Language is truth, my mentor, Bill Ziff, used to say. By the words we choose, people and organizations reveal the deeper truth of what they are saying. As my current partner in Social Starts, William Lohse, puts it, this makes it possible to listen to what people are saying to themselves that causes them to say what they are saying to you.
In this spirit, I felt that examining current language around digital transactions can reveal a deeper sense of what is really going on in this area and the long term impacts digital commerce may have.
At the heart of digital commerce, all commerce in fact, is the word transaction. But what does this word really mean and what is the deeper sense within it? Split the word and we have trans, to change the state of form, and action. So, a transaction is the alteration by action of one thing into another. Makes sense: money turns into malted milk balls, or in barter, my wood becomes your beer.
But, at root, there is another connotation to this word. It's Latin origin is in the word for stabbing or pushing through, piercing. So, while transaction implies change, at heart it is static, pinned to a single point in time and space. A transaction by its very nature is isolated and unmoving. No number of isolated transactions can produce significant, sustained value. They lack flow. Individual points of light that can never come together to produce a light show.
But in the real world, transactions actually chain together in a way that does produce lasting value. I give you my wood for your meat, then some of the meat I got from you goes to Joe for his beer, and some of Joe's meat goes to Lydia for sugar and some of Lydia's sugar comes back to me for some… wood.
And, of course, we have created a word for this network of transactions which captures the flowing nature of it rather well: currency, the creation and distribution of perceived value within a defined framework through a chain of transactions.
That framework could be the barter system in an isolated town, the US economy or the world market for a key commodity like oil. The flow can be as simple as my example above or incredibly complex. As a result, over time, currency has changed the manner in which it is captured as the world has gotten more complex and diverse. At first, currency was the flow of actual objects of value: the wood, beer, meat and sugar in the example above. But goods don't actually flow well on their own; they have a lot of that stuck-to-the-ground quality of the word transaction.
So humans, being clever, came up with ways to represent the value of transactions: knots in ropes, seashells or lumps of non-rusting metals like gold and silver, whose longevity gave the comfort of seeming permanence. And so we had money. Then, that physical form of money morphed into a representative phase; all that gold and silver denoted by bits of paper, green or other colors with the faces of notable people on it, a government certificate of worth that was easier to carry, more permanent and much easier to flow than beads or bullion.
These past few decades, we have been living through a computer-driven symbolic phase of currency. While we still have bits of paper and even a few chunks of metal to represent the flow of transactions, most commonly value today is captured in computer bits inside computers at banks, the Fed, Visa, MasterCard and other designated repositories of digital value. Bits can flow way faster than paper or metal and can be measured much more precisely, and so today's system allows for faster, broader and more intricate transaction flows than any that preceded it.
Now, though, we are moving into the latest, and potentially most powerful new mode for currency: the analytic phase.
It is easy to fall into the fallacy that money is the value in transactions, but it isn't. Flow is the fundament. Money, in whatever form, is merely an expedient, a superficial representation of that deeper truth.
Today, through social/mobile (and soon through the IoT, implantables and a host of technologies we can't even imagine yet) we will be able to capture and measure every action by every person on Earth. We'll be able to capture meat for beer interactions, for sure. But also acts of charity. Altruism. Togetherness. We'll be able to see and weigh the roots of all evil and the sum of human kindness.
In this way -- with the whole world and everyone in it as the framework, and every action among humans as the impulsion behind the flow -- we will see the emergence of a currency with a breadth, depth and power far beyond anything humankind has ever had. This ultimate analytic flow will have the power to fundamentally change economics and with it much of the core of society. This flow will be so powerful that the stuck-in-the-wool nature of transaction may be overwhelmed altogether and the notion of any physical representation for currency will seem ludicrous. In the emerging era, currency may move beyond money for the first time in human history.
With analytic currency, the flow of human actions becomes its own store of value. Money in any form will become anachronistic. And so may many of the institutions based around it.
Now that's big data.