I want to tell you about the future of money.

 Let's start with a story about this culture that lived in

Micronesia in the early 1900s, called the Yap. Now, I want to tell you about the Yap because their
form of money is really interesting. They use these limestone discs called Rai stones. Now, the Yap
don't actually move these Rai stones around or exchange them the way we do with our coins, because
Rai stones can get to be pretty massive. The largest is about four tons and 12 feet across. So the Yap
just keep track of who owns part of what stone. 

00:43
There's a story about these sailors that were transporting a stone across the ocean when they ran into
some trouble and the stone actually fell in. The sailors got back to the main island and they told
everyone what had happened. And everyone decided that, actually, yes, the sailors had the stone and --
why not? -- it still counted. Even though it was at the bottom of the ocean, it was still part of the Yap
economy. 

01:10
You might think that this was just a small culture a hundred years ago. But things like this happen in
the Western world as well, and the Yap actually still use a form of these stones. 

01:21
In 1932, the Bank of France asked the United States to convert their holdings from dollars into
gold. But it was too inconvenient to think about actually shipping all of that gold over to Europe. So
instead, someone went to where that gold was being stored and they just labeled it as belonging to
France now. And everyone agreed that France owned the gold. It's just like those Rai stones. 

01:50
The point I want to make with these two examples is that there's nothing inherently valuable about a
dollar or a stone or a coin. The only reason these things have any value is because we've all decided
they should. And because we've decided that, they do. Money is about the exchanges and the
transactions that we have with each other. Money isn't anything objective. It's about a collective story
that we tell each other about value. A collective fiction. And that's a really powerful concept. 

02:29
In the past two decades, we've begun to use digital money. So I get paid via direct deposit, I pay my
rent via bank transfer, I pay my taxes online. And every month, a small amount of money is deducted
from my paycheck and invested in mutual funds in my retirement account. All of these interactions are
literally just changing 1's and 0's on computers. There's not even anything physical, like a stone or a
coin. Digital money makes it so that I can pay someone around the world in seconds. 

03:05
Now when this works, it's because there are large institutions underwriting every 1 or 0 that changes on
a computer. And when it doesn't, it's often the fault of those large institutions. Or at least, it's up to them
to fix the problem. And a lot of times, they don't. There's a lot of friction in the system. How long did it
take the US credit card companies to implement chip and pin? Half my credit cards still don't work in
Europe. That's friction. Transferring money across borders and across currencies is really
expensive: friction. An entrepreneur in India can set up an online business in minutes, but it's hard for
her to get loans and to get paid: friction. Our access to digital money and our ability to freely transact is
being held captive by these gatekeepers. And there's a lot of impediments in the system slowing things
down.