When not continuously checking the news for updates on the Trump Administration’s descent into chaos (and now potential impeachment), I have recently spent a significant amount of time researching the amazing surge of interest in crypto-currencies. Why? Because I’m rapidly coming to the conclusion that the financial system we live under currently is so unstable that humanity is instinctively searching for a more coherent, equitable way of economically organizing itself.
The Trump administration is, I believe, creating an even greater sense of insecurity about the future, and we could be on the verge of a new, alternative economic model that could upend market capitalism in a remarkably short period of time. I’m not necessarily arguing that this is the dawn of a utopic era in which humanity puts aside its greed and stops exploiting the poor and vulnerable, but this could be the beginning of something quite remarkable. How it evolves is unclear, but the more decent people start to understand the emergence of the new economy, the greater influence they will have over shaping its future.
Digital currency that exists on a distributed ledger (known as the ‘blockchain’) is becoming more popular than ever, with Bitcoin reaching its highest price since its inception in 2008. You could buy one bitcoin for roughly $850 at the beginning of the year. Now, one bitcoin will cost you over $2000. Other digital currencies like Ethereum, Ripple and Litecoin are also surging as investors are increasing seeing them as viable alternatives to government issued money (“fiat” currencies).
Previously, I had a hard time understanding how these crypto currencies could be taken seriously — it all looked like some weird, libertarian fantasy created by techno geeks and hackers from their parents’ basements. And they might well be the case, but I don’t think it makes a huge amount of difference if everyone gets on board with the actually very simple and revolutionary concept.
Instead of exchanging money through a banking system, in crypto currency land, we become the banks ourselves and exchange currency through a peer to peer network. We store our encrypted ‘money’ on the blockchain (a sort of giant spreadsheet) in online ‘wallets’, and send it to each other with a completely transparent and unique record of it that cannot be altered by either party (more on that here). There are no banks and no governments involved in the transaction, taking power away from centralized institutions and back to the people. It is a safe, secure way of trading with other people and businesses, and allows us to transfer funds to whomever we want around the world, and whenever.
Without getting too far out there, the money we use today only really exists because we believe it does. The bits of paper with fancy artwork we call money is backed by a government as legal tender, and because the government says it is worth something, we believe it is, and use it as a way to trade with each other. Increasingly, money has taken on a digital form and exists only as numbers on a computer screen. My credit card allows me to transfer these ‘numbers’ to a vendor to purchase goods, with nothing physical leaving my pocket. It is a system built on a collective agreement that we accept its validity, and there is absolutely no reason why we can’t start believing in something completely different.
There is a big debate raging as to why the price of these digital currencies are surging so fast — is it just investor speculation and greedy people jumping on the latest fad? I think this could be part of the reason, but it does not go anywhere near far enough to explain why they are being adopted so quickly. From my research, I think the reason is far, far more fundamental to how human societies work and the current problems they are facing under the global economic system. As it stands, the global economy is run by powerful banking institutions in collusion with national governments around the world. It is a debt based, deeply unequal and unsustainable way to run human societies and there is an increasing awareness that it doesn’t have to be this way. Bitcoin and other crypto currencies can, and will replace money if enough people believe it is a better, more equitable system — and I believe that is exactly what is happening right now.
Of course critics will say it is unrealistic and dangerous, but that doesn’t really matter. It is happening whether many of us want it to or not, and the more we begin to understand the underlying technology behind it and the ramifications of adopting it, the better equipped we will be for the future. Cryptocurrencies could offer us a very powerful tool in addressing many of our current economic problems, but like anything else it can be corrupted for nefarious purposes. It is always worth remembering then, that technology is neither good nor bad — it just depends on how we use it.
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.