Before Babylon, Beyond Bitcoin: From Money That We Understand To Money That Understands Us
Published by London Publishing Partnership in association with Enlightenment Economics. 2017
Author: David G. W. Birch
A review by William C. Frederick, 2018
Anthropologists and others who have studied so-called “primitive” societies know that money has taken many forms throughout our human, political, social, and economic history. In this book, David G. W. Birch suggests a future of money in which “we will return to the multiple, overlapping community monies of the past but … they will be smart monies, monies, with values, monies that know about us” (p.xvi). These new forms of money will differ from our traditional Western monetary systems in two important ways: they will not be by central banking systems, and they will increasingly be cashless forms of cryptocurrencies.
The book’s 18 chapters and a concluding Coda are allocated across three major parts:
Part 1: The Past: Money That We Understand (4 chapters)
Part II: The Present: Money That We Think We Understand (7 chapters)
Part III: The Future: Money That Understands Us (7 chapters plus Coda)
Chapter 1: Money is a Technology. A discussion of early types of money, up to and including Mondex, an early (1990) form of smart card electronic cash system.
Chapter 2: 1066 and All That, referring to changes occurring in European monetary systems after the Norman Conquest brought French currency practices to England, for example “tally sticks” that provided a transaction record to both parties. A millennium later, “many people in the United Kingdom are beginning to challenge the assumption that the inertia around cash means an insurmountable barrier to change. It does not. Honest retailers also want it to vanish in favour of more efficient electronic alternatives…. We see retail chans going cashless already” (p.236).
Chapter 3: Money and Markets. A quasi-history of banks and markets interacting for several centuries in their own respective interests.
Chapter 4: Crises and Progress. A rather checkered account of the struggles between banks in different countries. The author’s explanations conclude as follows: People “did not value the anonymity of the currency, since they signed [the notes] and passed them on. Who had used a note attested to its validity…. Identity was the new money, so to speak. Fungibility is not all that” (p.71).
Chapter 5: Goodbye Pony Express. “Despite its iconic status, and its lasting place in American history, the Pony Express was a commercial failure” (p.71). The chapter then identifies the factors responsible for that failure.
Chapter 6: Consumer Technology. A somewhat complex account of banks’ reactions to the use of credit cards and similar mechanisms. “Nevertheless, computers and networks began to spread even within banking, and by the mid-1960s the sector began to reorganize itself around electronic payments” (p.89).
Chapter 7: Moving to Mobile. Another somewhat technical account of early attempts to introduce a new kind of money called M-Pesa and other technical types. No question that new forms of money were evolving, favoring banks’ normal reliance on paper money rather than the emerging cryptocurrency.
Chapter 8: The Case Against Cash. The author says “I think we should pause to take a long look at cashlessness…. Should the future include a cashless society…” Why? What’s wrong with cash?” (p.111). He then provides his own answers to these puzzles.
Chapter 9: Why Keep Cash? An informed account of five arguments against the use of cash: conservatism, demographics, seigniorage, privacy, and security (pp.123-129).
Chapter 10: Thinking About the Cashless Economy. “…We can ask ourselves what issues we need to consider in planning the transition to a future that is going to include a form of elecgtronic money” (p.131). “…It is time to think about a transformed cashless economy, not a chromewashed version of the present” (p.151).
Chapter 11: After the Gold Rush. A short, technical account about the abandonment of the gold standard and the potential need for forthcoming technical successors. The author “strongly agree[s] with [the] view that the era of floating exchange rates between nation-states based on fiat currencies is a ‘blip’ that won’t be part of the future of money….” (p.156).
Chapter 12: Seeds of the Future. “Money is nothing more than bits; we will have a cashless economy and all money will be digital money…” (p159). “It is clear to me that identity is changing profoundly, and that money is changing equally profoundly…the two trends are … converging.” “The technological change that I am referring to centres on the evolution of social networks and mobile phones” (p.163). “We have a paradigm mismatch that explains the midlife crisis: money feels out of place, unconnected, uncomprehending. We’re using the mentality of coins and the institutions of paper to try and deliver the money for a new economy. It is time for the debate on redesign…” (p.166).
Chapter 13: Counting on Cryptology. “While cryptocurrencies may well become mainstream … it does not follow that Bitcoin will” (p.171). “…Detailed analysis of data from the Bitcoin system has shown … that it has barely been used at all…. Why would people use Bitcoin … despite the widespread interest. Bitcoins do not seem to be gaining much traction … in the ‘real’ ‘world of payments (p.188). “Bitcoin is better understood … as a peculiar kind of digital commodity rather than as money (pp.171-172). If Bitcoin is not money now, might it be the future or money? I think not.” (p.172.)
Chapter 14: Who Will Make Money? A highly technical discussion of the actions and traditional operations of banks in response to the possibility of digital currencies.
Chapter 15: Reimagining Money. “Let us now integrate the economic, technological, and artistic perspectives and look at three examples of different kinds of communities that we might imagine creating money…” (p.205). Those examples are economic communities, e.g., the Euro; cultural communities, e.g., Islamic; and geographic communities, e.g., a city such as London.
Chapter 16: Back to the Future. “I don’t think there will be a universal currency ever” (p.215). “We have an outline … for the future of money: distributed, private, community-centric….” The examples in the Appendix show that “this narrative … is already unfolding” (p.217).
Chapter 17. The Next Money. I suspect that there will be more and more different kinds of money … than ever before … there is no compelling argument for a single alternative to hold sway” (p.220).
Chapter 18: Coda: a Manifesto for Cashlessness. The author was “inspired by … the Italian Cashless Way campaign to use … four policy areas as building blocks for an actionable ‘manifesto for cashlessness’ in Europe” (pp.231-233):
Appendix: Around the Cashless World. Birch believes that “cash has ceased to be relevant to monetary policy, has become irrelevant to most individuals and has vanished from most busiesses” (p.235). The eight countries discussed in the Appendix provide a snapshot of their various approaches and movements toward cashlessness.
United Kingdom. “While the decline of cash may have been slow to date, there are reasons for thinking that it might accelerate…. We see retail chains going cashless already” (p.236).
United States. “The situation in the United States is, in many ways, rather strange. “Perhaps America is moving closer to cashlessness than the broad figures for notes then ‘in circulation’ suggests” (pp.236-238).
Sweden. “Sweden provides a useful case study of the need for the journey through debit cards and into the world of cashlessness” (p.239), including a discussion of how and why the electronic payments industry needs to become considerably more effective at communicating certain “nefarious” issues to the general public” (p.241).
China. “China has a very vigorous mobile payments market” (p.242).
India. “transpositioning India to a cashless economy…” (p.245).
South Korea. “As South Koreans are carrying less cash … the Bank of Korea is planning a cashless society by 2020” (p.246).
Somaliland. “Mobile is growing by leaps and bounds…. It is entirely possible that Somaliland will be the first cashless country!” pp.248-249).
New Zealand. “New Zealand is steadily moving towards cashlessness…. The future may well be unevenly distributed, but some of it is in New Zealand” (p.249).
In summary, David Birch has taken us on a fascinating journey through monetary time and space. We can now follow along on the trip to see whether, how, and when his predictions become reality.