This book argues that not only is identity changing profoundly, but that money is also changing equally profoundly, because of technological change, and that the two trends are converging so all that we will need for transacting will be our identities. The technological change I’m talking about here centres of the evolution of social networks and mobile phones. They will enable the building of an identity infrastructure that can enhance both privacy and security – there is no trade-off.
The long-term consequences of these changes is impossible to predict, partly because how it takes shape will depend on how companies (probably not banks) take advantage of business opportunities to deliver transaction services. But I will predict that cash will soon be wholly redundant – and a good thing too – and there will be a proliferation of new digital currencies.
Rethinking identity
The old concept of identity is broken in the world of the new technologies. Identity is neither singular nor fixed, no matter how administratively convenient it might be to think of it that way. There are really three kinds of identity associated with people: the individual’s own personal or psychological identity, their social identity and their legal identity. Neither individual nor social identities are fixed: they evolve and change over a person’s lifetime; and they should not really be conflated with the legal identity. Legal identities are fixed and are about the identifiability of the individual.1 Online, we have multiple social identities that may be linked directly or indirectly to our legal identity. There are different kinds of mechanisms for validating various types of transaction, and for ensuring security and privacy.
A new understanding of identity is essential and ultimately inevitable, but what that understanding is depends on the complex co-evolution of technology and paradigms. It is very difficult to predict how these will co-evolve for even a few years ahead. Technologists (like myself) tend to overestimate the speed of adoption of new technologies but underestimate the long-term impact on society. In other words, it will take longer than people like me expect for new forms of identity to reshape mass markets, but when they do the impact on society will be far greater than just making it easier to log on to the Daily Telegraph website. Once you begin to look more than a few years ahead, in fact, the social changes wrought by new technology become hard to imagine.
This has always been the case. For example, on 3 April 1988, the Los Angeles Times Magazine published a description of life now. It contained all sorts of bizarre views of life in Los Angeles today, including such unimaginable fantasies as supersonic jet travel and people smoking cigarettes. But it’s a fun read, and in the true spirit of palaeo-futurism, I encourage you not to laugh at what the writers got wrong but to reflect on why they got it wrong. For example, what’s wrong with this picture from the magazine story?
Bill is trying to locate his wife to tell her about the dinner guests. Unable to reach her either at home or the office…
It has been at least a decade since my wife has called me either at home or at the office or, indeed, anywhere else. If she wants to talk to me, she calls me, she doesn’t call a place where I might be. The mobile phone didn’t just change the payphone business, it changed the communications paradigm, the common mental model that we share as the basis for thinking about communications.
Uneven
The Canadian novelist William Gibson, author of the seminal work of fiction for the new economy, the wonderful Neuromancer, and the man who coined the term ‘cyberspace’, famously observed that the ‘future is already here, it’s just unevenly distributed.’
He means that the technologies that will shape society in our lifetimes already exist, it’s just that we might not have noticed them yet. One of the key elements missing from that 1988 vision of 2013 was the mobile phone, despite the fact that it had already existed for a decade. In fact I’m sure that some of the people writing that magazine piece had a mobile phone, but hadn’t realized where mobile phones were going.
I think that the future of identity over the next twenty-five years, in common with the future of a great many other everyday tools, rests on that device formerly known as the mobile phone and what Sam Lessin of Facebook calls the ‘superpower’ of being able to communicate with anyone anywhere in the world at any time. Understanding this is key to shaping and forecasting the identity paradigm that is explored in Chapter 2.
When I heard the futurologist Richard Watson talking about the problem of forecasting across a generation at the Digital Money Forum,2 he said that one of the central problems is that the kind of digital bubbles people are living in lead to a kind of Balkanization of the future. We have to look out of the corner of our eye to see how technology is being used in ways that might disrupt existing business models, and that is difficult. So this leads me to think, in the spirit of William Gibson, that just as the magazine writers didn’t see that the decade-old technology of mobile phones would change the communications paradigm, that there must be a decade-old technology that is going to be pervasive in fifteen years’ time, leading not just to disruption in old businesses and the creation of new ones but to a fundamental shift in mental models.
So what is it?
Social identity the new paradigm
I think the answer is social identity. I specifically do not say social media. Yes, social media are an incredible new technology. Yes, we can use them for all sorts of exciting new purposes. But it’s what they are doing to identity that will be disruptive in business, commerce and government. Facebook, LinkedIn, Twitter, Tumblr and all of the others are already demonstrating just how our identity paradigm is changing. Identity is returning to a concept built on networks, rather than index cards in a filing cabinet. In common with a great many other people, a couple of billion, I use these networks almost daily. In a relatively short time, these tools have transformed society and will continue to transform it, as discussed in Chapter 3, in ways that are hard to imagine right now.
We already use these social networking identities, albeit in fairly primitive ways, to log in and browse around on the web. We could find ourselves using them for ‘serious’ business pretty soon. Why shouldn’t I be able to log in to the Benefits Agency using my Facebook identity? This might be very convenient for me and it might be also be very convenient for the Benefits Agency, but right now the Benefits Agency couldn’t really be sure it was me, because they’ve got no way of identifying the ‘legal me’ online, and neither have Facebook.
That is changing as identification and authentication technologies continue to develop. Suppose these social identities were made a little more secure. We can begin to imagine how more sophisticated and secure forms of identity might begin to change this equation. Perhaps I use my bank account to log in to Facebook, so now Facebook can be sure I really am ‘Dave Birch’. Then I can use my Facebook account to log in and sign on for unemployment benefit. This would take us into a different kind of online world, a different online experience where privacy becomes an active, rather than passive, part of life.
New money
The second area of profound technology-driven change I want to discuss is money. In order to further explore ‘identity is the new money’, we will have to explore what ‘money’ means. One of the problems in discussing money is that this simple English word means several different things to economists and technologists – in the classic definition it is a unit of account, a store of value and a medium of exchange. I want to focus here on money as a generalized means of exchange between buyer and seller to enable transactions, and on money as the subset of the means of exchange that does not involve credit, or in other words, cash. Identity changes the requirements for, and use of, both kinds of money, both the pounds or euros that denominate all transactions and the transactions that still use the physical notes and coins themselves.
That LA Times vision of 2013 had one of the protagonists go to an ATM and draw out $20 bills. When I travelled to Austin, Texas, for the South-by-Southwest