In the mid 1980s, technologist Stewart Brand observed “Information wants to be free”, in one simple statement Brand predicated the fall of governments and the restructuring of industries. There were powerful interests, aligned against the idea of information flow, but in the end Middle East dictators, and media executives all had to adapt to the tide of new technology.
Brand was the Founder of the Whole Earth Catalog, and his full quote is:
“On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”
I think CraigsList, BitTorrent and Google are the embodiment of the idea of free flowing information. Google, along with other search tools, empower individuals to connect directly with information, disintermediating any friction that does not add value to the flow of information. Not good for record labels, great for consumers.
But just as Google empowers information flow, Facebook and Google+ empower Money.
Money and information are in many ways interchangeable. Money represents a special type of information, an informational unit called trust. In barter, one trusts that 8 chickens will be worth something in the future, either to yourself or to others. In Roman times one trusted that metal coins could be exchanged for goods, in the 50s it was trusted that paper money could be exchanged for gold or silver, and today one trusts that your government issued paper will buy goods in the future.
Information = Trust
Trust = Money
Information = wants to be free
Money = wants to be free
Or said another way
Money wants to flow freely
Historically only big institutions had the gravitas to be the trusted intermediary for industrial scale commerce, and for this role they extracted a hefty fee. Wire fees, transaction fees, merchant interchange fees, credit card fees, regulations, bank fees and currency depreciation all represent friction to the free flow of capital.
What happens when trust can be calculated by careful analysis of your endorsements and social network?
What happens when communities can easily form groups (AKA "circles" ) to cross collateralize, insure, or drive better terms?
The result will be hundreds of new companies, maybe even new industries. Companies like AirBnB, Groupon, Lenddo and Square are just the tip of a “socially empowered” commerce renaissance.
Stewart Brand was right, and we see information flow in the form of media has been radically changed over the last 10 years. But consumer media represents only about 2% of GDP, finance is closer to 8% of GDP.
Let me say that again for emphasis. TV, Radio, Advertising and Social Media represent about 2% of GDP, and they have been transformed by technology. The finance Industry is 4 times bigger!
Media is a precursor of the change to come, Mark Zuckerberg says "every industry will be changed by social". Tom Anderson, co-founder of MySpace says "everything got better when it was social".
What happens when finance becomes socially empowered?
I guess the best way to predict the future is to create it.
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