Will currency exist in 2150 CE

Goldstein, an eminent author quoted?“There’s this thinking error we almost always make with money. The way money works at any given moment feels like part of the natural order, as with water or gravity. Any alternative to the way money works seems like some absurd game.”

I would tend to agree with him too ; cash/currency/monetary market/money or whatever you may want to call it, every time we have attempted to change its shape or form there has been a lot of hullabaloo about it. The whole world seems to come crashing down on us and we see conspiracy theories everywhere to debase its purity. How can a piece of paper from a mulberry bark be of any value ? How can a piece of paper be of value when you stop measuring it against an important metal ? But it has slowly settled down and life has moved on.

In order to speculate the state of currency 100 years from now, someone told me to look back at history to predict the future.

Around 100 B.C some merchant in China decided to issue depository paper against the iron coins stored by the traders of silk route. This paper became so strong that it was accepted at various establishments as a “promise to pay” for products and services. This claim-check was further recycled to procure other products and services, which in turn was reused at other establishments, thus the cycle went on and on. Perhaps, unknowingly China had revolutionized the word “economics”. Thereafter, the Chinese dynasty realized that it is perhaps easier to have paper money than metal coins and thus the origin of the first government backed fiat currency.

It was fascinating to note that nature provided us with our first currency and there are still countries in this world who use natural currency. Now what do I mean by that ?

The first ever currency was a seashell which was widely used in the trade routes including Europe. These were of the same size and shape and found in the Indian and Pacific Ocean. There is an island nation called Yap in the Oceanic belt which continues to use stones as its currency. You can buy and sell in stones and the transaction materializes once it is called out loud in a gathering of people. Sounds very much like distributed ledgers of our bitcoin era , doesn’t it ?

The rise of certified currency came via the Turkish reign when a mix of gold and silver coin was given the royal emblem and thus sanctity, that it is backed by the King’s treasury. In the year 180 B.C India had its own silver currency stamped by the Mauryan King. With paper being introduced it became even simpler as it started functioning as promissory notes to the holder of such paper. But it came with an inherent problem, one of being counterfeited and also rapid loss of value as it was not backed by anything of value. Of course ,?not much could be done for counterfeiting except hanging the perpetrators. To shore up against a back-up,?in the year 1800 came the Gold standard introduced by a wise man in?UK which came to be widely used by USA , France and Germany as a valuation tool for the paper currency. Countries on the gold standard cannot increase the amount of paper money in circulation without increasing their gold reserve. But then tragedy struck, and the great depression of 1930s happened leading to massive inflation. Interest rates were increased in order to reduce money in the market however some countries which had taken loans from the USA started defaulting leading to further crisis. US government took drastic measures by nationalizing household gold to protect against a rapidly falling dollar, while the depositor’s gold is protected against inflation.

All of this narrative proves how people have tried to calibrate the concept of money which was met with resistance but found its own way of holding fort. That’s why sometimes people say money is like gravity or water, no matter what you do it seems to become a natural order as time passes. ?

?Money is boring, you have it , you loan it , get some interest on it and you plough it back. Repeat. It is backed by some sovereign promise that it will never go out of circulation and therefore your value is protected. However, risky money is very exciting, and it helps to grow rich. A boring money can lend you stability but not riches. The case in point today is cryptocurrency. It is after all a private money, it has no one backing it , it runs on a self-propelled engine and as long as it flies you feel safe and happy. But it does help you soar , does it not ? I have not heard of a lot of cases where cryptocurrency is used to buy day to day products, maybe a house or a car or some furniture. The day that starts to happen , it will need some sovereign backing and a promissory that it will not lose its value and that it will be honored.

Therefore, money is both private and public in nature. Whilst a public money has a boredom factor, private money is exciting.?

What will currency look like in the next 25 years ?

After reading through the next few bullet points the question that will come to our minds ; is it the future of money we are talking about or is it future of transactions ? Are we really going to create a “new money” or is it just a new way to fulfill our buy-sell transactions ? Is money both public and private ?

1.??????Cryptocurrency has started a revolution of delinking the value and unit of account concept of money, from a central body. It is kind of a break-away. There are no strong guard rails to protect the holders of such currency, neither is there a ready acceptance around the world yet. But I foresee a standards body which will wake out of a deep slumber and create a universal exchange which will create and uphold the value of such a cryptocurrency. Crypto also measures up to unit of account and can be fragmented. However, today it is not ready to be used widely as a medium of exchange, but it will see the light of the day in the next?10 years

2.??????Since cryptos have dematerialized the money market to some extent the governments and their federal bodies have woken up and are ready to come up with their own digital currencies. Point to be noted here is that these currencies will be ?fiat in nature and therefore be boring money. All it will do is to take away the printing cost of the currency, however , it can not really do away with the principles of money market economics which is all about demand and supply.

3.??????“Cash is king” was a common phrase for travelers to China, but not anymore. A Chinese today has moved away from cash largely and transacts in digital currency whether it is WeChat or e-CNY. Sweden uses e-Kroner, so much so that Nordic countries have nearly footed out cash through the door. 40% of Nordic countries have become cashless out of a group of 10 European nations. The European Central Bank is coming up with its version of e-currency.?A colleague of mine over a coffee chat pointed out that Japan is not ready yet to go completely cashless, however the issue here is aged population and the tiny tots who cling on to cash. Therefore, you do not see cash vanishing from the tills in the near future when it comes to Japan.

4.??????While there is a huge motivation to move to digital currency very soon there is this question of “financial inclusion” versus “financial exclusion”. Even if certain countries can reach a 99% conversion to a digital era there is still this average 35% who are outside the banking system and need cash to survive. All our payment apps are a mode to dematerialize the transactions for everyone, whether you are part of the financial system or not.

5.??????70% of the world currency is dominated by dollar, while half of that is outside USA. Is there a possibility of a new currency to come and disrupt the 20 trillion-dollar dominance in a few years ? I doubt that will happen in the next 10-15 years, though there may be some strongmen who will attempt that. It will be disastrous for the global economy if done within the next 25 years, however new tech-development could enable it slowly over the next 50 years.

In short in the next 25 years there will be a surge to demolish the cashful system to be replaced by something which is completely digital in nature, be it an exciting or boring crypto or a sovereign backed digital currency. If each country does come up with a digital currency of their own , how different will it be from having their own cash except that the medium of exchange will no more be a paper but an “air” transaction ? How will the governments control the inflow and exodus of currency from the market if it is non-cash in nature ? In the next 3 decades all those standards will be devised which helps control the currency rates and the demand and supply at a global level. The valuation of a digital currency will continue to be different across the globe as it is today , however it will be more responsive since it will be controlled by an ARTIFICAL INTELLIGENCE based software which studies global money markets/central banks and pre-supposes a rate for each digital currency. Is that different from today ? Maybe not , as it still did not break away from the shackles of a government-controlled machinery in anyway and could not democratize the money market.

However, there will still be 30%-40% cash in the system as long as the governments receive their taxes in cash. The world has seen a dip of 15% in cash purchases over the last few years. Which I doubt will change in the next 2 decades , we have to keep a lookout for medium for ?tax collection, which is a big element for the monetary space.

What will currency look like in the next 50 years ?

The next 50 years or year 2100 will see massive technological innovations in terms of mechanism of exchange and new tokens to be introduced.

A new system of exchange will emerge where human actions like a wave or a wink, touch or eye pupil, fingerprints, voice or even memory that will define how a transaction can be settled. This is a perfectly plausible solution with the only caveat being people will need to create a system of trustworthiness. Money in today’s world runs only and only on trust , right ? What tells us that the paper with 100 written on it has any value other than 100 ? Nothing but a trust that it is about 100 when presented and honored by the government. 50 years later by the year 2100 , there will be ubiquitous devices on the high-streets , restaurants, transport stations or atrium which accepts a touch or a wave that will authenticate a legitimate transaction. Using these ?identification systems that verify voice, face and fingerprint patterns or any other physical attribute unique to a person during the course of a buy-sell negotiation, the buyers and sellers will be able to pass orders to their ARTIFICIALLY INTELLIGENT agents to settle the transaction. This AI agent will also verify the monetary space to assess credit rating of the consumer, alternative suppliers, price points, demand and supply market conditions and settle the payment in whatever preferred mode of payment through a clearing agent which happens to be another ARTIFICIAL INTELLIGENT box. A similar looking AI agent will also do the complex calculations of GDP , balance of trade and be able to make currency rate adjustments for trades that happen across the border. The assumption all throughout in this case is that there will still be currencies tied to borders and there will still be a central body / bodies governing the currency market. Now, whether it is all done through an ARTIFICIALLY INTELLIGENT agent or qualified humans is a discussion for another day.

After all our bank money is nothing more than an excel sheet entry which shows a deposit or withdrawal. Just a stroke of a pen and money moves between two entities without the need for any physical movement. It is money created out of thin air in any case, rarely money is transacted (other than cash exchange, which in 2100 CE will not happen, for sure). It does not mean that the supply of money is unlimited , people will have a “memory wallet” tied to their immutable ID from which they can withdraw and spend. ID of a person will be fool proof, multidimensional and non-fungible, tied to the his/her physicality therefore it will be easy to assign a certain value ?to this ID which can be used as withdraw-able/receivable cash.

What will currency look like in the next 100 years ?

The next 100 years or year 2150 will see even more innovations in this sphere. Our body will inherit a chip to store our earnings. New forms of money will be introduced, and it will no longer be just a unit of account. There will be no dominance of a certain country’s currency.

I spoke to my colleagues and some of their views are as follows ;

Apparently, there will be?a catastrophic war (on earth or intergalactic) as predicted by a colleague of mine, which will destroy a large populace and force people to get together to share and reuse common resources, money being one of them. This is exactly what happened in WW2 when allied nations got together and formed the IMF and set Dollar as the pivot currency. Maybe that will happen again where all of mankind will set one single currency ?

Money will be a resource which will be a shared tool to access and use across the world. Another colleague of mine predicted money will be encapsulated in “work hours or time” which can be used to purchase products. A third and a fourth colleague believe that crypto or digital money will cease to exist in 100 years and will be replaced by “goodwill money”. While we think aloud about "goodwill" money, after all, we know money is nothing more than a “trust”. It is a ?trust that a sovereign or a similar body will settle it when presented for redemption. A goodwill money will be on similar lines where each individual will be scored daily based on the fairness of his ?activities which will enhance his reputation and thus adding to his “goodwill” balance. It is believed anyone with a score of 80 goodwill-points is more likely to settle transactions with his in-body banking chip or a commensurate barter. Metering and storing of such a value, ?will be seamless and non-intrusive and people will continue with their mundane life to earn these scores without having to worry about day end reconciliation of scores earned versus lost. It is akin to a credit score of year 2022 ?which is largely used to assess a loan repayment capability of an individual. However, if we expand the scope to include “LIFE SCORE” as my colleague said it can be used as a currency, a medium of exchange and store of value.

What happens when we transact across planets ?

Space doesn’t understand the concept of time nor can you access intergalactic connectivity to record your “goodwill” scores ! While the NASA is tasked to build an interplanetary network that will cover both earth and other planets as I write, I fail to believe that it will be able to connect to all elements and devices across this galaxy. After all our current network schema allows us to join 10 billion devices today, maybe in 100 years it will expand to 300 trillion devices; but I believe to manage a complex web of value creation and store we will sponge out the last of the trillions in a matter of months.

Let us assume there is one currency globally by circa 2150, therefore there is no loss or gain?and the basket of goods and services will cost the same across the globe, therefore GDP will also show similar ?trends. This is a huge disincentive for the traders worldwide as they only work on difference in prices across borders in order to buy at a lower price and selling at a higher price somewhere else. This creates the trade imbalance and therefore the differentiated value of currency per country.?This is a big backbone for economies to run and flourish, to be job generating for planners and economists. All that will now go away as ARTIFICIAL INTELLIGENCE will run the money market , decide on rates and handle all the transactions for the same basket of goods and services.

Downside to this whole thing is that all transactions will be visible to everyone , which is bad for some. This is where cash scores higher than any other medium of exchange.

Therefore, by year 2150 monetary policies will be delinked from currency and inflation or deflation will be handled outside the currency barriers. There will be no central bank and there will be no banking record of deposits or withdrawals. Maybe , with inflationary conditions work hours will increase to meet the production need and during deflationary conditions work hours will decrease i.e If ?I go by the “New money is time” concept which is tied to the fact that “time” is the new money ; total floating currency in the world will be a big Yo-Yo which will lead to a continuous swing between inflation, stability and deflation. Repeat. Some of us have been on hanging bridges, right ? It is the same feeling where we keep swinging from one end to the other.

The ?broader question that remains unanswered ; It is not just a “store of value” discussion, it is a lot about the quantum of such currency in the market, expansion or contraction of economy , which will drive various monetary policies like inflation or deflation or employment generation or wealth of nations; therefore how will those get addressed in 2150 CE?