Money = Data

This concept is something I’ve devoted a significant portion of my life to.

It’s constantly misunderstood. I gave a TedX talk on it that I would love to use as an explanation, but I feel like I borked that talk and the opportunity.

I got off stage, and all I could think was…

$*#&. redo?

This idea also ends with me being very misunderstood.

There seems to be this implicit concern with some people on the other side of the table when I don’t say valuable data.

Money isn’t just digits. It’s numbers surrounded in a glorious amount of red tape, regulation, process, formality and hard work. An archetype like a dollar sign changes what data means instantly.

Typically, banks or other institutions at the top of the formality retain control of it. Those at the bottom, consumers, whose pockets are directly tied to it but minds are separated from it, reinforce it and make it powerful.

Banks and trading platforms support the digits/money that is traded by the demands of the consumer. They all support the currency we use and systemically important systems like governments and utilities that drive our world economies. They all, we all, support massive databases that carry inherent value because we use them.

What I found so amazing the further I got into this, is that banks get a bad rap for being at the top of the food chain. The fact is though, most of them don’t really care or think of themselves that way. For them, it’s more about capitalism and not control.

For the conspiracy theorist it always seems to be about control. This is exacerbated by the fact that most conspiracy theorists aren’t in control of big banks or in charge of massive amounts of financial progress, so it is easy for them to make wild asinine assumptions.

In the meantime, our banks, traders, and most educated citizens use this data/money to leverage themselves to the hills in the name of profit and progress regardless of how they got into the position they are in.

All with information in a computer. It’s not a conspiracy theory. It’s the U.S. and global economy, and it’s not really a bad thing.

Awesome? Yes.

It gets so much better.

I gave a short talk at a Goldman Sach’s conference months ago, and I asked a crowd of people who were hand picked by arguably one of the more important financial institutions in the world…

“who here knows what an RTGS system is?”

Our money, or how much of it we have, is stored in computers that record what we own. These systems are provided by a small number of companies and are deemed acceptable (read: have a charter or license) by the market (regulators named by administrators elected by the market) that includes all the consumers of (consuming the currency means supporting it) their services.

RTGS stands for Real Time Gross Settlement. It moves hundreds of trillions of our economy’s money and you, as a normal person, aren’t allowed to directly use it and probably have never heard of it.

Real time gross settlement powers the world and you as a consumer. Most of the world’s elite that use the system to drive it’s decisions aren’t aware of it’s existence.

In that room of powerful people, no one knew what the system was called that our Federal Reserve Bank uses to move its money. Had I asked who knows what WordPress or Apple is, the answer would have been different.

However, when I asked about the system that moves $600+ trillion dollars annually, only one hand was raised.

Let’s put that into perspective: All the companies traded on NASDAQ have a combined market cap of almost $5 trillion, which means they are worth less than one percent of the overall value transfered via RTGS systems in the United States yearly.

It’s easy to misunderstand how big this all is. In almost any other context, we’d look at the value of all the companies traded on NASDAQ as a miraculous beast of capitalism.

I talk to analysts everywhere who truly believe Dwolla has started a bigger conversation. Where other startup companies are seemingly happy to be focused on taking on parts of the multi-trillion dollar plastic market, or slightly more rarely the $30 trillion dollar ACH/bank payment market, it is still is not the whole picture.

At Dwolla, we consistently learn that the market is significantly bigger than we’d ever imagined.

I don’t pretend to say money isn’t valuable, or if you can’t pay your mortgage then you can just throw some digits into a database. What I’m saying is money and monetary value is held as a series of numbers in a computer.

Whether or not our value is stored this way is not a choice we have.

This is how it works: A network and a computer do not know the difference between data holding the bits of a photo service, phone call, text message, or the value we’re all exchanging.

While that is scary, the opportunity to lead that revolution from the physical to the virtual, and in doing so make the value we all earn and work so hard for more valuable, is a once in a life time opportunity.

The world turned money into data. We’re just pointing out the obvious. I’ve yet to meet an economist, banker or technician that has been able to argue this is incorrect.

Making money move in real-time with a new consumer network has untold positive effects. For example, the bandwidth of a phone line has a fixed cost and it’s why we evolved into other technologies to distribute information – like 3G/4G/WiFi. The bandwidth of a 16 digit account number system has a fixed cost, and the only way to make more money on products built on plastic cards is to make them more expensive.

New payment technologies are all reusing the same systems we’ve had since the 70s. That’s why the cost keeps going up, and it never really gets better. Like gas, it’s a commodity with a fixed cost.

When landlines became cell phones, when cars started to travel faster, and we could fly instead of take boats, when credit cards could be accepted on the internet and when e-commerce actually put a challenge to regular commerce – the world changed and new economies evolved from new opportunity. When friction is removed from any action, and trade happens faster as a result, we all historically win.

I believe this simple differentiation and realization can lead us to accelerate economies in a way they’ve never been able to. If we treat money for what it is and give the best technologies to consumers+business+developers – we all win.

Case in point. The change has already happened in some ways.

If someone dropped off a truck of gold on the average person’s doorstep, they wouldn’t know what to do with it. They wouldn’t even know if it was real or a Disney land faux prop. On the contrary, if you hit the ATM and had millions available to you, you’d know exactly what to do and how.

So if the change has already happened why not let people, business, government, and developers benefit from it? Money = Data, and that’s a good thing.

1 thought on “Money = Data”

  1. When Paul Graham talked about ‘frighteningly ambitious’ startup ideas, it was hard to think of startups that were around at the time doing it. Dwolla is one of those. I really hope Dwolla is able to crack this problem and make this world a better place.

    A related anecdote. I live in India, and here an inter-bank online transfer of money takes hours and can only be done in the normal bank working hours [before 6pm, and before 1pm on Saturday.] In a world where people think of a site taking more than a few seconds in delivering your post/tweet as unacceptable, it is ironic that these banking practices are seldom complained about. It doesn’t need to get 10% better, it needs to get 10x better.

    All the best.

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