Information is currency

For centuries economies have been based upon a well proven model of bartering, early trading involved individuals exchanging goods or services of similar value then over time we saw cash become the primary means of applying a value to a transaction. Over the last decade we have seen several companies and individuals work out the next step in the evolution of currency, applying value to information in ways that we never previously imagined.

As a society we have always understood the value of big pieces of information. Every day corporate moguls exchange it for power, spies have used it to bring down ancient kings, and criminals have occasionally been able to turn it into money by blackmailing a cheating spouse. However, at the lower end of the scale we’re probably just starting to understand the value of the information that we hold.

Over the last decade, as information based business models have evolved, we have seen a number of companies work out how they can translate information into revenue, in many cases turning that information into cash through the use of targeted advertising engines. These companies are able to take information from many sources, then process it to ensure that advertisers can target their adverts directly to the right individual or set of individuals.

Supported by advanced computing power, this new breed of company has been able to achieve two things. First of all the ability to process massive amounts of seemingly irrelevant information, enabling them to build complex demographic models that provide them with a deep understanding of societies behaviours and secondly manage and collect micropayments in exchange for the information that they have processed. In today’s environment information no longer needs to be big enough to bring down a king to be valuable, you can build a multi billion dollar business based upon information that sells many millions of times over for a single cent a time.

Who does this information really belong to though? Is information about what we eat and drink, where we visit, how healthy we are and what we like to do in our spare time something that should be public domain or should it be private information that belongs to each of us personally?

Today’s model is pretty straight forwards. Many of the companies that collect and process information about us provide us with valuable services in return. Instead of spending traditional cash for access to these services we are in essence (and sometimes unwittingly) investing our personal information in return for email, blogging tools and other similar services.

For those who choose not to use a particular companies services there is probably an unrealized loss, assuming that they own their information then they’re still investing the same information but as they are not using services their information is turned into cash through an advertising model which then goes straight to the companies bottom line profits.

In the future I would expect that we will see more evolution of this information to advertising model. Individuals are already beginning to recognize that their information has value, for the moment all you can do at that point is hide what information you can behind privacy permissions that are granted to you, in the future I think we will be able to do to more.

Assuming that the title of this post is fact then I expect we will eventually see mathematical models that help us understand the floating exchange rate between, for example, a home address and the New Zealand Dollar (which might be as low as a couple of cents), or the rate between the mapping of an individuals DNA and the British Pound (which would most likely be into the thousands of Pounds).

In essence information as a currency will be able to float in value alongside the rest of the existing currencies of the world. At that point individuals will be able make similar decisions with their information that they make with money today.

Should the DNA mapping of my next child be something that I can invest in such a way that it gathers interest and eventually pays for that child’s collage education, should I be able to spend the details of my family tree with a restaurant who in return throw us a lavish family party. I might be able to make an explicit decision to invest details of my online browsing behaviour with a company that in return pays me with free email and search services, rather than the implicit decision that I make today.

Going even further out I can see several good reasons why we could see information management be a product offered by banks alongside our existing checking and savings accounts, providing customers with “billpay” functionality that allows them to control where personal information goes, how it is used, and what they get back in return.

This post isn’t in any way a complaint about the information companies that exist today, merely an attempt to provoke a little thought around what comes next.

In 2010 information is currency, there are multi-billion dollar companies standing as evidence to that point. My question is about what new opportunities we can create as we gain a greater understanding of information based business models, and at the same time how likely are we as individuals to be able to recognize the value of the information assets that we hold?