Tag: PayPal

The evolution of money

Money has evolved from coins to paper to electronic accounts. Now we see the emergence of mobile electronic accounts. Money may represent value but does it actually represent the value creation process? If not, then what does and which is more important?

PayPal wants to be like the electrical socket that all mobile payment innovations plug into.   In fact, they have a standing invitation for all technology partners in the mobile payment space to integrate with them. This is called an externalization strategy (much like Facebook, Twitter and Windows), where there are so many developers, users, and participants that NOT being on the platform becomes the competitive disadvantage.

The PayPal offer represents the separation of money from the value creation process.  This exposes a very interesting point to consider.

The Frictions of Monetization

The assumption is that PayPal et al will store and exchange dollars, and only dollars.  As such, they are contained within the financial system: credit score system, a person’s name, birth date, and the social security number as a personal identifier, the IRS reporting jurisdiction, and commercial code vetting mechanisms, etc.

Similarly, the drive to monetize in Social Media is pushing applications toward the same containment within the financial system.  Not surprisingly, the complaints of privacy and data security in Social Media stem precisely from association with credit scores, IRS, personal identifiers, Social Security Numbers, etc.  But “Big Social” presses on – they know not another way. Ironically, this is precisely the battleground; the source of all intermediary tactical and social friction that hinders monetization in the first place.  It has little to do with the creation of value – only containment of value.  To win is to lose.

A Better Proxy for Value

The reality of governance dictates that all business ventures begin and end in a standard currency of commerce such as the dollar.  However, there are NO restrictions on which currency must be traded in between to “create value”.   Nor is there any schedule that determines when a venture must begin, end, or be liquidated to dollars.

While The Social Value Game may start and end with dollars, the value creation process is carried out in a social currency using a “Social Credit Score”, an anonymous “Unique Identifier”, and a collection of “Social Vetting Institutions” independent of government or corporate jurisdiction.  The Value Game is a frictionless, tax-free and self-regulating environment without the guy wires of the financial industry.  The game simply leverages existing value socially to make new social value.

Social Value Specifications

The Social Value Creation Process is a blank canvas and we are writing the specifications today.  If a social currency becomes a better proxy for productivity – it may also become a stand-alone currency fully capable of capitalization and securitization. Theoretically, a social currency may never need to be converted to financial currency any more than a dollar ever needs to be convertible to silver or gold – it simply becomes another ledger entry on an accounting balance sheet.

Is Money Irrelevant?

The value creation process is the hard part.  Transformation of Social Currency into Financial Currency will become easy – anyone can do it.  In other words, if PayPal becomes irrelevant, the money evolution chain will be broken and money will become obsolete.  The market is wide open for a money competitor who can simply transcribe a social currency transaction into a ledger entry for financial currency. It’s a lot easier and closer to reality than many people think.