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The Second Coming of Non-Consensus Currencies

Currencies are based on consensus.  For a currency to have value, a consensus must form around what it is, who has it and what it is worth relative to other things in the world.

This is the case with currencies like the Dollar or Euro, where the consensus emerges from government fiat, or gold, silver or platinum, where the consensus is rooted in chemistry and tradition. Even cryptocurrencies like bitcoin are rooted in the concept of consensus, albeit one based on some clever math and a distributed form of majority voting.

While traditional consensus currencies are not going away, I believe a type of currency is on the rise that has nothing to do with consensus. The spread of efficient communication technology is enabling the recapitalization of social capital, which is both the original form of capital and the ultimate non-consensus currency.

It’s based purely on the decentralized accounting of peer-to-peer credit and relationships, and not on any sort of central or agreed upon standard or authority. Whereas for the last hundred years, we have seen a massive consolidation in the currencies used around the world, I believe that technology is now bringing us to the brink of a currency Cambrian Explosion.

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Social capital—defined as the credit you earn with other people by helping them and collaborating with them—is the dark matter of our global economy. There is an enormous amount of it sloshing around.