The revolution will be coded. In maths and science we place our trust. But the revolutionaries are, in some places and in some ways, under attack.
Chiefly in China, crypto entrepreneurs have effectively been criminalized by the diktats of the Chinese Central Bank. The bank, understandably, doesn’t like competition, but the government there has at the very least been complacent.
Out of ignorance, in our view. The Chinese civil service has probably not properly briefed lawmakers in the world’s second biggest economy. Perhaps they haven’t asked them. Perhaps they think this is a matter for the bank, quite a mistake because the bank of course would rather have the ability to keep using and abusing its power without competition.
Where the government is concerned, like every ordinary person they too want to increase their income. That being the amount they receive in taxes, which depends on how well the economy is doing, how productive their citizens are, which in turn depends on the level of innovation and efficiency gains.
Logically, whether those taxes are paid in dollars, yen, bitcoin, eth, or grain, doesn’t matter one bit as long as 40% or so of economic value is given to the government. It should be 30%-20% or even 10%, but it can be as high as 60% or 70% even in the west.
The more economic value is created, the more that 30% is in real value. From the government’s perspective, therefore, if the central bank is hurting that economic value, then they are hurting the government. The chances the bank does so near 100% the more power it has. The more competition, the more it is kept in check.
In a marvelous twist, governments ought to love cryptos and the blockchain. Which may be why not one parliament in the world has passed a law voted upon which bans cryptos, as far as we are aware.
Banks are a different matter. The Bank of India recently banned bank accounts for crypto exchanges. Here we are now ostensibly in a democracy, with the matter, unlike in China, quickly taken to the Supreme Court of India.
The court there has for the past few days been adjourning the matter because they are so busy they haven’t had time to hear it. The decision however is likely to have considerable ramifications, at least conceptually, on the level of freedom all Indian citizens can expect.
Those two assaults above have been complemented even in the west by the former elite bankers’ lawyer Jay Clayton who now heads the Securities and Exchanges Commission (SEC).
In testimonies before senate hearings Clayton has come across as completely clueless on cryptos and has stated SEC does not have any tech expertise, which means they don’t understand how any of this works, yet they’re making policy decisions on it.
Decisions which so far haven’t been good at all for this space, but that may change as the SEC composition starts to change.
In addition, complaints about banks closing the accounts of crypto businesses continue to the point London’s FCA strongly implied it amounted to anti-competitive practices. Nothing was done at a policy level, but there has been an organic considerable cultural shift in attitudes recently.
As Hayek predicted in the Denationalization of Money, young bankers are leaving the old institutions for the new crypto industry with the aim of designing far more efficient and equitable financial instruments.
Entrepreneurs in China are finding many ways to bypass the bank there, a bank which is increasingly becoming more and more hostile even as it becomes more and more powerless where cryptos are concerned.
In India, the Supreme Court may well side with innovation, as may lawmakers, and if neither does the workarounds being developed by the Chinese would probably work far better in India in any event.
Crypto businesses are now threatening to launch their own fully licensed regulated banks. There is demand for it. In some jurisdictions there is tacit backing at the government level. Old banks thus are feeling the heat, with complaints regarding crypto bank account closures appearing to be lower.
All of which may mean cryptos are winning for they have the backing of the strongest intellectual foundations and the promise of hope as well as optimism.
Hope that the ingenuity of man can lead to the design and the creation of far better and far more equitable financial structures and overall systems.
Hope that science, which has come to our aid since man became man, will save us again from these ever bigger and ever growing financial collapses.
Hope that the invention of code, and the maths that underlines it all, can open completely new worlds of incredible efficiency and productivity for the betterment of all, king or pauper.
Cryptos therefore are winning, and they will hopefully continue to win, peacefully, gradually, consensually, fully voluntarily, by creating something they all, even the bankers themselves, want.
In this anniversary thus, of a decade since the banking collapse, it may well be that while in some places bankers and cryptonians are in open metaphorical war, in some other places, particularly in America, cryptonians and young bankers are close to merging.
For the young bankers now are of the generation that made crypto, crypto. The millennials are taking positions of responsibility too. The bankers just starting out are of the generation that loves cryptos. The old bankers, we’ll wait them out.
They never understood, they’ll never understand, their time about to pass while cryptos stand at the brink of modernizing everything.