In the next era, what will "money" be?
Today is November 6th, 2021. I was asked about this topic while sitting on a sofa next to the beach of Haitang Bay in Sanya.
I think back to our monkey ancestors in primitive societies; some were brave and strong, wielding sticks and venturing into the jungle, while others were diligent and hardworking, gathering and farming. Within the cycle of the seasons, winters like now must have been challenging times, filled with many departures due to hunger and cold.
Out of this hardship, the seeds of knowledge might sprout. Clever minds would naturally start thinking about ways to trade some seeds from the next year for food now.
However, with the vast variety of items, some who were neither strong nor diligent but were clever realized that the shells they picked up on the beach the evening before could serve as an interesting medium for trade. Of course, not everyone would accept this new and somewhat vague concept. So, some of these clever minds would chat about mundane things or feelings to persuade others, some might use coercion, and some might resort to just getting a few strong ones to beat the skeptics up. Given the limited communication skills and methods of primitive people, ganging up and using force might have been the more practical approach. This made me marvel at how our ancestors came up with the concept of "money" – a tool to overcome the challenges of time and space.
They taught us that money is merely a medium required to facilitate the exchange of Item A for Item B across different times and spaces.
History has shown that over thousands of years, we transitioned from farming to the roar of machinery and then to a digital life. Behind the evolution of gold, silver, and paper money is the progression of societal structures. Regardless of how the physical form of money has evolved, its properties as a medium of exchange, a unit of account, and a store of value established through consensus have remained consistent. The money we use today is simply the "industrial money" from the capitalist structure of the industrial age. If likened to a game, one role is that of a king who uses advanced weaponry to secure trust within a territorial realm and sets the rules.
Another role is that of gold – the clever minds, who use hierarchical organizations to ensure money flows across different times, places, and levels.
Then there's silver – the brave thugs who band together to mass-produce, distribute, and lock in money using corporations.
Lastly, the role of copper is played by those who diligently work and provide services, exchanging their hard-earned products for money.
From different perspectives, money signifies rules, trust, value, and utility.
Money represents a relationship with time – an order, a relation, a measure, and a utility.
What we commonly refer to as making money often means playing a game of value efficiency under a set of commercial rules, earning the right to use a certain measure of value within a specific time and place.
History often unfolds silently.
Like a thunderclap on a calm day, until Satoshi Nakamoto penned the white paper on Bitcoin, defining a digital currency capped at 21 million units over 300 years. The concept of industrial money began to evolve into digital money.
Over the past 13 years, this natural social experiment has achieved certain successes.
The advent of Bitcoin redefined what money is. Its supporters formed a tribe commonly known as a community. Some within this community became purists, guarding the original rules. Others began exploring new possibilities, collectively building an open system about this new kind of money. From what we know, Bitcoin might exceed our expectations for gold, while Ethereum's ecosystem and DeFi are challenging our understanding of the financial system.
Then there's NFTs, a different kind of money that wasn't anticipated to hold much promise, but it captures a sense of belonging. It hints at another possible future. Viewing from the elements of humans, objects, mediators, time, and space, the past thirteen years are easy to understand. The entire cryptocurrency industry is merely reconstructing the bridge between objects and mediators in terms of time, similar to what Vitalik referred to as the bridge between objects.
This bridge, when viewed from the time dimension, has transformed rules, relations, measures, and utilities.
Up to now, we can understand digital money as teams and organizations setting new rules with code in a community money-making endeavor. A significant improvement of digital money is its precise periodicity, clearer rules, and positive essence. In layman terms, making money now means establishing a relationship with a community or organization. If you diligently contribute to a community, if you bravely create new money and communities, if you're shrewd and find a measure of difference, or if you're destined to be a king – thank you. Please, write the new rules with care.
At present, our choices seem to be more about the relationship with a community over a certain period of time. But what about the future?
Predicting the future is always uncertain, but perhaps we can glean some insights from the last thirteen years.
Firstly, how significant will the rise of digital currency be? From various signs, comparing the internet economy with the cryptocurrency economy might be misleading.
I've come to believe that there's a good chance we are currently on the cusp of a revolution similar to the advent of the steam engine.
In essence and momentum, Bitcoin surpassing gold might happen in the next two to three cycles, meaning around 600 trillion USD.
If we assume finance is one track, and Web3 is another, there's a possibility of an A+B model, with each major infrastructure and ecosystem taking up about 20%.
This means a total market cap of around 3 quadrillion USD. This estimate might not be accurate.
But to some extent, it tells us that there's a very high probability that we are the chosen generation of history. In the next 10-20 years, we'll witness grand and tumultuous historical epics.
Next, what changes might occur with digital currency itself?
Currently, a significant trend is that every decentralized system and organization is creating its own currency, be it from governance rules, measurement attributes, or utility attributes.
So, in the future, as Web3 emerges as the next platform and decentralization happens within the Web, we have reasons to believe a few things.
Organizations will become more and more monetized. New-age organizations will become more dispersed, spontaneous, and automated. More rational governance currencies will emerge.
Information with value will also be increasingly monetized, as NFTs have already begun to prove.
The relationship between people and money might be redefined. Your money might truly become your money, not just the money in your wallet.
Every piece of content and action might also become money. Every article you write becomes money.
Of course, you, as an individual, might also be monetized, but not in the crude and simple ways of today.
In short, if the last era was called "digital currency", the next might be termed "my digital currency".
So how do we acquire "my digital currency"?
In many dimensions, changes are happening rapidly. Blindly chasing might not be the best strategy.
But there seems to be a constant theme: unique minds always produce outstanding results in their own solitary ways.
Not only has this not changed, but in a freer order, such brilliance is even more likely to be created, discovered, and rewarded.
We have every reason to believe that those who focus on producing quality will be rewarded beyond their imaginations, in increasingly direct and fascinating ways.
Good things might mean tangible goods, artworks, and services. It might also mean good behaviors, discoveries, collections, and holdings. It could also signify good relationships, your "company or DAO", "friends", and "audience".
Yes, all of these might step by step become money. My digital currency means the input and output in a certain period of time are money.
From this perspective, for most people, it seems the era where tangible good things can directly earn money has finally arrived. More interestingly, you can almost choose the way, time, place, and organization of your work. One interesting strategy is the belonging strategy. When the system becomes too complex and fast-changing, I choose to belong to my own "money", my own "time", my own "organization", and my own "things". Regardless of any short-term absurdities or mismatches, over the long run, every output of yours will be recorded, calculated, and rewarded. So I say you are money itself. The way to increase the quantity and price of your money might be to focus on doing good things. Of course, it'd be even better if you could forget the game rules of industrial money. This will surely be challenging.
If there are billions of kinds of "my digital currency" in the future, most of them might have pitiful liquidity and need care. The upper layers might only be used within small circles. The third and second layers are playgrounds for the brave and the smart, where good things are greatly magnified into currency. If you can see and hold onto the first layer, that's great. It might even be you.
I can't find better words to describe this new era than "Stay hungry, Stay foolish".
In simpler terms, be more pure, more steadfast, and you might surprise yourself.