I don’t know about you but it is pretty clear to me that money isn’t handled these days the same way it was before the advent of the Internet. Currency doesn’t seem to have the same meaning anymore with new virtual currencies like Bitcoin, and electronic wallets that use smartphones to pay for goods and services. Banks no longer are the institutions where entrepreneurs find capital for their inventions and new businesses to get them off the ground, because today we have micro-loan providers and crowdfunding where ideas get pitched and invested into in non-traditional ways.
For me the Internet has pretty much ended most of my visits to banks with me managing our household accounts online. My bills are electronic and the only time it seems I visit a bank is to deposit a cheque or take money from the automated teller.
Moving money around the globe in the Internet age is almost magical. Where Western Union and your local bank were the sole providers of services for wiring currency overseas, today we have mobile phones and electronic money transfers that work using an “app.” One can almost describe the evolution of the technology as a democratizing process. So today I want to share with you some stories about the evolution of money in the 21st century.
In 2007 I discovered Kiva.org, an online community founded in 2005 that was a capital aggregator and an alternative to banks. Kiva has never been about profit. Every dollar that is loaned is free of interest but must be repaid. Kiva’s loans are distributed and managed by a network of microfinance field partners and trustees who vouch for the character of the borrowers and who get measured by the rate of loan repayments.
The idea of Kiva intrigued me because it wasn’t about charitable giving. Every dollar I put into loans I expected to see come back to me. And that has been the case since my first loan in 2007. To date I have made 37 loans with nary a default. The individuals and groups that I have provided investment capital live in 24 countries. My initial $100 investment in 4 business opportunities has been recycled to become $925 by me keeping the money circulating in the capital pool and loaning it again and again.
In some sense Kiva acts both as social network and economic stimulus. It has been exciting to watch how 21st century technology has created an entirely new means to enhance the lives of people around the world. Today Kiva has over 1 million members who have loaned nearly a half billion U.S. dollars to individuals and groups in 72 countries around the world who would never had access to capital through traditional financial institutions. It has an unprecedented repayment rate of 99.03%. No financial institution on the planet can match that.
Funding from the Crowd or Crowdfunding
I have written about this phenomenon in previous postings. Just type in “crowdfunding” in the Search field on the home page of 21st Century Tech blog if you want to read more). It appears that this means of raising capital and exchanging money between individuals has become a phenomena of the Internet Age growing from an initial campaign to raise $100,000 for one project in in 1997 to some 450 crowdfunding sites providing $2.66 billion U.S. in 2012 for new products, films, services, research and clinical trials and more. In a sense Kiva.org is a part of this phenomena. What crowdfunding is doing is bringing free market capitalism at the micro level to inventors and entrepreneurs on a scale never achieved before.You can purchase an automobile and car accessories, book a tour or vacation, buy your dog food and pet accessories, the latest computers, a wide range of clothing, all online and all for Bitcoins. You set up your Bitcoin account by downloading the free application. Once you have a wallet for your Bitcoins you earn them by providing goods and services you except for Bitcoin.
Probably one of the most interesting phenomenon of the Internet Age is the introduction of electronic currency that is unaffiliated with any country. Bitcoin is an open source project, a true child of the Internet. The code used to create Bitcoin and transactions is freely available to anyone who is a member of the Bitcoin community. As electronic currency it can be traded for goods and services with any other Bitcoin user. But it only works if those using it have confidence in its value as a currency. And today 1,136 businesses use Bitcoins as currency. You can even trade Bitcoins online.
Exchanges and Money Transfers