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THE SHAPE OF THINGS TO COME

money
the future of

Don’t get too attached to

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

H
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
you-scratch-my-back-I’ll-scratch-yours
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
86 PITTSBURGH MAY 2004
Like fire, it is generally harmless in small
amounts, but powerful and unpredictable
when it gathers speed and mass.
Before money, of course, there was
barter, but barter was supremely inconven-
ient. Four goats and two chickens for eight
bushels of wheat and one cow? Arranging
these trades must have been a nightmare
for the farmers and shepherds who made
them, what with all of the scampering ani-
mals and manure. We used this tit-for-tat
system for millennia (and some places, like
Timbuktu and flea markets, still do) until
finally we simplified the transactions with
the minting of the first metal coins in Asia
Minor 2,600 years ago. That was liberat-
ing. You could symbolize the value of ani-
mals or grain with coin, make the
exchange, and then take the round, metal
pieces elsewhere to buy whatever you
liked. Even the purest gold coins were
lighter than cows.
There was a lesson in the invention of
coins. The more portable money was, the
more powerful it became, and the more it
changed us. Money evolved as a universal
translator, capable of representing time,
talent, labor, goods or services, even gen-
erosity and concern, all without ever
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
traders knew they could count (literally)
on gold coins imprinted with the con-
queror’s image. Cultures that would never
have otherwise interacted shared their
products, ideas and inventions, and began
the long process of world shrinking, which
today we seemed to have honed to an art.
Now I wonder how new forms of curren-
cy will change the way we deal with one
another in the 21st century? We keep mor-
phing money, reducing it step by step to a
pure idea. The first coins improved upon
the inconvenience of swapping animals.
Next we moved to paper script: lightweight
symbols of the precious metals squirreled
away in underground vaults. With the elim-
ination of the gold standard in 1931, paper
money edged closer to being nothing more
than a concept, an agreement among all
parties that paper bills were worth what
they were worth because on any given day
everyone agreed they were.
In the last 50 years, we’ve stepped even
farther away from hard cash by actually
making currency out of no money at all.
With a credit card in your wallet, you don’t
even need to physically, or conceptually,
have money to spend money! Just the
promise that you will repay it. This enables
us to mortgage future versions of our time,
energy and talent for current pleasures.
Now, money has nearly made a total
transition to ephemera. Nearly all of it,
except for the small amounts we carry
around in our pockets, is pure, electronic
information—e-money. Each day, trillions
of dollars, euros, yen and reals fly around
the world, not in the forms of cash or coin,
but as ideas—values represented by global-
ly agreed-upon digital codes that move at
the speed of light. Money as molecules is
disappearing. Last year, for the first time,
according to the DaVinci Institute, a busi-
ness-development think-tank for emerging
innovators, check usage actually decreased.
And the Federal Reserve has stopped phys-
ically exchanging checks altogether; it now
simply exchanges electronic images of
them. As you read this, ledgers everywhere
are rewriting themselves to represent the
zeroes and ones that swarm like locusts
across fiber-optic lines in and out of the
world’s collective bank accounts.
W hen I first saw a demonstra-
tion of FreeMarkets’ pioneer-
ing online auctions here in
1998, I noticed that no money really had
to be laid on the table or even actually
change hands, as business was transacted
across the Web. Of course, a good many
digits swapped places from one bank to
another when the auction ended, but the
whole exercise illustrated how purely
informational money had become.
We’re a little like Micronesia’s Yapese
people this way. Their currency, which
goes back centuries, consists of enormous
stones that can weigh tons and stand 10
feet tall. Like us, the Yapese would rather
not actually move their money when a
transaction is made. So they leave the
stones where they lie, and every islander
simply agrees that this hardest of cash now
has a new owner. The shift in wealth
becomes nothing more than a shift in per-
ception. It’s easier that way.
Now, e-money’s portability and conven-
ience are trickling down to the rest of us,
threatening to eliminate even the paltry
amounts we carry around. We may not
participate in the online business-to-busi-
MAY 2004 PITTSBURGH 87
 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

88 PITTSBURGH MAY 2004

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
somewhere.
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
scorched.
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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