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the future of

Don’t get too attached to

your cash. B Y C H I P W A L T E R

uman beings are such social ani-
mals, it was inevitable we would
invent money. Like language,
money talks, and like talk, it glues us
together. We make transactions commu-
nally, compulsively and automatically.
Even chimpanzees conduct business: They
groom in exchange for food, obey orders
in exchange for protection. The notion of
goes way back; as our ancestors grew
beyond tight family circles and began
engaging in transactions with strangers,
trust had to be fortified in a different way.
In time, money became the medium.
When you think about it, money is a
startlingly smart concept, an invention
right up there with fire, the wheel and the
computer. It’s simple and elegant, yet so
potent that it fuels the world’s economies,
catalyzes ideas and even undoes presi-
dents. (Remember Deep Throat’s
Watergate admonition to The Washington
Post’s Bob Woodward to “follow the
money?”) It seems to act in ways both
good and evil because, like all inventions,
money—in and of itself—is morally neu-
tral. It can save lives, defeat hunger and
provide jobs, or it can buy favor, subvert
trust, erect empires and destroy people. It
is a powerful motivator; it’s as much about
emotion as it is about ledgers and figures.
illustration by Tim Lee
Like fire, it is generally harmless in small making currency out of no money at all.
amounts, but powerful and unpredictable With a credit card in your wallet, you don’t
when it gathers speed and mass. even need to physically, or conceptually,
Before money, of course, there was have money to spend money! Just the
barter, but barter was supremely inconven- promise that you will repay it. This enables
ient. Four goats and two chickens for eight us to mortgage future versions of our time,
bushels of wheat and one cow? Arranging energy and talent for current pleasures.
these trades must have been a nightmare Now, money has nearly made a total
for the farmers and shepherds who made transition to ephemera. Nearly all of it,
them, what with all of the scampering ani- except for the small amounts we carry
mals and manure. We used this tit-for-tat around in our pockets, is pure, electronic
system for millennia (and some places, like information—e-money. Each day, trillions
Timbuktu and flea markets, still do) until of dollars, euros, yen and reals fly around
finally we simplified the transactions with the world, not in the forms of cash or coin,
the minting of the first metal coins in Asia but as ideas—values represented by global-
Minor 2,600 years ago. That was liberat- ly agreed-upon digital codes that move at
ing. You could symbolize the value of ani- the speed of light. Money as molecules is
mals or grain with coin, make the disappearing. Last year, for the first time,
exchange, and then take the round, metal according to the DaVinci Institute, a busi-
pieces elsewhere to buy whatever you ness-development think-tank for emerging
liked. Even the purest gold coins were innovators, check usage actually decreased.
lighter than cows. And the Federal Reserve has stopped phys-
There was a lesson in the invention of ically exchanging checks altogether; it now
coins. The more portable money was, the simply exchanges electronic images of
more powerful it became, and the more it them. As you read this, ledgers everywhere
changed us. Money evolved as a universal are rewriting themselves to represent the
translator, capable of representing time, zeroes and ones that swarm like locusts
talent, labor, goods or services, even gen- across fiber-optic lines in and out of the
erosity and concern, all without ever world’s collective bank accounts.
changing its own appearance. This
changed the world. By 330 B.C., money
minted by Alexander the Great had
increased trade from India to Greece and
southern Russia to northern Africa because
W hen I first saw a demonstra-
tion of FreeMarkets’ pioneer-
ing online auctions here in
1998, I noticed that no money really had
traders knew they could count (literally) to be laid on the table or even actually
on gold coins imprinted with the con- change hands, as business was transacted
queror’s image. Cultures that would never across the Web. Of course, a good many
have otherwise interacted shared their digits swapped places from one bank to
products, ideas and inventions, and began another when the auction ended, but the
the long process of world shrinking, which whole exercise illustrated how purely
today we seemed to have honed to an art. informational money had become.
Now I wonder how new forms of curren- We’re a little like Micronesia’s Yapese
cy will change the way we deal with one people this way. Their currency, which
another in the 21st century? We keep mor- goes back centuries, consists of enormous
phing money, reducing it step by step to a stones that can weigh tons and stand 10
pure idea. The first coins improved upon feet tall. Like us, the Yapese would rather
the inconvenience of swapping animals. not actually move their money when a
Next we moved to paper script: lightweight transaction is made. So they leave the
symbols of the precious metals squirreled stones where they lie, and every islander
away in underground vaults. With the elim- simply agrees that this hardest of cash now
ination of the gold standard in 1931, paper has a new owner. The shift in wealth
money edged closer to being nothing more becomes nothing more than a shift in per-
than a concept, an agreement among all ception. It’s easier that way.
parties that paper bills were worth what Now, e-money’s portability and conven-
they were worth because on any given day ience are trickling down to the rest of us,
everyone agreed they were. threatening to eliminate even the paltry
In the last 50 years, we’ve stepped even amounts we carry around. We may not
farther away from hard cash by actually participate in the online business-to-busi-


After we’ve all obligated
ourselves to so many banks
we can’t think straight, how
warmly will we interact with
one another?
ness auctions at FreeMarkets, but we get
eBay, Amazon and Priceline. Less than a
decade ago—though we have all forgotten
it—a debate raged over whether financial
transactions should even be allowed on
the budding World Wide Web.
Today we tap a few buttons, electroni-
cally toss some numbers through the ether
and buy a vacation, book or troll doll.
Meanwhile, not a dollar is physically han-
dled, even though a lot of them are being
spent. According to the latest figures from
Fortune magazine, businesses sold $750
billion worth of services, media and goods
to us consumers in 2003. That’s nearly
twice as much as in 2002. And still more
digital money will be flying: Information-
technology consulting firm Computer
Economics Inc. predicts that between
2002 and 2006, all online transactions will
triple. Computers linked to the Internet
have made us e-money moguls.
Can money become even more
portable? It looks that way. E-money is
moving us at high speed to the on-demand
world we seem to want. The supreme
portability of today’s money now makes it
possible to think of something one minute
and buy it the next. This is a little like hav-
ing a fairy godmother. In Europe, cell
phones are already used as electronic wal-
lets: Just beam the vending machine and
buy a Coke. The charge is added to your
phone bill. Wal-Mart will soon require that
its major vendors tag their products with
radio-frequency identification technology.
This will make every object for sale a node
on the Internet. Soon, you won’t have to
pass by the cashier or the smooth-talking
electronic scanner to serially swipe your
purchases at the grocery store. You’ll sim-
ply flash your card, a machine will calcu-
late the value of all your tagged goods in
one fell swoop, a number will be deducted
from the account of your choice, and you’ll
be on your way. Will it be long before we
can point our phone at any product in any
store and buy it on the spot? Whether it


shows up FedExed on your doorstep the
next day or you step inside the store and
pick it up yourself is your call. It’s all made
possible because no money has to
exchange hands, only electronic symbols
have to rewrite themselves on a hard disk
The big fear in all of this is that e-money
has to be tagged with our own identity, and
information like that can be stolen as it
makes its way through the ether. Identity
theft is the fastest-growing crime in
America. It’s ironic that in the spending of
money today we risk losing our selves. But
since it is the credit-card companies and
banks that have to foot the bill for pilfered
identities, the incentive to solve the prob-
lem is hefty. New encryption techniques are
on the way.
The longer-term dangers and temptations
of e-money may be less obvious and more
personal, and I can’t say what it means for
human relationships or our self-control. The
days of friendly chats with the local bank
teller are probably numbered. Discussions
about the weather or the outrageous cost of
bar soap with the grocery-store cashier will
dwindle as well. On the other hand, maybe
if we don’t spend so much time in lines,
maybe we will spend more time with our
loved ones. Or will we? If we can grab any-
thing that strikes our fancy simply by tap-
ping a card or flashing our phone at it,
what’s to stop the flood of red ink and con-
spicuous consumption? (We’re already the
most debt-ridden society in U.S. history.)
After we’ve obligated ourselves to so many
banks that we can’t think straight or relax
enough to laugh, how warmly will we inter-
act with one another? We run the risk of
becoming like spoiled children, temporarily
satiated, but, in the long run, emotionally
But I’m an optimist. If money is double-
edged, it’s up to us to take control and be
smart enough to remember that it’s danger-
ous to run with scissors. The conveniences
that morphing money brings are not all
bad. Even in the form of pure information,
it can still glue us together and lubricate
our relationships. Its power can still be
used to advance human and humane caus-
es. It still cross-pollinates the world’s ideas
and cultures. And it still fuels dreams. We
just have to remember: We are supposed to
be spending the money, no matter what its
form. The money isn’t supposed to be
spending us.


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