The future of money,
the great sweep of historical change,
would tend to indicate
that we haven’t seen the revolution yet.
People on the tiny Pacific island of Yap
have preserved an ancient culture
amid centuries of change.
And on a recent afternoon,
Cyprian Mugunbey took his son
to see a time-worn piece of the family fortune.
This piece of stone money
was given to your grandfather, my dad.
He built a house for some people.
There are thousands of these stones
all over the place here.
They’re actually an ancient form of currency.
And, crazy as it sounds,
understanding how they work
offers a window into the future of money.
My name is Theodore Rutun.
Currently, I am the Speaker of the Yap State Legislature.
My family has some stone money.
Yap has no precious metals
and little in the way of stone.
So, centuries ago, voyagers began traveling
to a neighboring island about 300 miles away
in search of something rare.
What they brought back became a form of wealth
that has fascinated scholars, because it works without
bills, or banks, or just about anything else you’d think of
when you think of money.
They would cut it out of the stone,
hack it out, smooth it.
They would roll it down to their canoe,
put it on the canoe or on a raft.
Normally, it would take a year, or half a year.
The value of stone money,
if you want to put it in a nutshell,
comes from the work that goes into
that particular piece of stone money.
And then you sail it back to the island, and
it goes outside the chief’s house.
But the twist on the story,
which makes it interesting to people like me,
is that, sometimes, when they were bringing the rocks
back from the other island,
there’d be a storm, and
they’d have to throw the rocks over the side of the raft.
With money this heavy and hard to lift,
it often changed owners without actually changing hands.
A stone outside your house can become your neighbor’s
simply by both of you saying so in public.
And the oral tradition was so strong that,
by an early account,
even money tossed overboard
could remain part of the system of exchange.
What difference does it make
whether the stone’s outside my house,
or at the bottom of the Pacific?
It’s not going anywhere.
And so you have this idea
that who the money belongs to is
what everybody remembers the money belongs to.
Money is a communal story about who owns what.
It’s always been just a matter of
who we trusted to tell that story.
Yap’s ancient system, and the digital dollars in your bank,
work because what you have
is connected to who you are.
But there’s a big difference,
one that could make Yap’s money a model for the future.
Yap islanders remembered who owned these stones
without needing any intermediary,
like a bank, or a government, or a company
to keep track of things.
When you live in a small village, people all know the story.
Where did the stone come from?
How many times it’s been exchanged.
The more people who know,
the more secure it is.
And, in essence, this is the idea underpinning
some of the newest forms of digital money
we’re seeing emerge now, like Bitcoin.
In some sense, Bitcoin is a return
to this earlier concept of communal record-keeping,
of communal memory.
Bitcoin appeared shortly after a monster crisis
shook the world’s faith in our current banking system.
In 2009, an anonymous programmer, or a group of them,
launched what appeared to be an alternative system,
founded on principles an anarchist would love.
Without any government or banking intermediaries,
the system issues its own money
and verifies transactions
using a powerful network of computers.
They basically took a core function of government,
and they automated it.
Instead of the bank and the banking system,
instead of the dollars which are issued by the government,
you have a piece of software that gives you a thing
that looks like a bank account.
Just like with physical cash,
you don’t need a photo ID
or a physical address to use Bitcoin.
And just like cash, once you spend a Bitcoin,
you’re money’s as gone
as if you’d slipped a dollar bill into a vending machine.
So, having things in the virtual world
that you can’t copy,
that actually makes the virtual world
more like the mundane world.
And people who believe in the technology
have been buying a lot of Bitcoin.
Eight years after it launched,
the network was worth more than 25 billion dollars.
The security of that wealth is guaranteed, in part,
by putting the entire list of who has what
onto a network of computers
instead of in one central place.
And these computers simultaneously track and update
every Bitcoin transaction around the world.
They group together transactions that happen
around the same time into what they call “blocks.”
And then those blocks are linked,
which is why you often hear
that the technology behind Bitcoin is called “blockchain.”
You can think of a blockchain as a
global, digital, automated version of the oral tradition
that tracked ownership of the stones on Yap.
In essence, a blockchain is just
a high-tech, universal record book.
Imagine that you have a piece of paper,
and that any infinite amount of people
are also holding a piece of paper.
What blockchain technology does,
is it makes what you wrote on your piece of paper
show up, nearly at the same time,
on everyone else’s piece of paper,
exactly how you wrote it.
There’s literally a ledger of every
single Bitcoin transaction in history.
And because the network creates
and cross-checks this ledger,
no central authority is necessary.
But this also means it’s hard to find anyone
to appeal to if a transaction goes wrong.
If I want to operate in a community where
the money is completely anonymous,
and I might get cheated, and
it’s my problem to take care of. Fine. Right?
But, sooner or later, your grandma
is going to press the wrong button on an email,
and all of her money is going to be transferred
to somewhere in Eastern Europe.
So what does this mean for the future of money?
Bitcoin’s more anarchist features,
like the near-anonymity,
the lack of central control,
suggest it’s probably a long shot
to replace the dollars in your checking account.
But people who study the technology that powers Bitcoin
say blockchains will likely change
how the world does business.
2027, it’ll be everywhere.
They’re going to permeate everything we do.
Many of the programmers working here with Joe Lubin
are betting on a future where blockchains will make it
so that complicated, paper-intensive stuff,
like opening an account,
or renting property,
or getting a loan—
stuff that normally takes days or weeks—
could be done instantly.
If you’re trading a piece of land for money, perhaps,
there’s no reason why it can’t
clear and settle in the moment of the transaction.
In places where the financial system already works fine,
this means banking could get a little simpler, cheaper,
harder to hack.
But for nearly 2 billion people in the world
who, right now, can’t get bank accounts at all,
the stakes are a lot higher.
Just look at what simpler,
cell phone-based banking has done
in places like East Africa.
If you’d previously had to spend four hours, on a bus journey
and standing in line, to go and pay your water bill,
and now you can pay it in a couple of seconds on your phone,
your life’s completely changed.
Technologists say blockchains are likely to transform
far more than money.
If you’ve got something valuable,
a birth certificate or passport, stock or property deed,
you may soon be using a blockchain
to find it, check it, or sell it to somebody else.
You can think of a blockchain,
or a distributed ledger as
a golden record of the truth.
These technologies are about to disrupt
every industry that has
been based on trust.
Predictions like this have touched off
something like a digital gold rush.
Investors in 2016 poured more than one billion dollars
into new cryptocurrency and blockchain projects,
on the belief that the technology could simplify
trust-based transactions that so many of us need to do.
But that future comes with some risks.
Digital assets that aren’t backed by gold, or governments,
only have value if people keep believing they do,
and only if the computers creating them remain secure.
And one of the most far-reaching risks
goes back to a dilemma that comes built into Bitcoin.
It is, in some ways, the most private financial system,
and, in some ways, the least private financial system.
You can just be a series of letters and numbers,
and nobody will know that was you sending the money.
But once somebody does tie you to that serial number,
they know everything that you’ve done.
Putting still more aspects of our lives onto blockchains—
like property records and debts, identity documents,
and medical or criminal histories—
this could vastly cut down on the red tape in our lives.
But it could also vastly simplify efforts
to track our every move.
With access to great amounts of data
comes the responsibility to use it ethically.
So, if we wind up in a society
where there is a single computer record
for every single thing in the society,
and those records are kept in perfect order,
that might work quite well
in a modern liberal society like Switzerland.
The problem is, if something goes wrong,
welcome to your authoritarian superstate.
The virtues that we want to preserve
are virtues that we’re going to have to consciously fight for.
Because the technologies themselves
don’t bring those values with them.
If you want those technologies to have those values,
you have to bring them yourself.
This suggests that the future of money
may well be multiple.
Different systems that embody different values
about privacy, convenience, or community
that different groups want to preserve.
The rituals of Yap’s heritage persist
because they represent values
the community here wants to maintain.
Islanders may use dollars at the grocery store,
but stone money still has its place
in ceremonies and exchanges that reinforce social ties.
And that’s why it will likely endure,
no matter how central blockchains become
to the financial system.
If we are moving into this era
where the money itself is much cleverer,
and the money is much more
closely linked to communities,
that makes money work in very different ways.
But the way of thinking about that is
much more where we came from.