The currency of the future is personal data

Forget cryptocurrency—our data will be the most valuable asset in the future of money.
Forget cryptocurrency—our data will be the most valuable asset in the future of money.
Image: Reuters/Vincent West
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This story is part of What Happens Next, our complete guide to understanding the future. Read more predictions about the Future of Money.

This decade will be remembered for the rise of surveillance capitalism—yet as bad as it has become, the next decade will probably be worse. Machine learning is beginning to tie together our behavior with the ability to predict not just what we’ll buy, but for whom we’ll vote and even what we might someday invent. It’s all just the first step in training artificial intelligence, which is likely to be more disruptive to the job market than the industrial revolution.

Blockchain technology—cryptocurrencies’ underlying infrastructure—makes it possible to think of our data as a scarce digital asset that can be owned, rented, and sold in new ways. As our money becomes data, our data is becoming money. We might not be able to stop the rise of the machines, but we can at least create a more consensual system: a fair day’s wage for a fair day’s data.

Markets based on data stored in personal digital vaults, referenced via blockchain-tracked tokens and financed via cryptocurrency microtransactions, could make Data Farmer and Digital Day Trader lucrative careers of tomorrow. But without thoughtful planning, these new systems might end up furthering the passive surveillance, corporate hegemony, and intrusive authoritarian regimes they were meant to thwart.

Both businesses and governments are beginning to tap the power of shared distributed ledgers to eliminate the difficulty, complexity, and cost of sharing the data sets that power their businesses (and eventually, their AI). Distributed ledgers are similar to blockchains, but users have known identities, and there is an expectation of compliance with laws and regulations. These applications could be made to run atop a decentralized system of personally owned data, but most enterprise blockchain pilots today focus on protecting current profit models and reducing operational expenses, not returning power to consumers.

The tension is clear: If digital tokenization makes a medical record as unique as a painting, only one entity can truly own it at a time. Unfortunately, if blockchain startups need regular people to understand and care about new “self-sovereign data” business models, they’re likely to remain as niche as other cypherpunk projects that sought to redistribute the power of the internet.

Governments, too, like the idea of a more frictionless economy, but they’re not so keen on the “money from the machine” idea of Bitcoin, where monetary policy comes from code rather than a central bank. Indeed, Singapore, Russia, and China are experimenting with creating tokenized versions of their sovereign currency on ledgers they control, which gives them much more granular access to individual transactions of its citizens and anyone else using the new currency. Combined across supply chains that span people, businesses, and government entities, these projects may end up giving governments, banks, and businesses alike more direct access to all our day-to-day financial activity than ever before.

Those at the financial margins would be impacted the most: It could become impossible to get into one’s IoT-locked front door when the rent’s a few seconds past due; credit limits could become reactive in near real-time to our life events; and fighting a tax injunction or donating privately to a sensitive political cause could become near-impossible.

Experiments in G7 countries are more cautious, but they are progressing. Their motivation is often enhancing anti-money laundering controls, which require financial transactions to be linked to real-world identities. This results in an enhanced ability to freeze and seize funds—exactly the opposite intent of public blockchains like Bitcoin. Controls enacted in the name of “national security” might end up harming law-abiding civilians, and the proposals of universal “backdoors” that give law enforcement guaranteed access to every transaction are as controversial as they have ever been. While designing these currencies to function more like private digital cash is possible, no governments have yet pursued such a design.

Perhaps cryptocurrency-based, free market economics will collide with changing consumer sentiment about the value of personal data and legislation. We can already see hints of this in the EU’s General Data Protection Regulation (GDPR). Generation Z may launch the next wave of disruptive startups that teach us how to build thriving businesses we’ve yet to imagine. On the other hand, new systems may become exploitative of the near half of the human population expected to come online over the next decade, who have little knowledge of the changing economics of data and the power they hold.

The best time to care about the human impact of e-commerce networks was 20 years ago; the second-best time is today. As blockchain technology begins to connect new pools of data and economic incentives creep into mainstream applications, both incumbents and disruptors will try to find new opportunities for profit.

The line between data and money is dissolving. It’s too late to avoid a global techno-dystopia, but it’s not too late to demand better from those in power, lest they lose access to what they need to survive—our data.

This story is part of What Happens Next, our complete guide to understanding the future. Read more predictions about the Future of Money.