currency is roughly 90 years, so if we take Bretton Woods in 1944 as the genesis of the US Dollar, it should be blowing up any day now. 

For a particularly spine-chilling account of what happens when a currency implodes, look no further than Adam Fergusson’s brilliant ‘When Money Does’, which gives a detailed account of the Weimar Republic’s descent into monetary chaos in the Interwar period. 

Lionel Shriver, whose fictional novel The Mandibles—A Family 2029-47 envisions the demise of the US dollar under a mountain of debt, WAS likely inspired by Fergusson’s masterpiece. 

The currency cataclysm envisioned in The Mandibles is triggered by a debt-to-GDP ratio of close to 300% and the creation of a rival to the US Dollar’s currency hegemony, the bancor. The bancor’s issuers insist US Bonds held overseas must be redeemed in their new money, while new US debt must also be denominated in bancor.

In a televised statement, the first Mexican-born POTUS announces: 

• A debt reset – the wiping away the liability for all Federal debt instruments
• A rerun of Roosevelt’s Executive Order 6102, except this time, even personal jewellery doesn’t escape the confiscation
• Capital controls
• Outlawing holding the Bancor

Without spoiling the book even more, civil society quickly falls apart, particularly seismic for those who accumulated dollar-based wealth under the status quo. But a new status quo is achieved as money regresses, rediscovering the benefits of being backed by a scarce asset.

Written in 2017, The Mandibles is interesting because it mentions Bitcoin once, though Maxi’s could do a simple find/replace for mentions of Bancor.

“The dollar is a historied currency that’s stabilised the international economy for over a century…The bancor is an upstart pretender whose constraints are unworkably strict. We just have to hold our nerve. After all – look at what happened to bitcoin.” The Mandibles: A Family 2029-2047 

4 – Financial Armageddon

Financial collapse is implicit within those future scenarios where the shit majorly hits the fan for the planet, wiping out money along with all other vestiges of civil society.

Cormac McCarthy’s The Road, which won the Pulitzer Prize for fiction in 2007, is regarded as one of the most powerful visions of a post-apocalyptic world. In it, the few desperate survivors of an unnamed catastrophe forage for food, fuel, and water. 

When the main character stumbles on a well-stocked survival bunker, the ingots of gold he finds are useless curiosities. He’s more concerned about finding a functioning weapon than an inert lump of metal. The Road’s post-apocalyptic vision is so bleak that money seems irrelevant.

Seminal post-apocalyptic movies like Mad Max or The Postman show people bartering and fighting over fuel. Money in any organised sense doesn’t exist in these anarchic worlds because there is no large-scale organisation. 

Society regresses back to a pre-agrarian state, where there are no surpluses to trade. Storing value into the future is a pointless exercise with time preference extremely high because surviving day-to-day provides maximum gratification. 

5 – Intergalactic money

Not all future scenarios for mankind envisage armageddon; many see humans inventing the means to explore beyond our solar system, setting up trading scenarios with other races, inevitably requiring a common medium of exchange.

What’s fascinating about how science fiction depicts these scenarios far into the future, as represented by blockbuster books and films like Star Wars or Dune, is how the portrayal of the role of money remains close to the ideas set down by Aristotle in the fourth century BC. 

Despite the ability to jump to hyperspace, money often retains a physical form or is described in terms that replicate today’s video game language, such as ‘credits’. 

You can excuse George Lucas or James Herbert for falling back on monetary templates. They are, after all, creatives, not economists, but they illustrate how hard it is to escape contemporary concepts of money compared to the dramatic leaps in space travel

6 – Post-scarcity & the end of money

At the most optimistic end of the scenario spectrum for future money is a school of thought that envisages its total disappearance in what acolytes such as Elon Musk describe as a post-scarcity society.

Post-scarcity is imagined to deliver exactly what it says on the tin—an abundance of everything humans could ever want for free. 

Musk and other post-scarcity fanboys cannot provide much detail about the source of this cornucopia other than Artificial Intelligence, so right now, Post-scarcity is nothing more than a thought experiment.

However, putting the logistics aside, one of the many consequences of having anything you could ever want for free means there would be no need for money. 

So would the world stop going around without money, and would evil disappear, given money is, anecdotally, at its root?

If you want a better idea of what a money-free post-scarcity society might look like, read The Culture Series by Iain Banks, which Musk credits with inspiring his vision for an AI-driven future.

In practice as well as theory, the Culture was beyond consideration of wealth or empire. The very concept of money – regarded by the Culture as a crude, over-complicated and inefficient form of rationing – was irrelevant within society itself, where the capacity of its means of production ubiquitously and comprehensively exceeded every reasonable (and in some cases, perhaps, unreasonable) demand its not unimaginative citizens could make.

Consider Phlebas, Iain M Banks (1987)

Predictions about money are a fool’s errand

Money is, and has always been, integral to the function and progress of society. So long as we need a means to exchange or store value, it’s reasonable to assume money will remain an indispensable tool for future generations in one form or another. 

Considering that money’s function is inextricable from understanding who controls it, you’ll need a multi-dimensional crystal ball to predict what dosh might look like in the future.

Of course, making predictions is a fool’s errand, especially with Artificial General Intelligence a realistic prospect in our lifetime. But it’s unlikely that a citizen of Earth, two thousand years from now, will instantly understand what a debit card is.