The last time real new money came around was half a millennium ago when Marco Polo indulged Europe’s ridicule of the paper money he had brought back from China.
The invention was useful due to ease of transport, so it did not take long for its mass adoption. That led, directly or indirectly, to the invention of new monetary concepts, such as investing in companies in return for shares, the stock market, and the famous or infamous tulip mania.
The invention of computer technology has, for the first time since the 1,500s, brought real new money in the form of digital cryptocurrencies. They have many qualities, but the most fundamental is that they are codable and operate through just code.
We may have been distracted over the past two decades to forget just how new programming code is. The entire field, as we know it, barely counts twenty years. With its “ancient” history beginning in less years than our parents have lived.
With the rise of Facebook, Google, Amazon and Apple, it may have been tempting for some to claim the internet is over. Its wild days a relic of the 90s. The experimental horizon now closed.
But we would argue every end has a beginning, and what may now be starting is a second phase of disruption as not just the way we connect, but the way we exchange value, is transformed and digitized, turned into code.
To have a real share in a company like Apple there are many time consuming stages, each with its own fees. So concentrating them in the hands of brokers who then vote on the company’s direction for you.
But what if we replace the share with a token? And what if we can program this token to have inbuilt functionalities, to automatically perform a certain function based on voting results, to automatically give dividends, to easily be exchanged either for fiat or other tokens, as well as to easily be exchanged for goods if we please.
It’s nothing earth shattering. Just minor improvements in efficiency and accountability, just as paper made it slightly easier to transport. But with all of that come new concepts, new understanding, and an expansion of our horizon.
Because if we can now directly fund these companies, are we not in a way performing the bank’s function of lending money? Instead of us putting our funds in a savings account which receives 0.5% interest for the bank to give it out at 20% interest, keeping much of it, wouldn’t we keep all of the gains of our value, and thus become wealthier in the process, by directly “loaning” it out?
And since in the process we hopefully become richer, would we then not have more money to lend out, thus fund riskier ventures, some of which may succeed and may do so wildly, thus compensating for any failures while considerably increasing our combined wealth and productivity?
Through this process, wouldn’t banks no longer be a systemic threat for the losses and gains would be dispersed. If a company goes down, many will lose, but each a small amount. As opposed to the current situation where risk is concentrated in few banks which can cause a domino cascade that may bring entire countries to bankruptcy if the lenders miscalculate.
Such concentration has now been established by experience to be very problematic. Necessitating solutions. Whether this space actually provides them only time can say, but we are not aware of any other space even attempting to suggest any potential solutions. So we ought to try the one solution we think we might have, ought we not?
The SEC might say no. Old laws must apply to a new age, they might argue. Our system of one law for the rich and another for the rest concentrating gains in the hands of the few, leading to the greatest inequality in a century, should continue, they might say.
But the Securities and Exchanges Commission (SEC) is a relic of the past. Established to oversee what then was new, the stock market. With their expertise limited to that area, thus lacking any understanding of how this space differs.
Because although there may be similarities between gold and Apple shares, there are differences, just as there are differences between Apple shares and tokens. They can’t co-exist under one law, and certainly not a law that explicitly discriminates against 99% of the people in favor of the 1%.
Which might explain the reason why almost everyone has ignored SEC’s naysaying, not least because it has not made a good case for why it has jurisdiction over globally traded and invested tokens issued by computer code rather than a centralized and incorporated company.
Nor is their role to make policy, so being unelected bureaucrats. If we are to have a discussion over the benefits and downfalls of this very new, fast evolving, and quickly changing space, then we out to have it in Congress or Parliament not at grey bureaucratic halls who hate innovation and told our grandfathers that their car was only good for a horse to pull.
Risk taking is the driving engine of capitalism. In a fast changing world of automation with the rise of artificial intelligence, risk taking must be opened to all if we are to transition to a future where we retain our liberty and democracy.
Our money should not be eaten by inflation so stuck in saving accounts, but put to use in innovative companies that produce, so opening the benefits of innovation to all, rather than limiting them to billionaire Venture Capitalists who have enjoyed most of the gains from the rise of internet giants.
Hence, while times were booming in 2006, people were getting poorer in real terms, while the 1%, protected by SEC’s law that keeps out the 99% through an iron wall, saw their wealth increase even as we went to the great recession.
Well, it’s about time that changes. It’s about time money is liberated, investment is opened to all, companies are funded directly by the people, and in the process so serve the people, not Wall Street, not Silicon Valley, nor the SEC’s revolving doors.
It’s about time people pay off their houses through investing in innovative projects. And yes, some will fail, but good sense is a hallmark of the middle class. Simple diversification, limiting amounts to $2,000 or so per address, as some ICOs have done, and just some quick due diligence would do far more to protect them than SEC’s ancient laws ever can.
Times are changing, and we have to change with them. As the knowledge economy rises, profiting from knowledge must open to all. As we transition from physical labor to intellectual labor, the ability to engage in the later should not be restrained by blatantly discriminatory laws.
Bright young entrepreneurs need not beg billionaires for some pocket change, nor should any law restrict them to it. They need not give away 50% of their hard work, or give their profits to banks through high interest loans, when they can instead share them with the token holders through buy-backs.
That’s just the surface. The better than free token model might transform the way business operates and our relationship with them. Instead of a living wage for all, by simply engaging with projects we might earn sufficient rewards. Rewards we can then invest in a loop of sorts.
All this is just in time to complement other advances, such as self-driving cars that may put many out of work, algorithmic automation that may replace many admin jobs, and so on.
Just as in previous industrial revolutions, this one – if it turns out to be on the same scale – will probably have the likewise effect of not just creating more jobs, but most likely better jobs.
Jobs which we might not even think of them as such. Jobs which we might enjoy, might actually want to do even if we were not paid for it. So the advances in this space might actually be necessary, rather than just desirable.
The new way of funding companies, of investing and even of transacting is required for a knowledge based economy where self-employment has risen to all-time highs, as people are empowered to provide direct services.
The old ways of loans or VCs might not be easily available to them. But the new ways of ideas is easily accessible with people willing to take risk, so driving forward this great engine of the economy and with it too, perhaps, our booming times.