Dough. Cash. Moola. Whatever you want to call it, one thing is undeniable: money makes the world go round. But what is money, really? How do we go about redesigning a financial system better suited to the world we live in today?
Realistically, this revolution isn’t going to happen overnight. More importantly, a one-size-fits-all solution isn’t viable in a world with disparate living experiences. Where to begin? It starts with understanding what money is and what it means to you.
What is money?
Money is the brown and silver coins jangling around in your pocket. It’s the plastic card empowered by a magnetic strip or embedded chip living in your wallet. It’s the paper in your purse. It’s the semi-abstract numbers and decimals on an electronic screen. You get the idea. Money has many shapes and forms depending on its purpose.
American Scholar, Bill Maurer expresses an interesting perspective, “Money is a system of relationships, a chain of promises, and a record of people’s transactions with one another.” And it makes sense. Take a moment to check your transaction history in the banking app you most likely make use of with your smartphone. Chances are it will tell you a lot about yourself and how you engage with the world: where you spend your time, what you like to eat, what you’re wearing, where you live, and so on.
Connecting the dots
Let’s take a step back. Briefly, coins represented intrinsic value due to their material composition. Then came paper money: the first move towards “the assertion of state authority over money.” And now we’re at a crossroads where it makes sense from an individualistic perspective to take full control over your money. The digitised nature of today’s money means we no longer need traditional banks or governments to safeguard our money for us. Sure, they do more than that, but we’ve got a question. Are banks functioning as legacy gatekeepers, or are they doing more that we cannot at this stage do for ourselves?
Anthropologist and economist Keith Hart believes money is a ‘memory bank’. He describes it as an “expression of trust between individuals in society, an act of remembering which allows us to bring calculation to some of our interactions and relationships.” He views money as a memory bank in the same way that language does. These two constructs intersect and join forces through the internet. And it’s our duty as citizens of the world to ensure they both remain fit to serve the very people who created them.
It’s all about the Benjamins
Now let’s take another step back and look at how we manage our money. It’s impossible to classify how everyone in the world interacts with their finances. Depending on where you live and your socio-economic situation, this will vary greatly. Alfred Milnes, author of The Economic Foundations of Reconstruction talks about money as a matter of four primary functions: a medium, a measure, a standard and a store.
- The medium of exchange: used for buying and selling goods and services
- The unit of account or measure of value: used to measure the value of all other things
- Method of payment or standard of deferred payment: used to settle debts
- Store of value: used to maintain and safeguard value that would otherwise diminish
Is our current financial system working as efficiently as it could be? How do we classify ‘efficiency’? Who does the system benefit, and who’s left out?
If it’s broke, fix it
The trouble is that people hold a variety of views about the nature and function of our financial system, and their interactions with it are far from the same. If you’re a Kenyan local, you may use a mobile money solution, like the wildly popular M-Pesa, as an alternative to a bank account. But, roughly just over half the world’s population do have bank accounts in their own name.
Drawing back to the work of Bill Maurer, he raises an interesting point about how we as a society view money, “When we treat money solely as a means of exchange we depersonalise it, abstract it from all social relations save the most rudimentary, formulaic - and ultimately fictional - pure market relation. When we see money as a means of payment, however, we spotlight its technologies, how it moves from person to person or from point A to point B. We are confronted with its infrastructure.”
Shifting ideologies (hint: it’s not easy)
At Luno our primary goal is to upgrade the world to a better financial system, one in which trust and efficiency are at the forefront. The current financial system came about at a time when technology wasn’t even a figment of anyone’s imagination. And whether you like it or not, there’s no denying that money has shifted firmly into the technological space.
Our vision for a better financial system seeks to re-personalise monetary transactions by returning the focus to payments and technologies. This is predicated on trust. Trust in traditional banking depended upon an intermediary’s ability to protect users from fraudulent behaviour and theft, and to action their requests in a timely fashion. Bitcoin, however, offers this promise based upon a mathematical algorithm – one that isn’t bound by existing prejudices, geographical lines or disparate currencies
So where to from here? How do we design a better financial system that works well for everyone? It’s definitely not easy. But it’s time to start changing the way we think about, view and interact with money and to be open to embracing new technology that may be daunting at first, but will shoot us to the moon in the long run.