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Before Babylon, Beyond Bitcoin: From Money that We Understand to Money that Understands Us (Perspectives) Hardcover – 15 Jun. 2017
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"This is a book I'm proud to endorse, not only because it's well written, funny and full of great facts and history, but because the author is about the smartest guy on the planet when it comes to the future of money." - From the foreword by Brett King, author of Augmented: Life in the Smart Lane
"During the past decade, we have witnessed an explosion in new forms of money, in which the social fabric of money itself is being transformed in some very profound ways. Birch tells the complex story of technology's role in these transformations. His analysis is wide-ranging and comprehensive, stretching back to the temples of Babylon and looking ahead to a monetary landscape that will be dominated by digital technology but organized by various local, regional and global communities. This is a 'back to the future' look at money that is hard-headed, insightful, entertaining and accessible. It is a brilliant book, a tour de force that should be read by anyone who is interested in the past, present and future of money." - Nigel Dodd, Professor of Sociology at LSE and author of The Social Life of Money
"Taking a journey through the past and future of money with David Birch is not only eye-opening, it's immensely entertaining. You get Milton Friedman mixed with Bill Bryson. With money undergoing one of its periodic paradigm shifts, I can't think of a better guide than Birch for navigating this exciting yet highly disruptive moment." - Michael J. Casey, co-author of The Age of Cryptocurrency: How Bitcoin and the Blockchain are Challenging the Global Economic Order
"Marvellous. A deeply researched and brilliant synthesis of history, technology and futurology, and a worthy follow-up to Birch's pioneering 2014 book on identity as the new money." - Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University
"David Birch knows his stuff. His writing, as well as being on the pulse of fintech, is always diced with fantastically obscure stories from history, so it never fails to be both witty and informed. You, the reader, are simultaneously entertained and educated. What more could you want from a book?" - Dominic Frisby, author of Bitcoin – The Future of Money?
"Whether you agree with his controversial predictions or not, David's fascinating tale of the interrelationship between technology and money is required reading for those interested in either or both of them." - Alastair Lukies CBE, Chair of Innovate Finance and the Prime Minister's Business Ambassador for Fintech
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I was surprised to learn that up to ½ of the cash in circulation is for criminality, that cash is a penalty on the poor, and the (UK) annual sales tax foregone due to shadow economy will be £47bn in 2018.
‘We assume that the way money works now—fiat currency controlled by central banks—is a law of nature. It isn’t. It is a particular set of man-made, transient institutional arrangements’. ‘We are connected in more ways to more people than ever before, and that is changing everything, and it would be strange if it didn’t change money too’.
Well worth a read if money interests you.
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However the book does no such thing. Instead, right in the introduction, the author serves up a blanket assertion that "money will continue to exist when Bitcoin is long forgotten" (which, I assume, means something like "for generations"), out of the blue, substantiated by nothing. And then goes on to spend too many pages discussing the superficial details of transactions via mobile apps versus plastic cards etc. etc.
The book is probably serves a good enough purpose as a trade publication of interest to members of the financial industry. For everyone else for whom money is a means to an end, a detail in the big picture, who just want to know what comes next and deal with it already, they will only be left with a number of hours of their life gone that they won't get back.
His enthusiasm for the subject, cleverness and wit are on full display as he waltzes the reader through several millennia of monetary history, from Lydian gold-and-silver alloy coins, Chinese emperor Kublai Khan’s fiat paper currency, King Henry the First’s tally sticks – pieces of wood recording debt, the greatest payments innovation of the last century general-purpose bankcard networks, failed e-purses, to mobile wallets and cryptocurrencies in the 21st century. The enabling technologies march forward but money serves the same purpose for the 21st century New Yorker it did for the 1st century Roman.
Birch often conflates technology and money. Money is a means of exchange, store of value and unit of account, and critically a network relying on technology, trust and generally government sanction. A dollar is a dollar, however, whatever technology’s employed to store and spend it, whether it’s a paper note, four quarters, or electronic bits in a DDA, PayPal, a prepaid account or receivable. Electronic delivery platforms amplify money’s social and commercial utility.
Two Birches jockey. The payments mastermind has strong opinions about the ingredients of better payments mousetraps, what Mondex should have done in the nineties and rails against cash. The mastermind’s frustrated with people’s innate conservatism in payments, declaring “Money is a field in which conservatism – preserving the status quo is very definitely a bad thing. Caution is not the best course of action.” People are reluctant to abandon the tried and true. Innovation is all well and good, but new money or systems for managing payments must be compellingly better than what they attempt to displace.
Birch laments the failure of electronic purses such as Mondex, Danmont, and Proton and banks’ strategies introducing them, in the nineties. With cards, cash and checks neither consumers nor merchants had an obvious payments problem at the physical pos. But online, Digicash, CyberCash, First Virtual, Beenz, and Flooz also failed. Traditional card systems were good enough and had network critical mass.
In the 21st century successful new payment systems such as PayPal, Alipay, WeChat Pay and M-Pesa had paths to critical mass compellingly solving big problems. PayPal solved the payment challenge on EBay. In the shadow of monopoly card network China Unionpay, Alipay built critical mass on marketplace Alibaba. WeChat Pay catapulted to formidability on Tencent’s gaming and chat platforms. And in emerging markets like Kenya and Tanzania, M-Pesa succeeded competing with insecure and inconvenient cash.
Then there’s Birch the proto-Hayekian who believes in the dynamic intelligence and innovative capacity of competition and decentralized decision making. Advances in the technology of money have been spurred by competition, spearheaded by private-sector actors, and adopted most rapidly in markets where cash reigned supreme and traditional retail-card payment networks and banks were weak.
He allows government should control money. Nevertheless, Birch cites former Bank of England governor Mervyn King’s speculation central banks could become extinct and channels Cato’s George Selgin observing “The production of money does not have the properties of a natural monopoly.”
Competing currencies would better discipline and encourage innovation than monopoly central banks. Birch notes people can deal with multiple currencies. And where existing money and payment systems don’t serve, mutually consenting adults are resourceful finding ways to transact, notwithstanding government restrictions. Africans evade government mandates to transact in shaky currencies by transacting in dollar-denominated airtime.
In the 21st century, however, governments enjoy money monopolies, reap seignorage and debase currencies. Some governments threw in the towel, typically adopting the dollar. Ecuador and Panama outsourced monetary policy to the Fed. Inflation in Zimbabwe reached 89.7 sextillion percent. The economy dollarized because Zimbabweans refused to transact in Zimbabwean dollars. Permitting competition in money as in every other realm would improve performance and innovation.
It’s fashionable to trash gold as a relic. In that regard Birch doesn’t disappoint. But digital bills backed by gold would retain its timeless benefits, except perhaps for anonymity, and have none of its disadvantages. For example, Gold Money provides fiat-currency debit cards drawing on gold accounts. Gold isn’t the only asset one could draw in lieu of dollars, euros or pounds, with a debit card. Xapo offers debit cards with bitcoin accounts.
Birch is provocative, speculating “Selfie money should have little trouble getting popular acceptance”. Why not? Digital dollars might carry the bearer’s picture and/or fingerprint replaced on payment by the new bearer’s.
Like most payments gurus Birch is passionately anti-cash. However, while electronic payment systems will continue to displace cash, it still has enormous utility and isn’t going away in Birch’s lifetime.
Money and payment systems matter. For curious millennials to baby boomers, and payments professionals pondering futureproofing existing payment systems or challenging them, Birch’s Before Babylon, Beyond Bitcoin is an accessible, engaging and eminently worthwhile read.
The combined effect helps to discern between what is an incremental improvement on a solved (or mostly solved) problem versus some things which are fundamentally new. Beyond his witty, engaging style and breadth and depth knowledge, what really makes this work resonate is the author's extensive field work. In the trenches illustrations of rolling out new technologies like M-PESA and Mondex show the logistics of shipping a new technology in vivid detail.