The first scenario is the simple continuation of the
This second scenario represents an update to
current trends. While new technologies are developed
Neuromancer, one in which Bitcoin replaces fiat
and society continues to evolve, the nature of the
currencies and the role of nation states diminishes.
change in both of these dimensions is incremental.
The existing payments systems collapse as both large
and small payments are conducted via global,
Payments will continue to move from the
distributed payment networks based on Bitcoin or one
physical to the virtual world (or, more accurately,
of its descendants, with each payment being
from physical places to mobile devices). The use of
instantaneous and (in effect) free. The banking
cash will continue to decline and cheques will
system fragments as the government guarantees for
retreat further to the higher ground until regulatory
deposit-taking institutions mean little, and individuals and social change allow individuals to make all
and firms move their capital into the exploding
large and small payments electronically. Bitcoin and
number of fintech start-ups. The trend for shared
the other cryptocurrencies will continue to be
infrastructure – from roads to hospitals – to move
developed but will remain a niche interest, though
from government funded to user-pays accelerates as
the best ideas from the cryptocurrency community
the shift of currency to the virtual world erodes the
will be co-opted by the established financial sector
government’s ability to tax its population.
and integrated into the status quo. Most importantly,
the relationships between the finance sector and
This future is quite unlike today. It is also a future government, business community and the public
that looks increasingly improbable. Many of the
will remain the same, with the established banking
ambitious predictions made for cryptocurrencies
and payments providers retaining their roles.
are being set aside as it becomes clear that
mass adoption is unlikely.
This future would be like today but more digital
and online, providing governments of the world with The third scenario is the transformation to a new
complete visibility into how we transact, reducing tax paradigm – high technological change and social
revenue leakage, financial crime and tax evasion.
change. Cryptocurrencies and FinTech redefine the
relationships between the existing participants in the The second scenario is a future in which a new
finance sector and accelerate the trend for products to technology paradigm disrupts the existing social system.
be transformed into value-added services (called
This scenario represents the technology determinist view
‘servitisation’) where the payment occurs at a time and of the world, where technologies such as Bitcoin disrupt place separate from where the goods are exchanged
the finance sector and accelerate the trend, driven by the or the service provided. An example is Uber, a
Internet, for society to move from centralised,
smartphone-based driver dispatch service. You book a
geographically based systems to distributed systems. This car using a smartphone, jump in when the car arrives
may be seen as collapse, as the social and governance
and are taken to your destination, at which point you
systems revert to a state similar to what came before the get out without (explicitly) paying.
current global institutions.
The Future of Exchanging Value Cryptocurrencies and the trust economy 23
The exchange of value can happen somewhere
In this world, an established sovereign currency remains else, at another time, possibly in a different
the major tool for governments to manage their
geography and in a virtual non-sovereign currency
economies. People are paid and taxed in the country’s
beyond the reach of the government. The payment
sovereign currency and most individual wealth is
and finance sector becomes consumer-centred (the
measured against assets in the same currency. While the consumer chooses where, when and how to pay,
relationship between state and citizen remains largely the and the currency), rather than the current
same, ubiquitous digital technology enables consumers
government- and finance sector-centred approach.
to redefine their relationships with merchants. The value a business creates moves
This future is quite unlike today. The relationships
(or has moved) from the simple provision of a product or between the participants have been redefined,
service into the space between the business and its
ushering in a new social paradigm. Governments will
customers. Loyalty programs expand from simple reward
also struggle with the leakage of tax revenue. Firms
schemes to provide businesses with finer control of the and individuals will store and exchange value in
shared value between firm and consumer, becoming
virtual networks and cryptocurrencies that live on the complementary currencies in the process. This, coupled network and beyond the purview of regulators.
with the growth of in-game currencies for online games, results in a rapid increase in the number of
The final scenario is the establishment of a new
complementary currencies alongside sovereign
equilibrium. The accumulation of incremental
currencies, with all the attendant benefits and problems of technological change results in a social shift that
being a currency for their owners. Settlement moves to redefines the relationships between consumers,
low-cost, instantaneous transfers via the ‘block chain’
merchants and the finance sector. This creates a
technology that underpins Bitcoin, transferring value
significant change in how we exchange value, but
directly between entities. FinTech start-ups mature and the social framework in which it happens – the
their innovative services – from new value transmission relationship between government and citizen –
services through to crowd-funding and crowd equity
remains largely the same.
– are absorbed by the mainstream
regulatory environment.
The future is quite recognisable from where we stand
today, but there are key differences. The long-term
decline in the cost of communications technology
results in a fundamental change in the relationship
between firm and consumer. Banks’ deposit-taking role
continues but the context in which they operate has
changed, potentially disintermediating existing
payments networks in the process through the adoption
of peer-to-peer technologies.