Elon Musk, one of the most successful entrepreneur in the world transforming space travel and car manufacturing, has told the Securities and Exchanges Commission (SEC) and the government to “do nothing” when it comes to crypto.
Asked what should the US government do, “we had Gary Gensler, the SEC chairman, calling it a wild west of finance, what should they do, if anything?” – Musk said:
“I would say: do nothing. I’d seriously just let it fly… there’s certain value in cryptocurrency, it will hopefully reduce the error and latency in the money system.
Governments have a habit of editing the money database – which is probably some ancient mainframe somewhere in Virginia written in Cobol, it’s kind of bleak to think about that – so when governments can’t keep their hands out of the cookie jar, edit the database, there’s probably some value to that…
I do know a lot about the money system and payments and how it actually works, as opposed to how economists think it works.
The money system is a series of heterogeneous databases that are not real time, with the exception of PayPal and a few others, and reconcile on a batch basis that may take from 24 hours to seven days.
It’s slow, there’s just a lot of latency in general and the ACH system has basically no security. It was that way when PayPal started in 1999 and it’s still that way 22 years later.”
“So it needs reform?” “Yup, yeah.”
Interesting. Musk is making a basic but persuasive argument that at a technical level, the crypto systems are superior to the fiat system in both being way faster and in being pretty much totally secure where the database itself is concerned.
His argument seems to be that there is fundamental real innovation here, and that it is superior to the technology used in what we may as well call Cobol systems, that being a programming language from 1956. Ancient history in this space.
He says let it fly because he wants that innovation to continue developing to the benefit of all certainly at a tech level.
Someone like Gensler, who was a trader at Goldman Sachs and probably has no clue on how finance works at a technological level, sees only those numbers going up and down and this “private money” that goes against Keynesian ideology, and in the process misses completely the raw innovation and crypto’s indisputable superiority at a technological level.
He thinks the same laws that apply to these Cobol systems, which deal with all the trust involved in the reconciliation and database editing, should also apply to cryptos which don’t have such problems.
That applies both to crypto tokens and the smart contract financial systems which are difficult for laymen to grasp in regards to the level of innovation they contain in replacing through code a lot of laws that require trust.
They see the fixed limit and that it is immutable. Or in defi they see the high yield and understand it is partly because the database isn’t being edited by rogue employees or because there is no bank to decide they should keep almost all the yield for themselves and give savers nothing because it is instead a pure market operating on its own through code without rent seekers and power abusers.
Thus when the most successful man driving innovation in our time says they should just let it fly, you’d expect someone like Gensler who has never created anything of value in his entire life, to sit and think very hard.
Alas, Gensler is to be paid by Goldman Sachs so what we should actually expect him to do is to try and regulate away any competition to banks so that they can keep putting their hands on the money jar.
His predecessor failed however in the end, he’ll probably fail too because their attempts are the equivalent of putting a man holding a red flag in front of a car to make cars as ‘safe’ as horses, which is in fact what they did do for a time in the United States, presumably at the behest of the horse lobby which maybe had their man in charge of transport.