Money isn’t what it used to be, writes Minyanville macroeconomics regular “Professor Pinch.” And it probably won’t ever again be what it used to be.
In a column published Wednesday, the professor begins by noting that Bitcoin is currently “big” simply because “it’s never been done before.” Part science fiction, part gold, Bitcoin, he writes, appeals to “folks who mistrust government, central banks, and well, pretty much most of the rest of the world.”
Both gold and Bitcoin reflect a “me, here, now” philosophy, the professor writes. The problem with both those commodities, though, he notes, arises with the idea of credit. Credit, he argues, requires trust … while the appeal of Bitcoin and gold is more in the “every man for himself” camp.
So is there even room for credit in the future economy? Professor Pinch sees the answer in personal data. He quotes Atlantic Media CTO Tom Cochran, who argues that personal information, ultimately, will become “the currency of the 21st century digital economy.”
“It has no transaction costs and does not decrease in value when the supply increases,” Cochran reasons. “Contrary to the laws of economics, it may even increase in value with greater supply. The more information you provide to companies, the more value they can extract from it.”
Handing over such personal information, however, implies trust, the professor notes … not something either Goldbugs or Bitcoiners are big on. Contrary to “me, here, now,” information implies, “us, everywhere, forever,” he argues.
Which will win? The Minyanville writer says he suspects that “people will buy into using data as a currency as much — if not less — than proponents of Bitcoin do today.”
Whatever the future of money ends up looking like, he adds, “it’s an interesting time to be alive.”
Image credit: Flickr