An Apple Currency?

BLUF: What if Apple isn’t simply the first trillion dollar company, but instead, over the next decade, the first ten-trillion-dollar company? How would it get there?

First disclaimer: This is simply a thought exercise. Think I’m wrong? Fire away.

Second disclaimer, just-as-important: I am unqualified to write about this topic. Should you take what follows seriously, you do so at your own risk.

Third disclaimer: I’m writing on my off-time. The US Navy neither endorses (nor likely cares) about what follows.

With the CRIC, we imagine potential futures and try to run experiments to show the Navy how the future may look. One of the nice things about such a position is that nobody will ever know if you are right — or in lay terms, “good”—since futurism is to history what alchemy is to chemistry. Will future Navy supply chains be truncated thanks to additive manufacturing? Will augmented reality change the way we interact with tools of war and peace? Time will tell. That said, I think that the best people who think about technology (and war) understand progress happens at the point of convergence.

In that vein, here is a bit of mental meandering when it comes to my favorite company, Apple.

Disclaimer four: I own a bunch of stock in Apple, and have for nearly two decades. I’m bullish about its future because I believe the people at Apple understand how to think about the future as a realized concept, and therefore build things that will fit into that future. This results in tools that gain utility even after they come into being. In apposition, the competition builds tools that accurately understand the present. Think I’m wrong? Consider: The iMac was moderately useful, and then as the internet grew, it became more so (remember Jeff Goldblum and “There is no step three!”?). The iPod was moderately useful, then months later it became supremely useful when the iTunes store opened. Same for the iPhone and the app store. This is not coincidence; it is strategy. Net assessment, even.

What got me started on this topic? The narrative of Apple as “first-trillion-dollar-company”. I think this truism is likely short sighted. Ergo: what if (and I’m thinking on a 10–20 year horizon here) Apple becomes the first ten-trillion-dollar company? How might it get there?

Assumptions:

#1: As the only company to have truly mastered digital hardware, Apple will begin to play more in what I will call, “meta-software” — identity-as-a-service (why keep an RSA key fob when you have a fingerprint scanner?), or just-in-time data delivery (like what Google Now is trying to do).

#2: The forthcoming Apple Watch will be the most personal device Apple will make for the five years (e.g. no Apple Glasses before 2020). Therefore, productivity gains from engaging in the Apple walled garden are likely to come from software (see #1). This isn’t to say that Apple won’t make a television (I would guess the answer to this question is “yes” and “within five years”), just that I think that we’re about to see the lineup of personal devices made by Apple solidify for the near-term.

Next, converging trends:

#1: Security. Res ipsa loquitur

#2: Payments.

#2: Cryptocurrency. I don’t think bitcoin qua bitcoin is the answer — I think that a real, workable cryptocurrency will need to be backed by something, and that something is not simply the block chain. US Dollars are a political expression of faith in Washington as a stable actor capable of paying its bills. Cryptocurrency will need the same, if only for sake of wide adoption.

And finally, some facts:

#1: Just a few weeks ago, Apple issued $17bn in debt at ~1.1% — lower interest rates than many European countries.

#2: Apple already issues its own semi-currency: iTunes gift cards. You buy them with dollars, and then transform them into an electronic string of numbers that you can convert into goods and services. While this “currency” sits on your iTunes account and is denominated in dollars. And even ever-so-often the currency undergoes some measure of fluctuation.

#3: Apple maintains nation-state amounts of cash on hand.

Now, the fun part: If Apple circa 2018 masters security in a generational way. What might this look like? Something akin to the Crypt. Imagine if you could only access your iCloud data by tapping your fingerprint on the side of an Apple-branded keyboard (Think power button-meets-home button), or verifying your thumbprint through your phone? Companies already do this with critical data through those RSA keys. As this concept trickles down to lay consumer tech, a few things will happen. Having built the best walls, people will seek to place valuable things inside of them. Apple may allow this at first, but will very likely see that doing so only facilitates economic friction (i.e. intermediaries for intermediaries). What to do in this case? Replicate the things others seek to store behind their walls (such as currency, or something like it). Or replicate the processes being stored behind your crypto. And if one imagines that the thing people will seek to store with Apple is money, well, it’s not too hard to imagine Apple simply using their own advantages (read: security), and making their own money, in some way, shape, or form.

If Apple starts acting like a bank (which many have already assumed is happening), what will that look like? Will mortgages of the future take place via Apple Watch? Will Apple currency be backed by shares in the company (gives an interesting flavor to the company’s current share buyback)? Honestly I have no idea. But the hold that the idea of cryptocurrency has on the technology industry — and the fact that many large companies are moving towards payment technology both in the cloud, and using NFC-type-technologies, means that as these companies expand their reach I think there are bound to be internal arguments about creating currency-like tools. Surely Apple may decide against creating a currency, but I will bet an Apple-denominated single iTunes song (“¢.99") that somewhere in that gleaming, nascent infinity of glass someone will write a memo to Tim Cook that will at least float the idea.

That’s about all I have so far on this likely crazy idea. But assuming it isn’t, what will leading indicators be as Apple prepares to focus on this new market?

Hiring, and also NFC firmware modifications. Though I have no idea how the ApplePay firmware works, it seems plausible that future iterations of the hardware, with minor tweaking, will enable two iPhones to transfer currency without any intermediating software (so long as they have internet connectivity to verify the transfer). This will be important because in order to make a currency work, it has to be accepted everywhere, or at least in enough places to make it usable. And turning billions of Apple devices with fingerprint sensors into instant cash registers would certainly do the trick.