So it's 2020. We have global electronic cash. The internet is used by all
businesses and accessed in 80%+ of homes either via digital TV or
other computers. It is perceived by most people to be secure and
people expect to be able to find anything quickly and get the best
price. Most appliances in the home come with built in radio devices that
allow them all to talk to each other and via a network interface to the
outside world. The various computers we interact with
either understand requests in the world's major languages or have a
friend who does that can act as an interpreter. Voice response is
ubiquitous. Many of us have 2 m plasma wide-screens on our living
room walls. Plug and play finally works and software is mostly written
with evolutionary user adaptation. Adaptive artificial intelligence makes
it actually pleasant to interact with the machine world. Machines and
software come with personalities, represented in faces that appear on
displays whenever appropriate. When they get sick, they will usually be
able to tell us what is wrong. Cute, cuddly robotic pets provide extra
amusement by ambushing the cat. Iris scans are used for ID in many
places, such as banks and post offices. Quarterly body scans in M&S
ensure that we can all get clothes that fit, custom manufactured and
often delivered within hours. Everything we do will be facilitated or
enhanced in some way by the network. When it's raining or we're tired,
we just won't need to leave the house.
One of the things we will take for granted then is seamless electronic
commerce. Most of us are very familiar with the basic idea, but let's
look at some less considered aspects of it.
Global currency - networked electronic cash
Global electronic cash will not just be a convenience for on-line
shopping. It will have a very significant effect on the global economy.
E-cash is very likely to be based on a single de facto standard, with
variants issued by a variety of institutions, personal, corporate or
governmental. There is absolutely no compulsion for it to be linked
to a national currency, and the exchange rate with national currencies
will vary. Because we will use it so much for on-line shopping, physical
shops, buses and so on will start accepting e-cash payments too so as
not to lose business. E-cash will become very widespread, spreading
from the net outwards into the physical world. Because it is used
anywhere on the net, it will not be a geographic currency. To maximise
the geographic sales domain, sales taxes, delivery charges and so on
will need to be kept quite separate from what will be a fixed base price.
It is therefore likely that a substantial amount of currency will be held in
e-cash form at any time, essentially independent of local currency
fluctuations. Since both will be accepted for purchases in most places,
there will be significant competition between net and geographic forms.
Net cash, being global, may become the
stronger of the currencies, and may have quite different inflation
characteristics, or even no inflation. In this world of de-facto electronic
global economic union, it is hard to see how EMU, local currencies,
international money markets, black markets and so on will be affected.
Not being an economist, I can only pick out some
of the more obvious implications.
Electronic cash is much more versatile than physical cash. It will be
possible to give your kids pocket money with limits on how much can
be spent on sweets. This may of course result in a playground black
economy. Labelled cash may have uses in business too. Cash could
be accompanied by a record of its history, permitting opportunities
such as celebrity cash. It may have multimedia attributes. Each time
you spend a Disney Dollar, you might see or hear Mickey Mouse. Of
course, play cash could become electronic just as easily, together with
vouchers, tokens, tickets, even IOUs and other promises. Vouchers
could incorporate algorithms so that the value might gradually
evaporate.
In fact, no-one need hold cash at all, or even move it around. Cash is
already just electronic records. In the future, it will
be an increasingly blurred entity, mixing credit, reputation, information,
and simply promises into exchangeable tokens. My salary may be just
a digitally signed certificate yielding control of a certain amount of
credit, just another signature on a long list as the credit migrates round
the economy. The 'promise to pay the bearer' just becomes a complex
series of serial promises. Nothing particularly new here, just more of
what we already have. Any corporation or reputable individual may
easily capture the bank's role of keeping track of the credit. It is just
one service among many that may leave the bank.
Future of banks
Banks will have to change dramatically from today's traditional
institutions if they want to survive in the networked world. They are
currently introducing internet banking to try to keep customers, but the
move to digital electronic cash, held perhaps by the customer or an
independent third party, will mean that the cash can be quite separate
from the transaction agent. Cash does not need to be stored in a bank
if records insecured databases anywhere can be digitally signed and
authenticated. The customer may hold it on their own computer, or in a
cyberspace vault elsewhere. With digital signatures and high network
security, advanced software will put the customer firmly in control with
access to any facility or service anywhere.
As the world becomes increasingly networked, the customer could thus
retain complete control of the cash and its use, and could buy banking
services on a transaction by transaction basis. For instance, I could
employ one company to hold my cash securely and prevent its loss or
forgery, while renting the cash out to companies that want to borrow via
another company, keeping the bulk of the revenue for myself. Another
company might manage my account, arrange transfers etc, and deal
with the taxation, auditing etc. I could
probably get these done on my personal computer, but why have a dog
and bark yourself?
The key is flexibility, none of these services need be fixed any more.
Banks will not compete on overall package, but on every individual
aspect of service. Worse still (for the banks), some of their competitors
will be just freeware agents. The whole of the finance industry will
fragment. The banks that survive will almost by definition be very
adaptable. Services will continue and be added to, but not by the rigid
structures of today. Surviving banks should be able to compete for a
share of the future market as well as anyone. They certainly have a
head start in many of the required skills, and have the advantage of
customer lethargy when it comes to changing to potentially better
suppliers. Many of their customers will still value tradition and will not
wish to use the better and cheaper facilities available on the network.
So as always, it looks like there will be a
balance.
Taxation, e-bartering and info-economics
One possible outcome is that some people may be paid in e-cash,
while others will receive geographic cash and exchange some for
e-cash. Or part and part. Tax consequences of each need not be the
same. I might ask for e-cash for my information work that is easy to
hide from the tax-man, but accept conventional payment for my day job
with PAYE. They are in principle easy to separate. E-cash does not
need to be transferred anywhere for me to use it. I do not need to keep
it on a card, or in a bank. All I need is an understanding with
someone that they will reward me for my work in a mutually acceptable
way. A global barter economy based
on exchange of work or information products may result, a global
electronic version of LETS. If strong encryption is available in any
country, this would be impossible to police. That country could hold the
records required to make the system work, inaccessible to any tax
authority. As information products (entertainment, information,
education, communication and socialisation) form an increasing part of
quality of life, payment in services will be quite acceptable for a large
part of family income but very hard to tax.
Of course, by 2020, there will be many information companies with no
human employees at all. They will just gather, process, add value and
sell. We may even see non-profit electronic organisations that
manipulate information and control things, investing their entire
proceeds in improving their service. Gradually, much of the
machinery of commerce and industry could become ultimately efficient.
They can even deal with physical goods, providing that they deal with
just the information/transactional side of things and not the physical
transport or production. Such a company is just a collection of
information and algorithms, and could roam around the world's network,
never staying anywhere, or even us satellites. It could thus refuse to
pay corporation tax in any country, as it is not resident there.
Payments could be e-cash based and again don't have to have any
physical location, just cyberspace agreements of future reward of some
kind. If some of this reward can be exchanged for the operating
requirements - temporary storage, processing and transmission, then
the company could thrive. Once again, not being an economist, I can
only highlight this as an interesting issue. How it will affect the global
economy is unclear to me, and I suspect most of today's economists.
The whole field of 2020 info-economics will certainly be rather different
from today's financially based systems.
Shopping in Cyberspace
Most of us are familiar with the idea of virtual environments, where
people can meet in a computer generated world. By 2020, this world
may also be inhabited with synthetic as well as real people, humanoid
front ends for pieces of software. A thriving industry will make virtual
environments for business, leisure, socialising,
shopping, art, in fact every area of life. As access rates and capacity
increase on the internet, we will find the interfaces increasingly using
such virtual environments. These make an interesting topic in
themselves, but equally fascinating is the feedback loop that exists
between cyberspace and the mental and physical domains. Just as our
offices are physically designed to accommodate our mental processes,
with filing cabinets, post-it notes and so on, so we will find that
cyberspace spawns new concepts and methodologies
that inspire change in our physical environment.
It is certainly clear that many of today's retailers hope and expect
shopping to stay almost the same in cyberspace except that it is done
electronically. They are fond of the virtual shopping mall that mimics the
high street, with all the various shops laid out much as they would be in
physical malls. Some either don't appreciate the magnitude of the
change possible, or are trying to resist it. Although people may initially
go to a traditional company site to shop sometimes, new companies
that are entirely net based will offer products from many such
companies, side by side, with lots of information and customer
feedback for better selection and comparison. These new companies
will quickly capture market share. A few years later, people may use
a virtual environment constructed by their software based on their
individual needs an preferences. Their agents will gather information
from around the net, and assemble the best matches for the customer
to make the final decision. The agent may negotiate provisional prices
during its pre-selection processing. As a result, our food
shopping may have Sainsbury, Tesco and Asda beans all side by side,
something that never exists today in the physical world. It is likely that
as we get used to this market model in cyberspace, so the physical
world will eventually reflect it. We may see our traditional supermarkets
forced to stock each other's home brands.
We will have our bodies scanned regularly by laser so that our
computer knows exactly what size we are. This data can be used by
the computer to illustrate what we would look like in that outfit instead
of what some model looks like wearing it. But when we make our
shortlist, we may still go into town and try the options on in
an approximate size. Then when we have made our selection, our data
can be sent to manufacturers to make clothes that fit perfectly. Clothes
shops will thus evolve from retailing into trying on outlets, paid by
manufacturers, as a result of mass customisation and customers
buying direct from the manufacturers. We could of course use the
shared computer environments to take our friends with us as we shop,
so that friends could still help make the choice.
Another interesting sideline is the sale of electronic clothes. Of course,
people may still ‘window shop’ electronically and this can be just as
much a leisure activity as going into town. Users may experiment not
just with their clothes but with their physiology too, messing about with
digital cosmetic surgery and digital
makeup. But more importantly, they need electronic outfits for the time
they spend in cyberspace. The computer could capture real images of
their real clothes, but in cyberspace, many physical limitations such as
warmth and material cost can be discarded and clothes could be more
fun. With digital manipulation of images
in real time routine, you may have just got out of the bath but may
appear on the videophone as if you had spent hours getting dressed,
and were 10 years younger! Avatars do not have to be truthful. Of
course, there may again be feedback into the real world, with 2020
clothing incorporating the latest polymer screens to show video instead
of plain static designs. The ultimate nightmare might be the
supermarket computer renting the video screen on your T-shirt to
advertise to other shoppers based on their location and personal
profiles.
The role of people in the e-commerce world
In the mass automation future, documents will be produced
automatically by AI based information processing, machines have
displaced people in factories, offices, banks, and shops. After all, a Big
Mac can easily be dispensed of a vending machine. Where do people
fit in?
When people watch TV, it transports them somewhere that they can
watch people (or occasionally animals). When people use telephones,
or the Internet, it is mostly as communication with other people. Even
searches for information are mostly just searches for the contents of
someone else's mind. Chat areas are already
becoming much more popular, but will evolve to include audio and
video. These allow a more direct form of communication, rather than
just via documents. The simple fact is that people themselves are
content. Technology changes rapidly, but our socialisation needs are
still basically the same as when we were hunter-gatherers.
When we have mass automation of industrial and information work, we
will see the emergence of the care economy. Whatever is left that can
only be offered by humans will account for an ever increasing share of
the purchase price. A Big Mac may be dispensed by a vending
machine, but you will pay extra in another restaurant for the French
waiter to sneer down his nose when you choose an unsuitable wine.
Washing out a bedpan may be automated, but compassion is a specist
thing, dispensed best by a friendly, cuddly nurse. Undoubtedly, this will
change as we come to accept the eventual validity of advanced
synthetic intelligence, but it will take time to adjust. We will prefer
people to machines in many situations and for many roles for many
years.
This will affect e-commerce significantly. If it were not for the social,
interpersonal side of shopping, people could be completely replaced by
automated systems. But shopping is a social experience much of the
time. Cyberspace can allow us to take our friends with us or meet them
there. We can all share the same virtual environments. But the people
are an important part of this, and they can't all be replaced. Many will
be replaced, but the rest will reinvent their role, concentrating on the
interpersonal value-add aspects, instead of
the transaction processing. We may see the same need strongly
affecting the nature of the machines. Machines will do many things, but
their human interfaces will often have human-like characteristics,
appearance, behaviour, emotions and so on. It may be quite common
to base machine interfaces on digitally reconstructed emulations of real
people, using digital actors and so on. Of course, their digital images
and behaviours can be cosmetically enhanced as appropriate. The sci-fi
film 'Looker' may be quite close to future
reality. Future agents in e-shopping may look like our familiar actors
and actresses, cartoon characters, aliens or droids. Some may
actually be droids.
Distribution and media
Already we have very different alternative channels for distribution of
information products. They may be sent via e-mail, broadcast on the
internet, distributed via satellite or terrestrial networks, sent in the post
on magnetic or optical media, or even as a last resort printed on paper.
Leaving aside production and distribution economics, the taxation of
these variants is different, some incur VAT, others don't and agreeing
management of taxation in e-commerce is already a problem for
international relations. This situation must surely be short
lived and we must expect rationalisation of information taxation
independent of the distribution form. Physical media and its information
content should be taxed quite separately, based on their respective
values.
However, even for physical goods, packaging, advertising, information,
software, and instructions are information components. A significant
cost of many products lies in well-recognised packaging. Packaging for
products bought on-line does not need to compete for attention on a
shelf, so can be purely functional and
cheaper. Argos sell their goods in plain brown cardboard boxes. The
information associated with the product could be shipped electronically
instead of on paper. Significant penetration of network shopping will
thus greatly affect the packaging industry.
The actual distribution of products will also change dramatically. As the
customer deals increasingly with a customised manufacturer, the
distribution sector will grow enormously and absorb some of the useful
functions that used to be offered by the retailer. Instead of one or two
deliveries to our street each day, we will see many. We can expect the
distribution industry to sprout trust service offshoots. A local distributor
will have a high degree of knowledge of your preferences and schedule.
They will be able to receive and store products on your behalf at a local
warehouse, delivering your goods at appropriate times when they know
you are at home.
They may use virtual company methodologies to work closely with the
manufacturers, perhaps taking responsibility for the whole link between
the manufacturer and customer, including arranging services, repairs,
returns etc. They may also absorb obviously related functions such as
supervising trades-people that need to
call while you are at work.
Conclusions
E-commerce is much more than just ordinary commerce with electronic
cash. It will ultimately have far reaching consequences for our whole
economic, social and political structures. By reducing the restrictions
of geography, it will make commerce much more global, and as a
second order effect, will force reform of monetary and taxation systems.
The power of banks will be greatly reduced as cash can be held and
managed just as easily by its owners. Similarly, shopping will evolve to
use the best of electronic commerce, physical outlets and mass
customisation, with a greatly improved distribution infrastructure. As
many jobs are automated, we will see the rise of the care economy,
with more focus on the human interaction side of jobs. But by then,
even our interfaces to machines will look human.
References & links
Also on-line at http://www.syncordia.bt.com/news/articles/articles.htm
Links to more viewpoints on the future
http://www.bt.com/innovation/viewpoints/pearson/index.htm
© British Telecommunications plc 2000
Author Ian Pearson, Futurologist, BT Adastral Park
(http://www.btdomain.com/communications/articles_rethfuture.htm#01