Money happens because people happen, not the other way around.
Wall Street has no idea what’s knocking at their door with the emergence of a new class of Social Media Applications that incorporate geolocation and gaming strategy.
Money is as money does.
Earning tokens for hanging out at bars does not define a sustainable economy any more than borrowing money from yourself at interest in order to keep it sufficiently “scarce”. However, the strategic combination of social capital, creative capital, and intellectual capital does define a sustainable economy.
Social Productivity can be loosely defined as “what you make with your time”. All of us have a limited number of hours on Earth. “Don’t waste my time” is the new Tax on Tea. The Last Mile of Social Media is a critical step that will complete the Internet as a system of social organization, and as a result, financial reorganization.
The 5 components of a financial system
A financial system must have 5 components acting in a system in order to sustain itself: 1. a means to store and exchange value (currency). 2. inventory 3. vetting 4. entrepreneurs, 5. A business model. If any of these components is missing or becomes corrupted, the whole system fails. Where all of these components are intact, however primitive, an economy will flourish.
1. Currency is a social agreement and the Dollar is no exception. The “social agreement” is the presumption that the currency is scarce and therefore valuable. In reality, time is scarce. Geolocation is important because traveling is a quantity and guessing is a quality that are both time consuming.
2. The knowledge inventory is emerging where people establish themselves as experts through blogging, community organization, and development of creative content. The new class of social media applications like Gowalla, Foursquare (and those not yet created) will eventually evolve to highly organized and finely granulated knowledge inventories in and about communities.
3. The vetting mechanism will form as people with common knowledge assets aggregate around cooperative activity rather than competitive activity. High integrity will be rewarded and low integrity will be punished. Gowalla and Foursquare are still easy to cheat, but that will get worked out.
4. Entrepreneurs. As information becomes infinite, time becomes more scarce, thereby forming the basis of this new economy. Entrepreneurs will identify knowledge assets and elevate them from low levels of productivity to higher levels of productivity. Gowalla and Foursquare provide visibility to some rudimentary knowledge assets – it will only get better.
The New Class of entrepreneurs will begin by aggregating strategic combinations of vendors. Then they will aggregate strategic combinations of knowledge assets and match them to strategic vendors in infinite combinations. They will manufacture “time”.
5. The business plan is simple: A. transform data to information, B. transform information to knowledge, C. transform knowledge to innovation, D. transform innovation to data. Each transformation produces “time”.
In fact, this is all that Gowalla and Foursquare accomplish. Each transforms data into information and people transform information into knowledge. People are drawn to the possibility of increasing the value of their time in their community.
If people can make their own currency more efficiently than a corporation or government can do it for them, they will. Don’t worry, a currency will find a way to represent them - after all, money is as money does.