The future of money: With what will we want to buy tomorrow.

An edited version of this article first appeared in The Republican,
Issue 10, Friday 16 May 1997 on page 23.


Last May the CATO Institute held their 14th annual Monitary conference. Speakers from a variety of global financial indrustries discussed the implications of the imminent changes facing the existing money system. Lawrence White, Professor of economics at the University of Georgia made the undisputed point that the costs of transacting money have dropped and will continue to drop to below one thousandth (0.1%) of their current rates.

"When commercial online networks and Internet sites begin offering offshore banking services, with zero or very small fees for transferring funds, there will be an exodus of retail banking business from the regulated onshore sector to the untaxed and unregulated offshore sector." he warned.

According the Richard Rahn, CEO of Novecon Ltd, Governments face two choices. The first is to overhaul the tax and monitary system completely, and the second is to attempt to monitor every financial transaction made by anyone anywhere.

David Chaum, whose Digicash has been adopted by many banks worldwide includng in Australia the Advance bank, elaborates on the Orwellian dystopia.

"One way to do it would be to require the consumer to identify [themselves] by some kind of biometric, like a fingerprint or retina scan. Once identified, the consumer could access their account and conduct transactions. Of course, there would be central records of all transactions, and a customer could be locked out of the system at any point."

Citibank in the USA announced last week they are incorporating Retina Scan technology into their autotellers. IBM recently announced their Personal Area Network (PAN) devices which use the micro electroic field surrounding the human body to carry network information.

Chaum continues, "Another way is to create a chip that is in effect a portable bank officer, a little black box that everyone would use to access their financial accounts and records. The consumer would have no way of knowing just what was on the chip; it might be sending encrypted messages revealing their transactions to all kinds of parties. It might even be programmed to discriminate against certain people or to enforce arbitrary rules. The consumer's lingering doubt about what's on that chip would have a chilling effect on society."

Not so much big brother, as a million little brothers. Hi grade encryption is regarded as a munition by many nations and trade in encryption technology is severly constrained. PGP is a public domain encryption system however which lets you digitally sign and encode private messages to military grade security levels

For people like Bill Frezza, CEO of Wireless Computer Associates, the public takeup of encryption and the ease with which digital cash can be created is cause for optimism.

"In practice, that means that ordinary people will be able to create and exchange wealth away from the prying eyes and grasping hands of sovereign powers. Imagine the consequences if a significant fraction of the world's most productive people engaged in unrestrained commerce within an economic system inherently immune from government scrutiny."

Who will build the roads and feed the poor and assist the sick and run the country and how it will all be paid for? Bill doesn't address these details.

Dave Sag © 1997

Dave Sag is a Director of Virtual Artists Pty Ltd