Negroponte: Internet could make cash obsolete
May 22, 1998
Web posted at 4:02 PM EDT
by Stannie Holt
SAN DIEGO, California-- Internet commerce is a gathering tidal wave
that could totally reshape the world economy within a few years, according
to technology pundit Nicholas Negroponte, director of the Media Lab
at the Massachusetts Institute of Technology, in Boston.
Not only could smart cards replace cash, even for transactions as
small as a pack of gum, computers could turn a handshake into a financial
transaction, save books but kill bookstores, and spare you from ever
wondering if you've got milk, Negroponte said.
Negroponte, giving the keynote address Sunday night at the Oracle
Applications User Group convention here, scoffed at U.S. government
predictions that I-commerce will reach $327 billion per year worldwide
by the year 2002. Cisco Systems alone is already doing $3.5 billion
per year, he pointed out.
"I think $1 trillion a year by 2000 is modest," Negroponte predicted.
But before I-commerce becomes that extensive, consumers must overcome
two barriers, security and payment systems, Negroponte said.
Security is mostly a regulatory issue, since very strong encryption
technology already exists, Negroponte said. Regulations banning the
strongest encryption from being used in certain countries are "unbelievably
silly, because terrorists and drug dealers aren't waiting for FedEx
to deliver a disk to Libya or Colombia."
So, Negroponte reasoned, honest citizens
might as well get the same kind of protection, and buy, sell, and make
donations as anonymously online as they can with cash.
Encryption could also help crack the other barrier -- to make transactions
as fast and cheap with credit as with cash -- so that it could become
cost-effective to bill a nickel or dime electronically, Negroponte said.
Microcash transactions "will change consumer behavior enormously,"
For one thing, readers might be more willing to pay for content if
they only had to pay a few cents for each article that interested them.
Shopping for groceries and other necessities via the Web might also
become more common.
I-commerce is already flexing its muscles, Negroponte said. On one
hand, it is giving consumers more power by broadening their choices
and letting them band together, for example, by pooling car purchases
to get a fleet discount.
On the other hand, it's killing off such traditional businesses as
car dealerships, department stores, and bookstores, turning them into
mere showrooms to tempt online shoppers, Negroponte said. And it could
wipe out jobs for all kinds of middlemen in the retail and credit industries,
such as accountants, data processors, and store clerks.
The future of I-commerce will depend strongly on enterprise IT users
such as the Oracle Applications convention-goers, Negroponte said. In
the future, whether they deal in information or physical goods, "you'd
be plumb crazy to put an invoice in the mail and put on a 32-cent stamp,
not to mention a 33-cent stamp," he said.
a few years, even "walking around money" could become purely virtual,
Negroponte said. The Media Lab at MIT is working on weaving computer
circuits into clothing, using the body's own electrical currents to
transmit information. Instead of getting money from an automated teller
machine by sticking a card in and getting printed pieces of paper out,
you could just press your thumbprint to the screen to get the money
downloaded to a computer in your shoe. Conceivably, you could even transfer
money through flesh-to-flesh contact.
"A colleague of mine said it made him think twice about kissing his
wife goodbye in the morning," Negroponte quipped.
Negroponte's predictions were provocative for many in the audience.
"Well, I believe accountants will still exist," said accountant Sue
Spriggs of construction services company Landis & Staefa, in Buffalo
Grove, Ill. Otherwise, "it was a wonderful presentation," she added.
"He was really insightful," said Tony Vecchiet, a database administrator
at Xilinx, in San Jose, Calif. "What I thought was a long way off in
the future ... a toy, something nobody takes seriously... he made me
think is not so far off."
"I hope he's wrong," said consultant Peter Plackowski in San Francisco.
"Would you want to replace the bazaar of Istanbul, so to speak, with
staring at a screen? We'd all be in the house and the drug dealers would
be running the streets."
On the other hand, some of Negroponte's predictions seem useful, such
as being able to make more kinds of payments electronically, Plackowski
"I found it kind of depressing, actually," said Anne Hartheimer, a
database administrator at metals manufacturer Oremet-Wah Chang, in Albany,
Ore. "It just seemed like there wasn't any connection between human
values ... and gadgets. I think there's a lot more to life than computers."