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If information is king, data is good currency

By Jules Quartly | China Daily | Updated: 2013-01-09 13:59

Cash isn't going to be king forever. It's a bit like shell money or trading in beads, an outdated system that people will laugh at sometime in the future. And while the current system probably isn't going to change any day soon (cowry shells were legal tender in some places up until the 19th century), change is coming.

First off, there are other ways to get what we want: Like most people I use plastic a good deal, Alipay, Paypal and direct payment. The paper stuff (let's not get started on coins yet) is becoming less convenient as I find myself patiently lining up behind people buying a single pastry and paying with a Great Wall Card that debits directly and has no service fee. Then there's the subway, canteen and store cards.

If information is king, data is good currency

Cashless appears to be the way forward, if only to save on trees, avoid forgery and keep your money from being lost or stolen.

Equally, the idea of sterling, or the US Federal Reserve being the "gold standard" of currencies not only seems antiquated in a globalized economy, but also unfair and possibly dangerous. It's a bit like Monopoly money.

Added to which, bullion and precious stones like diamonds just don't carry the same weight anymore. The diamond market is a cartel and the price of your bride-to-be's sparkling ring is an expensive fix, since the Russians don't want to flood the market, which they could if it wasn't counterproductive. While only 188,826 tons of gold has ever been mined, it could in the future be synthesized or mined in space. It may be useful and rare, but its real value is also determined by vested interests.

Which brings us to the Bitcoin alternative, a digital currency that works without banks or governments manipulating its value. And the recent economic meltdown shows just how stable that is.

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So, instead of one central authority controlling the money supply, decentralized networks do the work and Bitcoins are mathematical tokens that have a value agreed upon by those who use the virtual currency.

It sounds a bit nebulous, but so is value, since something is only worth as much as someone is prepared to pay for it. And since you can print more cash or find more precious stones and gold, then their values logically drop.

Bitcoin works differently, in that there will only ever be 21 million Bitcoins and therefore they really are a limited resource, but can be divided indefinitely.

It was conceived by an anonymous individual or group called Satoshi Nakamoto, introduced in 2009 and is already the world's biggest alternative currency, oft used as a form of online payment. It's easy to get a Bitcoin wallet, just download it free from the Internet.

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Even so there are many arguments against the currency (deflation-stagflation) that are too involved to go into here and I'm no economist. From a practical standpoint, you can get Bitcoins but you can't buy a pastry with them down the road. Major companies like Apple and Paypal are not fans of Bitcoin and it has fluctuated wildly in value, so it's obviously not ready for the big time.

However, it is essentially just another kind of token, like shells or cash, but more in tune with this digital century. Getting rid of exchange controls, financial middlemen and bits of printed paper sounds like progress to me. And since I'm essentially paying for many goods in some virtual sphere already, it's not a huge leap to join the Bitcoin revolution or something like it.

My thinking is that since information is king, then data does seem like a good currency. But I wouldn't put my money on it yet.

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