I thought it would be interesting to compare two contrasting articles I have read about Bitcoin and other cryptocurrencies and their predicted impacts on ‘business as usual’. I think it is fairly uncontroversial to speculate that cryptocurrencies are going to be disruptive to existing banking and monetary systems, even to a layman trying to get an overview of the subject like myself. I am starting to discern, however, two trends in the things I am reading on the subject.
The first trend is basically ‘Bitcoin and related currencies are going to free us from the stranglehold of the existing financial infrastructure and open the doors to a truly P2P way of doing business with each other’. A good example of this type of article would be ‘Blockchain revolution: open source democracy for the 99%‘ by Nozomi Hayase of opendemocracy.net.
“The revolution in this era may not need pitchforks, as the ‘peasants’ can just stop paying for the plutocracy.”
The Bitcoin network empowers those so called the other six billion, the unbanked, underbanked and exploited. In the West, Bitcoin is often seen as an instrument for speculation, yet it can actually be a tool for liberation in the Global South.
Transition into blockchain currencies has the effect of freeing people from monetary control and centralized economic hegemony. The blockchain-based borderless currency is such a game changer that it could foster a free flow of movement away from fiat debt, creating a kind of global jubilee, making personal and national debt embedded in the old fiat system increasingly irrelevant. It also could stop printing of money that is often used simply for building weapons and maintaining constant war. A shift into asset-based currency could help balance the red ink of the growing empathy deficit, transforming society into a global network of abundance.
In contrast, we have the second trend in reporting on cryptocurrencies, which we could call ‘Hang on a moment, Bitcoin is great and all, BUT…’.
A good example of this is the article ‘What happens after the crypto-revolution?‘ by Matthew Slater of cointelegraph.com.
Bitcoin may disintermediate banks, but that will not change the economy, save the environment or make society fairer. One peaceful way to prevent our governments driving us to collective suicide is to get behind a new generation of P2P credit projects.
Many entrepreneurs and activists are eager for Bitcoin to ‘disrupt’ the banking system, but adoption is sure to be slow while the price is so unstable. There’s no solution to the volatility problem, and lets face it, most of the money which goes into Bitcoin is from people looking to make a profit from volatility – speculators. They do not care how well Bitcoin might function as money.
Bitcoin’s innate purpose is to disintermediate the banks as a global payment system and bring the cost of global payments to near zero. However, adopting Bitcoin as a national or even global legal tender currency would do little to change the balance of power and build a more equitable society.
At this point, the nascent state of cryptocurrencies is really reminding me of the early ‘Wild West’ period of the internet around 1995 – 2000: anything seems possible, and freedom seems just within reach. However I think we need to learn the lessons from that time: elites will remain elites and will use their power to warp reality to their way of thinking. We saw it especially with ‘Don’t Be Evil’ Google spying on us and passing our data to any interested party after we naively entrusted them with all our emails (and much more). By the way if you didn’t, if you were one of the few naysayers who warned against it, then I take my (tinfoil) hat off to you. We have now been warned, and to me, while applauding a great deal of the sentiments expressed in the first article, I tend to favour the more cautionary perspective of the second, and especially its upbeat conclusion:
If money was backed by your reputation, and issued interest free in the quantity that reflected our trust and interdependency, we could expect the economy to display entirely different characteristics:
- 30 year mortgages would become 10 year mortgages
- prices would plummet as interest was subtracted right through the supply chain
- zero unemployment
- two or three days working week
- No inherent ‘need’ for growth
- governments wouldn’t be slaves to banks!
The author goes on to recommend several promising truly P2P credit alternatives (including that favoured by the Cooperative Integral Catalana, with whom the P2P Foundation has recently entered into partnership.
In conclusion, I think we need to embrace the liberating potential of cryptocurrencies and other new P2P monetary systems, meanwhile keeping our eyes open for attempts by the status quo to subvert them to their own ends.
Won’t get fooled again!