By Noam Cohen
As David Mamet once wrote, . â€œPaper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the 21st century, people need a form of money thatâ€™s more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection. Of course, what weâ€™re calling â€˜convenientâ€™ for American users will be revolutionary for the developing world. Many of these countriesâ€™ governments play fast and loose with their currencies.â€�
Thiel ended his talk by describing what this economic transformation would mean for PayPal as a business. â€œI have no doubt,â€� he said, â€œthat this company has the chance to become the Microsoft of payments, the financial operating system of the world.â€�
Being the financial operating system of the world, needless to say, is a good place to be. Thiel told WIRED at the time that PayPal would make money â€œon the float,â€� the interest earned by the money as it sits in an account. Later, PayPal would become a Silicon Valley giant by charging for transactions, even if it didnâ€™t ever become a financial operating system of the world. For a time, Bitcoin adopted that mantle. And now Libra is trying.
We are back again in the late 1990s, before Google and Facebook discovered the fortunes to be made from targeted advertising. The people planning to become rich from the internet back then, like Thiel or Jeff Bezos, wanted to get their hands on the money being exchanged online. The logic was clear to David E. Shaw, founder of D.E. Shaw hedge fund and mentor to Jeff Bezos before Bezos left to create his own business. For a 1999 profile of the company still known as Amazon.com, Shaw told The New York Times: â€œThe idea was always that someone would be allowed to make a profit as an intermediary. The key question is, â€˜Who will get to be that middleman?â€™â€�
With his operating system comment, Thiel was imagining a company even more powerful than Amazon. Adding users became an obsession in those early days of PayPal. A rectangular popup box measuring PayPalâ€™s usage rate, Jackson recalled, was called the World Domination Index.
Facebook, with its 2 billion-plus users, has finally taken up the challenge. You know what should keep us up at night? What if Facebook actually succeeds?