Imagine a Crypto Future
You know you’re into cryptocurrencies a bit too much when you start dreaming about them.
That’s what happened to me last night, after a big night on the Stilton.
In the dream John Lennon was singing a crypto version of ‘Imagine’.
It went something like:
‘Imagine there’s no fiat,
‘It’s easy if you try,
‘No central bankers,
Now, the crypto-Lennon of my dreams was singing with an affected 60s English, rock ‘n roll star voice, so the ‘try’ and ‘cryptography’ lines managed to rhyme, somehow.
Cheese-induced dreaming aside, upon awakening it gave me an interesting thought. One I want to share with you today.
Forget the prices, the crypto in-fighting, the technical nuances and the massive challenges still to overcome for just one minute.
Instead, imagine a future where the ‘war’ is over and cryptocurrencies just ‘are’. Much like the internet is today.
An integral part of your life that just crept in over time.
What would that even look like?
That’s what I decided to imagine today…
Study the past if you would define its future
Future generations may look back on our current monetary system and think, ‘How could so many people be so fooled by so few?’
How could we put so much trust in one group of people?
There’s no doubt this group of people have disproportionate power in the system as it stands now.
As the famous financier Mayer Rothschild is claimed to have said in the 1800s, ‘Permit me to issue and control the money of a nation, and I care not who makes its law!’
Whether he actually said this or not isn’t the point.
The truth of the statement still stands.
That’s why the mechanics of our economic system are a carefully protected secret. Albeit hidden in plain sight. They’re standing there for anyone interested enough to see.
But most don’t. The dollar in their pocket seems to work OK, so why worry?
Well what if that dollar starts to become worthless?
You see, the rules basically allow one group of people — bankers — to create money at will.
Of course, there’s the façade of regulations, complicated circles of influence, and competing individuals in the elite echelons of society. But the core of the system means that whoever controls the money supply controls the world.
You could find most of them at Davos last week.
The modern-day incarnation of the mythical Illuminati!
But their power is very real.
Believe it or not, the US Federal Reserve is actually a private institution. Made up of representatives of the major private banks in the US.
The infamous banker, JP Morgan, managed to finally achieve this type of central banking system after decades of pushback (because it was a blatant power grab from the democratic institutions of the American people) during a banking collapse in the early 1900s.
At the time, it was the price for saving the government from the crisis by bailing out troubled banks.
A short-sighted decision with huge long-term consequences.
Other countries’ central bankers are as much part of this system too. They’re from the same universities, with the same economic thought and the same policies.
A crypto world would make this system — and these people — redundant. And Davos would once again revert back to just a toff’s ski-resort.
Power structures dissolve and are re-distributed.
But not in the socialist meaning of the word ‘redistribution’. Far from it.
Instead, it’s the ultimate free market battle!
Let me explain…
A crypto future
In the crypto future, you would be free to use any currency you like. Even worthless dollars!
And a receiver would be free to instantly and freely convert it into any currency they like.
There would be no monopoly power here.
The nature of what is currency would change.
Some of these cryptocurrencies will be based on new economic theories around supply, demand and inflation. Some will digitally represent hard assets like gold and oil, and some will be valuable because of unique technical attributes.
Your future digital wallet may contain a multiplicity of currencies, not just one.
You might do your daily spending with litecoin because of its cheap transaction costs. But your savings might be kept in bitcoin which acts more like digital gold.
For any spending you wish to keep private you’ll use a privacy enabled currency like zcash or monero in an instant atomic swap.
Other currencies you hold might require you to do a task to realise value or earn the equivalent of bank ‘interest’.
For instance, the cryptocurrency Augur (REP) allows the creation of decentralised prediction markets for any event. This might be gambling on sports, or insuring your house against bush fires.
REP holders have to validate any events on regular dates to receive a token payment in return. The token holders receive a portion of the fees generated by the market, so they’re incentivised to do this and be honest in their reporting.
This kind of cryptocurrency represents a whole new way of thinking.
It allows a new way for people to benefit by contributing knowledge or effort. And the system — not a central party — decides the benefit.
Or imagine the formation of crypto-DAOs (Decentralised autonomous organisations).
Your likely future crypto wallet is likely to contain a few of these types of DAO cryptocurrencies.
DAOs are systems set up with no central authority. Instead creators build a system of decision making into the coding, and enforce it through a series of smart contracts.
Once it’s running, no one can change it.
Again, this is not just making things faster or cheaper. This is whole new levels of thinking at a system wide level.
For instance, take a venture capital DAO. Token holders in this DAO would vote on what ideas to invest in. They might also contribute skills as well, in return for rewards.
The proceeds of the DAO would be distributed to token holders. They would share in the successes and failures.
The possibilities are truly endless.
Whether the future will look like this or be entirely different is impossible to know.
But my strong conviction is that with the crypto genie out of the bottle, the evolution of money is here.
And you can’t just put the genie back in.
To be clear, this isn’t a guarantee of Utopia. The world might not end up ‘living as one’.
But it will certainly end the corruptive, monopoly power of big government. And in my opinion, that’s a good thing.
Editor, Money Morning