What’s the Future of Money?

Bitcoin and the future of moneyThe future of money will be the subject of a talk I gave at TEDxBellingen on Saturday 19th of October more info at the Facebook page here  facebook.com/TEDxBellingen.

For those who couldn’t make it here is a transcript of my talk.


Just as the web transformed print and music, social media transformed marketing, so will digital currency transform finance and the money we use.

Simply put Money is a signal, it’s a signal for human interaction, I give or offer you money, you give or do something for me, and visa versa. Otherwise the metal and paper is quite useless, you can’t eat it, you can’t make anything out of it, it’s no good as clothing, it’s value is only based around what can be exchanged for. We started using metal objects for money about 5000 years ago, the first coins were being minted about 700BC by the Lydian’s, and around 960 AD the Chinese began using paper money. What we know now is that money allows for the function of society, that’s the magic of money. It’s a good thing! For money to work, it needs to have some specific qualities;

The first quality is scarcity, if money grows on trees and doesn’t have scarcity it can’t work as a reliable signal. If it does have scarcity and is very well controlled it can provide that universal signal to coordinate human interaction. Money needs to be portable, we need to be able to carry it and pass it around it also needs to be durable, you can’t have it getting trashed after a few transactions or a machine wash. It also needs to be divisible. It needs to be uniform, to avoid confusion as to what which version is the current one. Lastly but not least it needs to gain wide acceptance, in the end we all, as a society, have to agree that it’s value.

My relationship with money started early in life, as a child of 3 and 4 I learnt to count, by counting the money in my parents café cash register at the end of each day, and I liked it, so I’m quite fond of money but a series of life lessons changed the way I experienced it forever.

the Canberra House

buying our first home

My first real profound lesson with money came when I was 10 my family moved to the nations capitol;  Canberra, they really wanted to buy a new house.  they went along to the bank with hope and a deposit and other pieces of collateral, one of which was a life insurance policy that my father had been judicially  paying into for many years.

Upon investigation the bank found that the insurance company had gone in liquidation, bankrupt, all the money that had been paid was now gone, and the policy was worthless. At that point I learnt that it’s not a good idea to trust other people with your money. Because it seems that as money accumulates into a sizeable amount the people charged with it’s care start hearing little voices in their heads telling them to do bad things.

Samos IslandMy next big lesson in money came in 1974 when my mother took us; my brother and sister and myself to visit Greece for the very first time, we were on Samos an island on the eastern side for about three weeks, when the Turkey invaded Cyprus.

Even though Cyprus isn’t part of Greece technically, all of Greece went into a war footing, everything went into lock down, no flights, no ships for several weeks.

Samos Island donkey

Samos Island Donkey

On Friday we could go to the corner store and buy a dozen eggs for say 50 drachma now those same dozen eggs were worth 500 drachma! What happened? The eggs hadn’t changed at all if anything they’re perishable items it would have decayed somewhat, but the value of the drachma had changed against the egg and in a few days time the money was almost worthless in trying to purchase fresh food.

So the changing circumstances on the ground were changing the value of the money. Well that wasn’t very comforting, and it really bothered me that this thing that everyone without exception made they’re entire life revolve around was so feeble and fragile.

It bothered me so much that I have never taken out an insurance policy, except for the mandatory vehicle ones, I have steered clear and minimised my exposure to the banking institutions as much as is possible, I used barter and contra deals for many of my major purchases

Some 10 years later the Internet arrived, and that changed everything, except the money. People cleverer than I, applied some thought to this problem of money being ‘fragile and manipulated’ and in 2008 an obscure computer programmer by the pseudo name of Satoshi Nakamoto presented a white paper which began with this statement;

satoshi's statement

Imagine a global currency for the Internet, you don’t need a credit card, you don’t need a bank, you don’t even need a physical address, to collect and contain your wealth.

Of course Satoshi was instantly labelled as a crackpot by the financial community, but none the less he kept working, in secret and on Jan 3 2009 he released the first open source digital currency, Bitcoin, since then a number of digital currencies also known as crypto-currencies and virtual currencies have been created and are in circulation, Litecoin, Ripple, Terracoin, Novacoin, Namecoin Chinacoin etc.

To further explain I’ll focus on Bitcoin as it was the first and the others are essentially variations of the Bitcoin implementation.

What is it, it’s a free stand alone app you download to your computing device, like a game, like solitaire there’s no servers, no companies, no governments. The Bitcoin program only communicates with the other Bitcoin programs around the internet to keep it’s ledger or transaction list updated, the ledger is known as ‘the blockchain’ it’s a website anyone can visit

blockchainThe block chain is like a skyscraper or tower, workers or in Bitcoin slang miners collect and verify transaction information, lay this information out like a floor of a building when the floor is finished, the new Bitcoin is issued and they move onto the next floor.

bitcoin wallet

bitcoin wallet transaction

And every transaction since the first, affectionately known as the genesis block is visible and can be scrutinised, nothing is hidden yet nobody can interfere with the process, and it operates completely independent of human involvement

Bitcoins are not free

Bitcoins are not free


The miner sets to work solving a complex mathematical problem, that problem is an encrypted form of a previous Bitcoin transaction. When the problem is solved and verified a Bitcoin is issued to the computer, which offered up the first correct solution.

To earn digital wealth one must expend energy and time, apply work to be paid in a digital currency like Bitcoin, or Litecoin, etc.

As opposed to our current fiat money system where one persons wealth is generated by making others go into a lifetime of debt.

Bitcoin is Money

Bitcoin is Real Money

Bitcoin is money, a number of recent legal judgements in Europe and in the US have confirmed it is money.  However we don’t need the now broken financial establishments to endorse it, because Bitcoin qualifies in each and every aspect of the essential qualities, I mentioned earlier, that money needs to be.

Bitcoin’s scarcity and future stability is intrinsic in it’s design. Bitcoins, are produced at a rate of 1 every 10 mins, there will be only 21 million coins issued and the last one is due for release in 2040,

difficulty and inflation


Because the number of coins is set, the rate of distribution is determined then so is the rate of inflation so at the time of the last Bitcoin issue it will reach 0% inflation and stay that way forever more.

Bitcoin and most digital currencies are divisible to eight decimal places, so sharing parts and a fraction of a Bitcoin is no problem. They’re portable, you can carry your electronic wallet in a phone or thumb drive or SD card, and plug into online when you want use or just update the transactions. Digital currencies don’t exist physically so they’re always uniform in their expression just a set of numeric characters

Bitcoin and many digital currencies have one more element that transcends ‘traditional money’ and this one element makes Bitcoin right now the best performing currency investment on the planet.  Self-regulation, what does that mean, the technology is the regulator, not a government, not a set of individuals with vested corporate interests. It’s a kind of techno anarchist.

As mentioned earlier Bitcoin is issued after work has been done, after electricity has been expended, so in recent years bigger, faster, smarter computers have been applied to the task in the aim of producing more Bitcoin at a faster rate.

difficulty verses price of bitcoinWell in its design Satoshi thought that might be the case so, automatically and periodically the Bitcoin program assess the sum total of computing power globally being applied to the current problem and increases the difficulty accordingly so as at no time between now and the 2040 Bitcoin production will deviate from the predicted rate. Digital currencies are sent person to person but the transaction is virtually anonymous, there’s no real way of telling who sent who, what, we need too communicate about that.

Recently governments and the traditional financial institutions have jumped on this, announcing that digital currency like Bitcoin is being used in drug and arms running and money laundering, not to put too finer point on it, so are most currencies, lets ban the USD because criminals use it too, it’s not an argument that has any validity.

Up until recent times the value of your money was generally tied to gold reserves in your countries central bank, well that’s not the case anymore. Nowadays a very small group of individuals that represent and even smaller group of private organisations determine the value, arbitrarily depending upon their perception of they’re own future needs. For me that just isn’t good enough!

The money you use has been corrupted to such a point, that if you were to value the US dollar against its reserve capacity it would probably rate at negative 73 cents, it’s actually worth less than zero. Technically you go into debt by acquiring a US dollar.

Bitcoin Mining RigIn 2010 the Bitcoin was valued around US$3-4 in 2011 it reached $30 at one point, but even at that price it cost more in electricity to do the work than a bitcoin was worth, so Bitcoin remained the realm of committed geeks and nerds, creating elaborate mining rigs.

In June 2013 the price of the Bitcoin climbed over a few months and reached an all time high of $260. And those nerds and geeks, some of whom  cashed out thousands of coins to become millionaires overnight. And why not? They had kept the faith, they been satoshis disciples and had been spreading the word to all those who would listen. They’d been paying 10000 Bitcoin for a pizza delivery only 2 years prior. Since then the value of the Bitcoin in November 2013 has skyrocketed to $US525!

Cyprus features again in my story because last year the people of Cyprus woke up to the western worlds worst nightmare. The banks were shut, no ATM’s were working, no internet banking, no eftpos, in fact the central bank was out of money, and it stayed that way for several days causing incredible problems for normal people,

They couldn’t just transfer the money electronically, because the debt was so high it would absorb any sizeable deposit, So the European Union past around the hat and put one million Euro in cash on an unmarked airbus and sent it down to kick start business again. If nothing else this event alone underlines the precarious nature of the financial system we completely rely upon to feed and house ourselves.

the unbankedThen there is the unbanked, over 60% of the world’s population do not have a bank account; they don’t have enough funds to make it worthwhile for banking institutions to offer them a service. That is to say if the bank can’t charge your account for transaction fees, it won’t offer you one.

Ironically the people in the world who get robbed the most are the poor, because they’ve got their money on them or in their home. And the thieves know this.  Keeping their meagre resources online, keeps them safe, from thieves and the leprous banks.

Digital currencies are set to solve the issues, like :

“Who can I trust with my money?”  Frankly I trust the internet over a human banker or insurance broker, I have more faith in a value set by mathematics than arbitrary decisions by people who have no interest in my welfare. Personally I’m tired of a small group of individuals with vested corporate interests setting the price of my money, I’m tired of the embedded corruption that comes with traditional currencies.

acceptanceThe wide spread acceptance of digital currency is happening, from WordPress, website hosting, online games, to real estate the list of businesses that accept digital currency payment as an alternative to traditional money increases everyday. I can imagine a time in the not too distant future when countries won’t be able to trust each other to value their own currency fairly, and digital currencies like Bitcoin will be put to use offering a stable and fair signal for global interaction and cooperation.

in Bitcoin we Trust

Digital currencies are here to stay they are robust and reliable, what you see is what you get, they allow for the movement of money without the need of a financial institution, without the need of a third party getting involved in your transactions.

In Bitcoin We Trust

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TEDxBellingen Crew

TEDxBellingen Crew


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Digital Media Marketer, Old school New score, what does that mean? Helping your brand get found online! Keynote Speaker. Social Media Consultant and Strategist. Exploring and Sharing ways that Creative Professionals can leverage the Web