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Joi Ito, director of the MIT Media Lab

NOMINATES

Neha Narula, director of the Media Lab’s Digital Currency Initiative

Despite all the grifting, thieving, speculation, and wild price swings you’ve heard about, bitcoin and other decentralized digital currencies are clearly here to stay. Boosters think crypto­currencies and the distributed ledgers called blockchains they depend on will reinvent the financial system. Neha Narula, who studies them full time, and Joi Ito, who has been following digital money since the dawn of the web, talk about what that reinvention might look like. —Klint Finley

October 2018. Subscribe to WIRED. Plunkett + Kuhr Designers

WIRED: What are some of the implications of cryptocurrencies for average people?

Narula: First of all, the way we fund productivity is going to change.

Ito: Small and medium-size businesses are the largest part of our economy, and they’re supported by really, really stupid debt, because for most banks the costs of investing in small businesses outweigh the potential returns. At the same time, there’s a lot of incentive for customers to own equity in a service that they use. So you could move investment away from debt and toward equity by making the risk and opportunity in a small business more transparent and tradable. It would make equity financing an option, which it currently is not for most small businesses.

Joi Ito First IP address:

199.100.7.5

—

First time I sold anything for cryptocurrency:

“When we sold music for Ecash on our server in 1997.”

WIRED: Ah. So instead of taking out loans, businesses could offer shares in their companies on the blockchain. Are all of the blockchain-­future scenarios so rosy?

Narula: This could go in three directions. Cryptocurrencies and blockchain technology are promising a lot: democratization of the financial system, changing payments, all sorts of stuff. That’s the utopian direction—what the internet did for data and information, maybe cryptocurrency technology can do for money. The other direction is more dystopian, where digital money is used for surveillance and control, and people don’t have physical cash. And then there’s a middle-of-the-road view: Instead of totally changing the structure of our financial system, this technology works as more of a catalyst. For example, because of digital piracy we have things like Apple Music, Netflix, Hulu, and HBO Go. The entertainment industry saw what was happening and realized that it needed to get in the game. So banks might use blockchain technology to settle transactions a little faster, or maybe central banks will issue digital currency. But everything would still be mediated through banks. We’d see incremental, perhaps positive, change but nothing groundbreaking.

LEARN MORE The WIRED Guide to the Blockchain

WIRED: Is the technology ready for that?

Narula: Well, the internet was created by researchers in universities and labs. They weren’t thinking about money, and they didn’t have a financial stake—they were neutral. It was like this for decades while the protocols were developed and finalized. But now there’s so much attention on cryptocurrencies. Most of the developers hold large amounts of some token or coin, so they have a financial interest in seeing that specific tech succeed. We haven’t even figured out how to scale this technology yet, but VCs are investing like it’s ready to produce the next Google or Facebook, even though it is definitely not. We still need time to build and standardize.

Ito: Unless the cryptocurrency market completely collapses. After the dotcom crash in 2001, everyone forgot about the internet. So it got a second chance. That’s when blogs came out, when Google really started to grow.

Narula: It took a while before the internet was ready for prime time. Blockchain is also not ready for prime time and needs a lot more work. And that work needs to happen without pressure from the established financial industry to conform to its own narrow goals.

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