The money we use is not fit for purpose. There are many things wrong with the world, but a dysfunctional monetary system underpins systemic injustice. Like the air we breathe, money permeates our social interactions and its nature colours theirs. It is impossible to build a thriving and sustainable economy on such a flawed foundation, or a vibrant democracy within the toxic culture of inequality that necessarily results.
Debt-based money requires constant inflation to avoid an increasing debt burden and default by governments and institutional borrowers, thereby eroding the long-term value of money for savers. It exaggerates normal market cycles and fuels a boom-and-bust economy in which periodic recession is the price of growth. Its very existence entails a transfer of wealth from the everyday users of money to those who create and manage it, primarily the commercial banks, because the debts that back it have to be repaid with interest. Furthermore, money can be stored and transactions made only with the permission of the banks and under conditions imposed by third parties.
The monetary system is too important to be co-opted as a tool of power; or to be allowed to function as a driver of inequality and division; or to be vulnerable at a single point of failure, but it has nevertheless become all of these.
Open and transparent forms of blockchain-based money or cryptocurrency are not susceptible to unplanned inflation or interference by intermediaries. Independent currencies, outside of the existing monetary system, offer users choice in the ways they can store and transfer value, and an alternative to the zero-sum conceit of debt-based money that must incur costs elsewhere. However, blockchain is not a panacea. Like any other innovation, blockchain technology 'is neither good nor bad; neither is it neutral'. The impact of a technology is dependent on its use cases and the value systems within which it is applied. Additionally, real and perceived problems of volatility, security, usability and ease of acquisition mean that cryptocurrency is not yet ready for everyday use.
Despite growing awareness of the faults of our monetary system, change will not come through the top-down and voluntary relaxation of control by its current custodians. It will only come from the market. Forward-thinking businesses and their customers represent the best and arguably only viable means of driving positive cryptocurrency adoption and monetary reform.
Private currencies, hosted on the blockchain and embedded in business models and websites, apps, games, social networks, and physical and online marketplaces, will address several of the most serious current shortcomings associated with blockchain money. Barriers to entry will be overcome by accessing existing customer networks and distributing tokens to users in return for valued activity - from issuing loyalty points for purchases to providing rewards for specific information or services - and enabling users to spend the tokens they acquire on goods and services. Utility tokens, in-app and native currencies, closed-loop payment systems: these are the first forms of private money we will create. Moreover, ensuring tokens are supported by turnover from established business models will contribute to price stability and sustainable increases in value with greater adoption, whether in the same business network or in unrelated sectors.
These developments will not be universally popular, but 'it is easier to ask forgiveness than permission' and the need is immediate and acute. Blockchain has many potential use cases, but creating attractive alternatives to debt-backed and centrally-controlled fiat money must be one of our highest priorities.
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Guy Brandon. Registered company number 11257296.