The grey heads are trembling in their halls as they listen to propaganda from China proclaiming some relatively small digital currency trial as a new era and as a method of technological dominance.
In their media they claim they are the most advanced in this aspect, and on the verge of a transformation that will play a role in China’s domination of the region and perhaps the entire world.
Out of fear or desire to copy their propaganda methods, Lagarde says they are looking at a digital euro, while fed speaks of digital dollars, and now countries so remote no one knows where they are on the map claim they will launch a digital currency.
To these pages, much of this is now a far too old tune, and very much a settled debate that was running for about four years until most agreed a central bank issued digital currency would not be a good idea.
That’s because in some ways it would guarantee the collapse of the financial system due to disempowering commercial banks and in effect fully removing them from their role in monetary circulation, to the point all monetary matters are handed over to a single point of failure, the central bank.
That’s because if such currency can be held in one’s own wallet, then during times of financial uncertainty all would withdraw their digital money from the banking system, creating an inevitable collapse.
So when the Swiss had their say on a referendum on the matter, we concluded it is best the progression of time affords a smooth and gradual transition, than the hubris of man enacts an instant transformation in utterly complex systems.
The Swiss voted no, and that was the end of the matter, until China tried to ban bitcoin for the thousandth time and to sooth the anger of its own people, turned on the propaganda blitz about digital currencies with no real intention of actually doing such digital currency at least in a way that reasonable minds would say it is something that can be trusted and is implemented in a way that is actually an improvement.
Where trust is concerned, Venezuela found the hard way that you can’t just declare something as provable without having a way to prove it is provable with their Petro in some ways a failed experiment because of the execution primarily.
While where implementation is concerned, China has not given any persuasive argument why putting total power in their central bank would not be a total danger to their financial system.
Nonetheless digital currencies are here and they are here for the same reasons the People’s Bank of China (PBoC) governor Zhou Xiaochuan stated in 2016:
“History shows that currency has evolved abreast of technological advances and development of economic activities. The evolution from early-stage physical currency and commodity currency to the later credit currency was a result adapting to the development of commercial society. Paper money, as the last generation currency, lacks high-tech support, and it is an irresistible trend that paper money will be replaced by new products and new technologies with greater security and lower costs. With the rapid development of the Internet and the significant changes in the global payment systems, it is necessary to establish the issuance and circulation system of digital currency, which will help build the financial infrastructure and improve the quality and efficiency of the economy.”
While the governor was speaking, a then little known project was slowly growing in pioneering the very first blockchain based dollar.
Tether rose out of necessity. Establishing a decentralized exchange was the aim of the crypto space for long, but you couldn’t do so with fiat because you need a bank account to digitally move fiat, making that a centralizing point.
Hence they came up with a way of moving fiat to the blockchain with here still a centralized point existing at that fiat entrance, but then the blockchain dollar could move freely.
Not as freely as bitcoin, so some other coders worked for years to create a bitcoin like dollar in the algorithmically pegged DAI.
While tether can reverse or freeze transactions, it still has the problem of knowing just what these transactions are doing, so such freezes are very rare.
In DAI however one can’t freeze the funds at a technical level even if they know these are bad funds unless you get the whole ethereum ecosystem to agree to it – something that would take time and effort, thus making this an extremely rare option – and even then people can fork to the unchanged blockchain.
Seeing the success of Tether, Coinbase and Circle teamed up to launch USDC. This currency has now integrated with Visa, so starting to bring to life that smooth, granular, passage of time based upgrade of the financial system.
While China talks, billions in blockchain based dollars move a day, across the globe, including within China itself where USDt is a favored way of entering and exciting this space.
While they claim they will revolutionize or transform or dominate, our blockchain based dollar and crypto money is transforming and is dominating and is growing at a significant speed.
We are doing while they talk, so let them talk while we keep building, and let the greyheads keep listening to propaganda instead of seeing what their young have raised as code based monuments.
The west does have a digital currency and so does the entire world, and it is one of many flavors that have come from the free market innovating based on need not empty talk.
Such innovation will continue primarily in the west because China turned against their best and is losing badly as proven by their thousandth attempt to ban what they can’t ban.
And such innovation should be encouraged, not in any way hampered, primarily because it needs to be further developed and refined and because any law will likely create monopolies at this utterly early stage.
That’s especially if such laws are proposed by individuals who have no idea what ground they’ve entered to, no different than some literature graduate arguing in a lecture with a physics professor about the nature of energy production.
Any such laws would in any event have to differentiate between custodian blockchain fiat currency and smart contract based algorithmically pegged currencies.
The latter is the law itself, albeit in code, and any interference in it can well amount to ordering all that Flash is used and only Flash when coding a website.
Because so much is new and quickly evolving it is the case that even those following this space daily have no idea what new method will come up to address market needs or desires in financial matters.
Any interference at such early stage therefore risks slowing down the ingenuity of man when it is very much needed to reboot the economy.
Thus the west should do the opposite of China and raise again that flag of freedom to allow market forces to meet best the needs of all at the down of the technological revolution.
Because freedom wins and always wins, and it is that freedom to experiment with all these digital currencies that has the west far ahead of China which can never catch up in digitizing fiat in an upgradable way due to its totalitarian tendencies.
Those grey heads therefore should keep on trembling if they want, but maintain trust in their young and not get involved with enacting monopolistic regulations in the midst of booming innovation.
Because the time for regulations will come. When this space gets as dull and boring as these monopolistic gulags and facebooks, they – by that time probably us – can move in and break them up to enact what has given us prosperity: the freedom to innovate under market forces.
And if some are tempted by totalitarian ways, look at China trying to ban for nearly a decade now what can’t be banned, while blockchain dollars make their way to every corner of this earth.
The new Biden administration should therefore facilitate further that integration so that the financial system can upgrade and become fit for a free and innovative digital age.