Interesting. My knowledge is limited, of course, but I predict that digital currencies that build residuals over time will actually be the final nail in the coffin for currency period, showing that barter system, gold standard, government backed fiat, digital, what have you, it's all ridiculous and counter productive to the collective good because wealth is weaponized and anything even remotely tied to wealth such as land, education, fame, personal titles, etc., is weaponized as well. I think, pretty soon, not our lifetime maybe though, people will realize the scam is finally up. Finally, instead of putting value in wealth, we'll finally put value in each other. . . . Leading to everyone to gig only.Once transaction of value is decoupled from institutions, new economic and political models will follow. Who needs a career when I build residuals over my lifetime, and leverage that income stream in every way possible? I imagine that eventually, everyone will gig, only.
The tricky thing in all cryptocurrency conversations is you have to engage in a reasoned discussion of "what is money" and "what is money for" and that seems to be a discussion that anthropologists and historians are better suited to take on than economists or computer scientists. Graeber argues that money exists as a token-based system of exchange between parties that have no trust. Parties that have trust have been unfairly shoved into the "barter system" - this is inaccurate because "barter system" means "I trade you this goat for two chickens" when aboriginal "barter systems" are actually "you are Sooki's cousin so I'm going to give you a chicken because Sooki is my friend and she totally helps me out whenever I have a problem and she hasn't specifically warned me away from dealing with you so even if you never help me out in return I know Sooki will." "Barter economies" are actually "favor economies" and tokens of value emerge invariably where itinerant traders, nomads and rival tribes are concerned. Graeber went as far as arguing that the basic unit of hard currency the world over is generally worth one adult male slave but then, he's an anarchist. In a favor economy, the value is guaranteed by the relationship between the buyer and seller. In a commodity economy, the value is guaranteed by the intrinsic value of the commodity being exchanged. So long as we all agree gold is valuable we can trade gold. If I'm more into cowrie shells? It's gonna take you a lot of gold to buy what I'm selling. Classic example, the Dutchman Peter Minuit "buying" Manhattan Island for the Dutch West India Company from the Delaware Indians for 60 guilders. Except (A) the Delaware Indians didn't "own" Manhattan Island (B) or live on it (C) or consider land as being something you could sell. Really, three Delaware Indians probably got some great beads and trinkets in exchange for permitting the Dutch West India Company safe passage across someone else's hunting ground. In a legal tender economy, which is what the world runs on, the value of the token is guaranteed by the government that stands behind it. You can exchange a green-printed piece of linen for a Snickers bar in the United States because the United States government says you can. They say no such thing about Baht, Ringgit or Shillings so if you want to use some other government's currency you need to trade it across for something merchants will take. Otherwise you're left to haggle; towards the end of the summer merchants in southern BC will generally go 1:1 on the US dollar because get out of here Yankee and if you'd like a better deal, exchange your damn cash. This is simplified through debit cards and cashless transactions. You run your Dutch bank card at an American cash register and it will convert on the fly at the end of the day and add a service fee. However, this depends on (1) a treaty between the United States and the Schengen Area (2) A treaty between the Schengen Area and The Netherlands (3) you and your bank. Enter crypto. Cryptocurrency is literally trustless. Nobody has to back it. This is the stumbling block that took me a while to get over. You can't "hack" cryptocurrency and make the value change; everyone supporting the network (everyone "mining" at the moment) has a copy of every transaction made with the currency and if your record of transactions doesn't match the rest of the world, you get kicked out of the consensus. Your transaction is invalid. It doesn't go through. Wanna change that? You need to get the majority of the miners agree. If 51% of miners agree you have ten times as much currency on Thursday as you did on Wednesday, poof you're rich. Otherwise, fuck off. We don't care if you're a government, a criminal enterprise or St. Friedman himself. The Fed has been printing money like the end of the world is at hand. You can't do that with crypto. The US government will do things like say Iran can't use the SWIFT banking network. You can't do that with crypto. A surprising amount of domestic and foreign policy is executed through currency controls - take those away and the economic power of the government (all governments!) is greatly diminished. That's the real stumbling block that nobody likes to talk about because anyone who deals with "real" money recognizes that you're a heretic subject to stakeburning. But at its core, the fundamental feature of cryptocurrency is it converts governments from issuers to customers. And it does so in a distributed fashion that theoretically can never be countered or defeated. And that upsets a lot of apple carts.
I always appreciate you taking the time to talk economics with me, even though we don't always agree on it. I have a bigger thought about what you're saying but I got sit on it for a day or two to put it into words, but the general theme is that "shifting who creates wealth and how we create trust in that wealth does not necessarily create an egalitarian economic system." Or I could just say that and leave it at that and hope you trust what I mean. But let me tell you something fascinating I found out that centers around this statement . . . What's interesting about this system is two things. A) It's a trust network which means it's really hard to get into (like you pretty much said) and B) it's really easy to get kicked out of. What's interesting is, that even with currency and credit, we still have a "trust" system baked in, with credit scores. Interesting enough, it's really hard to build a good credit score and it's really easy to just absolutely trash it. I don't have a lot of "running into famous or powerful people stories" and to be quite honest, I'm quite alright with that, for a myriad of reasons. There is one time though, I once was in a room with a man who claimed that he used to be a CEO of a very powerful international company (think Disney, Microsoft, Toyota) type company. I'm not going to say anything good or bad about this person, cause I was only there for fifteen minutes, but I remember very distinctly how he was telling everyone that was listening that the best deals were made at the golf course or over dinner, nor charts, no lawyers, no numbers, just shooting the breeze, sharing ideas, making promises, and shaking hands. Once a promise was made, then all the number crunchers and lawyers got involved. I'm not gonna lie, I thought this man was straight up lying. Who makes business deals for hundreds of millions of dollars like that? Anyone can just straight up renege. It was so unbelievable, that not only did I think he was lying about how business deals were made, but that he was lying about who he said he was. It wasn't until the next day that I Googled him and there was his face and his credentials and it was him. I was flipping baffled. This was about ten years ago, at this point. Long story short, I've learned since then, that from small companies like construction companies and restaurants all the way up to big international firms, almost everyone operates, on some level, on trust networks. I do it to, non-chalantly, all the time, without ever thinking about it. The stakes are just way, way smaller. As in "I'll give you a ride if you buy me lunch" or "I'll cover your shift this week if you cover my shift next week." You know what too? I put way more stock in whether or not I think I can trust someone that I do about money, but in a way I don't know how to put into words.you are Sooki's cousin so I'm going to give you a chicken because Sooki is my friend and she totally helps me out whenever I have a problem and she hasn't specifically warned me away from dealing with you so even if you never help me out in return I know Sooki will.
Got it in one. There's an aggressively libertarian philosophy at the heart of cryptocurrency. And once it's in place and being used there isn't anything you can do about it. Now - granted: you can still pay people in dollars, you can still require stores to take dollars, you can still issue dollars. But the fact that theoretically, there will be another more portable currency that floats based on something other than your central bank means your central bank just got demoted to scrip. This is the fundamental idea behind Niall Ferguson's The Square and the Tower. He and Graeber are polar opposites; I always try to read the two of them back to back to balance out the angry radical leftist academic with a pompous self-assured right-wing academic. "shifting who creates wealth and how we create trust in that wealth does not necessarily create an egalitarian economic system."
Long story short, I've learned since then, that from small companies like construction companies and restaurants all the way up to big international firms, almost everyone operates, on some level, on trust networks.
Is that Niall Ferguson book pretty transparent in its bias and agenda? I ask because I think I might like to read it, because it appeals to me, but I also know immediately that it appeals to me because I think it'll validate some of my classist world views and I'm trying real hard to disabuse myself from such illusions and it's not easy, especially right now. The world is messy, now's not the time to feed personal beasts.This is the fundamental idea behind Niall Ferguson's The Square and the Tower. He and Graeber are polar opposites; I always try to read the two of them back to back to balance out the angry radical leftist academic with a pompous self-assured right-wing academic.
It pretty much launches with a defense of the Bavarian Illuminati and uses as its central argument how awesome Henry Kissinger is. Dude wrote a book called 'Civilization: the West and the Rest.' I appreciate the possibilities cryptocurrency offers the world. I'm fearful of the social darwinism it's likely to engender. Being educated about something doesn't mean you endorse it; you may or may not have noticed that I know a disturbing amount about nuclear, biological and chemical warfare.