A few Planet Earth residents have travelled in space, but so far none have needed to buy goods away from the planet. PayPal brought this slightly prosaic issue of how we will make extra-terrestrial payments to the world’s attention with the launch of PayPal Galactic last month. One of the questions that the initiative wishes to address is “What will our standard currency look like in a truly cash-free interplanetary society?” In Star Trek, the United Federation of Planets doesn’t use money (no need, apparently). I think it’s safe to say that our future won’t be so perfect!
Let’s imagine what commerce might look like as we start to work and live more in space…
First of all, more and more humans will work and take holidays away from Earth. Mars becomes our first permanent colony. Hotels, restaurants and shopping centres spring up to service visitors. It’s very costly at first to establish reliable internet connections between Mars and Earth. This means that people have to buy physical Mars credits on Earth. Some payments commentators see this as a big step back. Over time, however, these credits are overtaken by a form of prepaid card system.
Then, as the Mars economy develops, Mars looks to establish its own fiat currency and banking system. By this time, the entire Earth has a unified banking system and a single currency. Mars becomes incredibly rich due to its favourable tax conditions for corporations. It quickly becomes known as the ‘Luxembourg of the Solar System’. Some of the Earth’s biggest companies relocate their headquarters to Mars. Martians enjoy taking cheap holidays to Earth due to the strength of the Martian dollar.
As the years pass, humans colonise more and more planets in the galaxy. Cash has now become obsolete. All humans are implanted with nanocomputers in their index fingers which they have to swipe at payment ‘nodes’ to buy things. In the year 2076, a scientist on Ramosa III discovers a means of making payments through thoughts. ‘Telekinetic Field Communications’ is heralded as the next big thing in payments by the galactic media but fails to take off.
In 2099 humans make contact with alien species. Enterprising humans soon want to trade with these new cultures. Exchanges rates between the alien and human currencies fluctuate wildly as corporations attempt to make a quick buck by manipulating the market. In early 22nd century some of the galaxy’s biggest banks cause the Intergalactic Credit Crunch as a result of a swathe of defaults on mortgage payments from some of the poorer inhabitants of the galaxy.
After years of economic hardship, all the known species decide to set up a Galactic Central Bank to deal with these issues. The Central Bank sets up a truly frictionless system between currencies with zero gravity exchange rates. Currency Cloud – which has by now become one of most successful corporations in the universe as the enabler of interstellar currency conversion – ceases to be necessary.
The problem of currency conversion has been solved. However, spacecraft have now been developed which travel close to the speed of light. Fraudsters have discovered that they can become trillionaires by leaving their savings in the bank, taking relatively short trips close to the speed of light, and returning later as the time in transit seems less to them than the banks. Paul Krugman’s 1978 paper The Theory of Interstellar Trade has now been forgotten. The galaxy goes through another financial crisis….
…you know what? Maybe we should take this one step at a time.