WEBVTT 00:00:00.634 --> 00:00:03.146 So if I was to ask you 00:00:03.170 --> 00:00:04.560 what the connection between 00:00:04.584 --> 00:00:07.832 a bottle of Tide detergent and sweat was, 00:00:07.856 --> 00:00:09.496 you'd probably think that's the easiest question 00:00:09.520 --> 00:00:12.276 that you're going to be asked in Edinburgh all week. 00:00:12.300 --> 00:00:14.915 But if I was to say that they're both examples 00:00:14.939 --> 00:00:18.144 of alternative or new forms of currency 00:00:18.168 --> 00:00:21.682 in a hyperconnected, data-driven global economy, 00:00:21.706 --> 00:00:25.211 you'd probably think I was a little bit bonkers. 00:00:25.235 --> 00:00:27.778 But trust me, I work in advertising. NOTE Paragraph 00:00:27.802 --> 00:00:29.811 (Laughter) NOTE Paragraph 00:00:29.835 --> 00:00:31.870 And I am going to tell you the answer, 00:00:31.894 --> 00:00:34.480 but obviously after this short break. NOTE Paragraph 00:00:34.504 --> 00:00:36.389 So a more challenging question is one 00:00:36.413 --> 00:00:38.272 that I was asked, actually, by one of our writers 00:00:38.296 --> 00:00:40.773 a couple of weeks ago, and I didn't know the answer: 00:00:40.797 --> 00:00:43.013 What's the world's best performing currency? 00:00:43.037 --> 00:00:44.923 It's actually Bitcoin. 00:00:44.947 --> 00:00:47.138 Now, for those of you who may not be familiar, 00:00:47.162 --> 00:00:50.596 Bitcoin is a crypto-currency, a virtual currency, synthetic currency. 00:00:50.620 --> 00:00:54.402 It was founded in 2008 by this anonymous programmer 00:00:54.426 --> 00:00:57.270 using a pseudonym Satoshi Nakamoto. 00:00:57.294 --> 00:00:59.641 No one knows who or what he is. 00:00:59.665 --> 00:01:01.902 He's almost like the Banksy of the Internet. NOTE Paragraph 00:01:01.926 --> 00:01:05.010 And I'm probably not going to do it proper service here, 00:01:05.034 --> 00:01:07.177 but my interpretation of how it works is that 00:01:07.201 --> 00:01:09.960 Bitcoins are released through this process of mining. 00:01:09.984 --> 00:01:12.508 So there's a network of computers that are challenged 00:01:12.532 --> 00:01:14.662 to solve a very complex mathematical problem 00:01:14.686 --> 00:01:17.928 and the person that manages to solve it first gets the Bitcoins. 00:01:17.952 --> 00:01:18.914 And the Bitcoins are released, 00:01:18.938 --> 00:01:21.558 they're put into a public ledger called the Blockchain, 00:01:21.582 --> 00:01:24.211 and then they float, so they become a currency, 00:01:24.235 --> 00:01:27.258 and completely decentralized, that's the sort of 00:01:27.282 --> 00:01:29.806 scary thing about this, which is why it's so popular. 00:01:29.830 --> 00:01:32.282 So it's not run by the authorities or the state. 00:01:32.306 --> 00:01:34.359 It's actually managed by the network. 00:01:34.383 --> 00:01:36.622 And the reason that it's proved very successful 00:01:36.646 --> 00:01:40.040 is it's private, it's anonymous, it's fast, and it's cheap. 00:01:40.064 --> 00:01:43.832 And you do get to the point where there's some wild fluctuations with Bitcoin. 00:01:43.856 --> 00:01:46.747 So in one level it went from something like 13 dollars 00:01:46.771 --> 00:01:49.339 to 266, literally in the space of four months, 00:01:49.363 --> 00:01:52.078 and then crashed and lost half of its value in six hours. 00:01:52.102 --> 00:01:53.912 And it's currently around that kind of 00:01:53.936 --> 00:01:56.392 110 dollar mark in value. NOTE Paragraph 00:01:56.416 --> 00:01:59.188 But what it does show is that it's sort of gaining ground, 00:01:59.212 --> 00:02:00.115 it's gaining respectability. 00:02:00.139 --> 00:02:02.211 You get services, like Reddit and Wordpress 00:02:02.235 --> 00:02:05.506 are actually accepting Bitcoin as a payment currency now. 00:02:05.530 --> 00:02:07.449 And that's showing you that people 00:02:07.473 --> 00:02:10.000 are actually placing trust in technology, 00:02:10.024 --> 00:02:12.760 and it's started to trump and disrupt 00:02:12.784 --> 00:02:14.805 and interrogate traditional institutions 00:02:14.829 --> 00:02:17.544 and how we think about currencies and money. 00:02:17.568 --> 00:02:18.992 And that's not surprising, if you think about 00:02:19.016 --> 00:02:20.912 the basket case that is the E.U. 00:02:20.936 --> 00:02:23.127 I think there was a Gallup survey out recently 00:02:23.151 --> 00:02:25.113 that said something like, in America, 00:02:25.137 --> 00:02:28.887 trust in banks is at an all-time low, it's something like 21 percent. 00:02:28.911 --> 00:02:30.702 And you can see here some photographs from London 00:02:30.726 --> 00:02:32.917 where Barclays sponsored the city bike scheme, 00:02:32.941 --> 00:02:34.524 and some activists have done some nice piece 00:02:34.548 --> 00:02:37.472 of guerrilla marketing here and doctored the slogans. 00:02:37.496 --> 00:02:40.969 "Sub-prime pedaling." "Barclays takes you for a ride." 00:02:40.993 --> 00:02:44.672 These are the more polite ones I could share with you today. 00:02:44.696 --> 00:02:47.125 But you get the gist, so people have really started 00:02:47.149 --> 00:02:49.648 to sort of lose faith in institutions. NOTE Paragraph 00:02:49.672 --> 00:02:51.696 There's a P.R. company called Edelman, 00:02:51.720 --> 00:02:53.959 they do this very interesting survey every year 00:02:53.983 --> 00:02:57.154 precisely around trust and what people are thinking. 00:02:57.178 --> 00:02:59.896 And this is a global survey, so these numbers are global. 00:02:59.920 --> 00:03:02.159 And what's interesting is that you can see that 00:03:02.183 --> 00:03:04.763 hierarchy is having a bit of a wobble, 00:03:04.787 --> 00:03:06.549 and it's all about heterarchical now, 00:03:06.573 --> 00:03:09.113 so people trust people like themselves more 00:03:09.137 --> 00:03:12.197 than they trust corporations and governments. 00:03:12.221 --> 00:03:14.380 And if you look at these figures for the more developed markets 00:03:14.404 --> 00:03:17.108 like U.K., Germany, and so on, they're actually much lower. 00:03:17.132 --> 00:03:18.119 And I find that sort of scary. 00:03:18.143 --> 00:03:20.191 People are actually trusting businesspeople 00:03:20.215 --> 00:03:23.620 more than they're trusting governments and leaders. NOTE Paragraph 00:03:23.644 --> 00:03:26.727 So what's starting to happen, if you think about money, 00:03:26.751 --> 00:03:28.936 if you sort of boil money down to an essence, 00:03:28.960 --> 00:03:32.998 it is literally just an expression of value, an agreed value. 00:03:33.022 --> 00:03:35.118 So what's happening now, in the digital age, 00:03:35.142 --> 00:03:37.860 is that we can quantify value in lots of different ways 00:03:37.884 --> 00:03:39.477 and do it more easily, 00:03:39.501 --> 00:03:42.155 and sometimes the way that we quantify those values, 00:03:42.179 --> 00:03:44.678 it makes it much easier 00:03:44.702 --> 00:03:48.475 to create new forms and valid forms of currency. 00:03:48.499 --> 00:03:51.531 In that context, you can see that networks like Bitcoin 00:03:51.555 --> 00:03:55.174 suddenly start to make a bit more sense. NOTE Paragraph 00:03:55.198 --> 00:03:58.218 So if you think we're starting to question 00:03:58.242 --> 00:04:00.808 and disrupt and interrogate what money means, 00:04:00.832 --> 00:04:03.915 what our relationship with it is, what defines money, 00:04:03.939 --> 00:04:06.993 then the ultimate extension of that is, 00:04:07.017 --> 00:04:09.846 is there a reason for the government to be in charge 00:04:09.870 --> 00:04:11.302 of money anymore? 00:04:11.326 --> 00:04:14.136 So obviously I'm looking at this through a marketing prism, 00:04:14.160 --> 00:04:15.806 so from a brand perspective, 00:04:15.830 --> 00:04:19.482 brands literally stand or fall on their reputations. 00:04:19.505 --> 00:04:21.808 And if you think about it, reputation has now become a currency. 00:04:21.832 --> 00:04:23.919 You know, reputations are built on trust, 00:04:23.943 --> 00:04:26.469 consistency, transparency. 00:04:26.493 --> 00:04:29.017 So if you've actually decided that you trust a brand, 00:04:29.041 --> 00:04:31.851 you want a relationship, you want to engage with the brand, 00:04:31.875 --> 00:04:34.710 you're already kind of participating in lots of new forms 00:04:34.734 --> 00:04:36.249 of currency. NOTE Paragraph 00:04:36.273 --> 00:04:38.239 So you think about loyalty. 00:04:38.263 --> 00:04:40.302 Loyalty essentially is a micro-economy. 00:04:40.326 --> 00:04:43.537 You think about rewards schemes, air miles. 00:04:43.561 --> 00:04:45.686 The Economist said a few years ago that 00:04:45.710 --> 00:04:49.876 there are actually more unredeemed air miles in the world 00:04:49.900 --> 00:04:52.776 than there are dollar bills in circulation. 00:04:52.800 --> 00:04:55.324 You know, when you are standing in line in Starbucks, 00:04:55.348 --> 00:04:58.034 30 percent of transactions in Starbucks on any one day 00:04:58.058 --> 00:05:01.096 are actually being made with Starbucks Star points. 00:05:01.120 --> 00:05:02.930 So that's a sort of Starbucks currency 00:05:02.954 --> 00:05:04.963 staying within its ecosystem. NOTE Paragraph 00:05:04.987 --> 00:05:07.891 And what I find interesting is that Amazon 00:05:07.915 --> 00:05:10.971 has recently launched Amazon coins. 00:05:10.995 --> 00:05:13.710 So admittedly it's a currency at the moment that's purely for the Kindle. 00:05:13.734 --> 00:05:16.898 So you can buy apps and make purchases within those apps, 00:05:16.922 --> 00:05:18.295 but you think about Amazon, 00:05:18.319 --> 00:05:20.653 you look at the trust barometer that I showed you 00:05:20.677 --> 00:05:23.591 where people are starting to trust businesses, 00:05:23.615 --> 00:05:26.092 especially businesses that they believe in and trust 00:05:26.116 --> 00:05:27.482 more than governments. 00:05:27.506 --> 00:05:28.984 So suddenly, you start thinking, 00:05:29.008 --> 00:05:30.822 well Amazon potentially could push this. 00:05:30.846 --> 00:05:32.512 It could become a natural extension, 00:05:32.536 --> 00:05:34.013 that as well as buying stuff -- 00:05:34.037 --> 00:05:36.704 take it out of the Kindle -- you could buy books, music, 00:05:36.728 --> 00:05:41.277 real-life products, appliances and goods and so on. 00:05:41.301 --> 00:05:43.705 And suddenly you're getting Amazon, as a brand, 00:05:43.729 --> 00:05:45.322 is going head to head with the Federal Reserve 00:05:45.346 --> 00:05:47.489 in terms of how you want to spend your money, 00:05:47.513 --> 00:05:49.864 what money is, what constitutes money. NOTE Paragraph 00:05:49.888 --> 00:05:53.460 And I'll get you back to Tide, the detergent now, 00:05:53.484 --> 00:05:54.872 as I promised. 00:05:54.896 --> 00:05:57.205 This is a fantastic article I came across in New York Magazine, 00:05:57.229 --> 00:06:00.035 where it was saying that drug users across America 00:06:00.059 --> 00:06:02.211 are actually purchasing drugs 00:06:02.235 --> 00:06:04.862 with bottles of Tide detergent. 00:06:04.886 --> 00:06:06.950 So they're going into convenience stores, 00:06:06.974 --> 00:06:08.060 stealing Tide, 00:06:08.084 --> 00:06:10.254 and a $20 bottle of Tide 00:06:10.278 --> 00:06:15.130 is equal to 10 dollars of crack cocaine or weed. 00:06:15.154 --> 00:06:17.393 And what they're saying, so some criminologists 00:06:17.417 --> 00:06:19.798 have looked at this and they're saying, well, okay, 00:06:19.822 --> 00:06:21.624 Tide as a product sells at a premium. 00:06:21.648 --> 00:06:23.741 It's 50 percent above the category average. 00:06:23.765 --> 00:06:27.069 It's infused with a very complex cocktail of chemicals, 00:06:27.093 --> 00:06:29.454 so it smells very luxurious and very distinctive, 00:06:29.478 --> 00:06:31.402 and, being a Procter and Gamble brand, 00:06:31.426 --> 00:06:35.002 it's been supported by a lot of mass media advertising. 00:06:35.026 --> 00:06:37.871 So what they're saying is that drug users are consumers too, 00:06:37.895 --> 00:06:39.943 so they have this in their neural pathways. 00:06:39.967 --> 00:06:41.872 When they spot Tide, there's a shortcut. 00:06:41.896 --> 00:06:44.629 They say, that is trust. I trust that. That's quality. 00:06:44.653 --> 00:06:47.248 So it becomes this unit of currency, 00:06:47.272 --> 00:06:49.034 which the New York Magazine described 00:06:49.058 --> 00:06:52.531 as a very oddly loyal crime wave, brand-loyal crime wave, 00:06:52.555 --> 00:06:55.884 and criminals are actually calling Tide "liquid gold." NOTE Paragraph 00:06:55.908 --> 00:06:58.099 Now, what I thought was funny was the reaction 00:06:58.123 --> 00:06:59.443 from the P&G spokesperson. 00:06:59.467 --> 00:07:02.467 They said, obviously tried to dissociate themselves from drugs, 00:07:02.491 --> 00:07:04.873 but said, "It reminds me of one thing 00:07:04.897 --> 00:07:08.914 and that's the value of the brand has stayed consistent." (Laughter) 00:07:08.938 --> 00:07:10.775 Which backs up my point and shows he didn't even 00:07:10.799 --> 00:07:12.612 break a sweat when he said that. NOTE Paragraph 00:07:12.636 --> 00:07:15.306 So that brings me back to the connection with sweat. 00:07:15.330 --> 00:07:17.645 In Mexico, Nike has run a campaign recently 00:07:17.669 --> 00:07:19.419 called, literally, Bid Your Sweat. 00:07:19.443 --> 00:07:20.808 So you think about, 00:07:20.832 --> 00:07:22.542 these Nike shoes have got sensors in them, 00:07:22.566 --> 00:07:24.043 or you're using a Nike FuelBand 00:07:24.067 --> 00:07:26.724 that basically tracks your movement, your energy, 00:07:26.748 --> 00:07:28.529 your calorie consumption. 00:07:28.553 --> 00:07:30.364 And what's happening here, this is where you've actually 00:07:30.388 --> 00:07:33.394 elected to join that Nike community. You've bought into it. 00:07:33.418 --> 00:07:35.514 They're not advertising loud messages at you, 00:07:35.538 --> 00:07:37.712 and that's where advertising has started to shift now 00:07:37.736 --> 00:07:40.366 is into things like services, tools and applications. 00:07:40.390 --> 00:07:43.311 So Nike is literally acting as a well-being partner, 00:07:43.335 --> 00:07:46.196 a health and fitness partner and service provider. NOTE Paragraph 00:07:46.220 --> 00:07:48.354 So what happens with this is they're saying, "Right, 00:07:48.378 --> 00:07:50.950 you have a data dashboard. We know how far you've run, 00:07:50.974 --> 00:07:53.719 how far you've moved, what your calorie intake, all that sort of stuff. 00:07:53.743 --> 00:07:56.941 What you can do is, the more you run, the more points you get, 00:07:56.965 --> 00:07:59.919 and we have an auction where you can buy Nike stuff 00:07:59.943 --> 00:08:03.442 but only by proving that you've actually used the product to do stuff." 00:08:03.466 --> 00:08:05.562 And you can't come into this. This is purely 00:08:05.586 --> 00:08:07.285 for the community that are sweating 00:08:07.309 --> 00:08:09.920 using Nike products. You can't buy stuff with pesos. 00:08:09.944 --> 00:08:14.918 This is literally a closed environment, a closed auction space. NOTE Paragraph 00:08:14.942 --> 00:08:18.319 In Africa, you know, airtime has become 00:08:18.343 --> 00:08:20.153 literally a currency in its own right. 00:08:20.177 --> 00:08:22.256 People are used to, because mobile is king, 00:08:22.280 --> 00:08:25.101 they're very, very used to transferring money, 00:08:25.125 --> 00:08:27.079 making payments via mobile. 00:08:27.103 --> 00:08:29.770 And one of my favorite examples from a brand perspective 00:08:29.794 --> 00:08:31.715 going on is Vodafone, where, in Egypt, 00:08:31.739 --> 00:08:34.424 lots of people make purchases in markets 00:08:34.448 --> 00:08:36.205 and very small independent stores. 00:08:36.229 --> 00:08:38.631 Loose change, small change is a real problem, 00:08:38.655 --> 00:08:41.179 and what tends to happen is you buy a bunch of stuff, 00:08:41.203 --> 00:08:42.164 you're due, say, 00:08:42.188 --> 00:08:44.307 10 cents, 20 cents in change. 00:08:44.331 --> 00:08:46.947 The shopkeepers tend to give you things like an onion 00:08:46.971 --> 00:08:48.447 or an aspirin, or a piece of gum, 00:08:48.471 --> 00:08:50.175 because they don't have small change. 00:08:50.199 --> 00:08:52.342 So when Vodafone came in and saw this problem, 00:08:52.366 --> 00:08:53.793 this consumer pain point, they created 00:08:53.817 --> 00:08:55.867 some small change which they call Fakka, 00:08:55.891 --> 00:08:57.548 which literally sits and is given 00:08:57.572 --> 00:08:59.743 by the shopkeepers to people, 00:08:59.767 --> 00:09:02.577 and it's credit that goes straight onto their mobile phone. 00:09:02.601 --> 00:09:04.963 So this currency becomes credit, which again, 00:09:04.987 --> 00:09:06.431 is really, really interesting. NOTE Paragraph 00:09:06.455 --> 00:09:08.741 And we did a survey that backs up the fact that, 00:09:08.765 --> 00:09:10.387 you know, 45 percent of people 00:09:10.411 --> 00:09:13.681 in this very crucial demographic in the U.S. 00:09:13.705 --> 00:09:15.705 were saying that they're comfortable using 00:09:15.729 --> 00:09:18.218 an independent or branded currency. 00:09:18.242 --> 00:09:20.242 So that's getting really interesting here, 00:09:20.266 --> 00:09:22.132 a really interesting dynamic going on. 00:09:22.156 --> 00:09:23.657 And you think, corporations 00:09:23.681 --> 00:09:26.391 should start taking their assets and thinking of them 00:09:26.415 --> 00:09:28.926 in a different way and trading them. 00:09:28.950 --> 00:09:31.386 And you think, is it much of a leap? 00:09:31.410 --> 00:09:34.425 It seems farfetched, but when you think about it, 00:09:34.449 --> 00:09:37.143 in America in 1860, 00:09:37.167 --> 00:09:41.350 there were 1,600 corporations issuing banknotes. 00:09:41.374 --> 00:09:44.650 There were 8,000 kinds of notes in America. 00:09:44.674 --> 00:09:45.907 And the only thing that stopped that, 00:09:45.931 --> 00:09:48.515 the government controlled four percent of the supply, 00:09:48.539 --> 00:09:50.159 and the only thing that stopped it 00:09:50.183 --> 00:09:51.852 was the Civil War breaking out, 00:09:51.876 --> 00:09:54.924 and the government suddenly wanted to take control of the money. 00:09:54.948 --> 00:09:58.566 So government, money, war, nothing changes there, then. NOTE Paragraph 00:09:58.590 --> 00:10:01.421 So what I'm going to ask is, basically, 00:10:01.445 --> 00:10:03.816 is history repeating itself? 00:10:03.840 --> 00:10:07.717 Is technology making paper money feel outmoded? 00:10:07.741 --> 00:10:09.860 Are we decoupling money from the government? 00:10:09.884 --> 00:10:12.884 You know, you think about, brands are starting to fill the gaps. 00:10:12.908 --> 00:10:16.115 Corporations are filling gaps that governments can't afford to fill. 00:10:16.139 --> 00:10:18.876 So I think, you know, will we be standing on stage 00:10:18.900 --> 00:10:22.561 buying a coffee -- organic, fair trade coffee -- next year 00:10:22.585 --> 00:10:25.342 using TED florins or TED shillings? NOTE Paragraph 00:10:25.366 --> 00:10:27.029 Thank you very much. NOTE Paragraph 00:10:27.053 --> 00:10:29.229 (Applause) NOTE Paragraph 00:10:29.253 --> 00:10:34.300 Thank you. (Applause)