The web is money: it is our medium of exchange.
Sharing is the essence of the (world wide) web, its existential reason of being. Web is an information ocean and sharing is the only way it becomes. Yet, in the first two decades of the web, no one has been able to figure out a viable business model based on sharing information that will benefit all parties involved.
Centuries old business model of physical things that had been working for so long is not working anymore. The medium we call money, the agent between us humans for exchanging goods and services, is no longer working as it is supposed to do.
Meanwhile the growing web is taking over everything out there, it is eating the world. Atomic world of physical things is being swallowed by it and the web is pregnant to a new business model that will redefine all economic relations from scratch. First step is, converting all available data on physical goods to information and make them accessible from inside software apps. This is already happening, look at the wave called internet of things.
Now let’s have a look at how we define the essential ingredient of the old, physical business model, i.e. “money”. Money is all of these simultaneously: 1) medium of exchange, 2) store of value, 3) unit of account. We take it granted that there has to be an agent in-between us and physical goods when we buy them and also, that the agent has to carry value itself. Apparently both of these assumptions are wrong!
Let me give an example to illustrate my point. In the picture below, we see a customer purchase grocery with only units stored on his blockchain account without using any currency as an in-between agent.
A customer pays his grocery with units stored for him on a public blockchain, like Ethereum, itself maintained on a multitude of servers. And the grocery store received customer’s units instantly as soon as the purchase is over and added these new units to its online account, possibly on the same blockchain as the customer.
Note that, although a blockchain is used for transactions, there is no crypto currency, like ether involved, hence no digital or physical currency (like US dollar) was used for the purchase above. The first assumption that an agent is necessary for exchange is proved wrong with this example.
We do not need any physical or non-physical agent for the exchange of goods other than a web connection and recorded numbers on a blockchain. However, we do need a relative index of prices, i.e. a record of how much everything costs and the accounts on the blockchain of all parties involved.
We do not need a value carrying agent for any economic exchange when there is a common index of prices and a common (shared) infra-structure of blockchains that record all transactions involving them.
For the economic exchange imagined above, did the three essential functions of money dissapear? The answer is no! Let me show where they are now: the medium of exchange is the web itself (1), the units we used in exchange are digital numbers and they are stored in people and vendor accounts on the blockchain (3). Those numbers are just “pointers” in a commodity price index and themselves carry no value. They only point to the relative value of goods and services. Meanwhile, all value remains in goods and services themselves (2) as much as their nature and the markets permit.
Eventually, all economic activity occuring on the world wide web will boil down to tokenless blockchain transactions. There will be no banks, no central control of money, no central authority of economic activity. Then the world wide web may have its own Value Exchange Protocol (VEP) similar to FTP, HTTP, SMTP etc.
In the long run, we may all be dead, but our economic activity will be distributed as illustrated in the figure from the original Paul Baran article from 1964: