Thursday, May 13, 2021
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As Cryptocurrency Booms, Who Will Remember Its Purpose?

Cryptocurrency can solve many problems — if we choose to let it.

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From 1957 to 1958, the United States suffered a recession on the heels of a pandemic flu outbreak. Unemployment hit its highest level in decades. Prices rose as the economy shrank, whacking workers with a double whammy — less money, higher prices.

In response, the government cut interest rates, lengthened unemployment benefits, and accelerated government construction projects. Within a year, the U.S. economy recovered.

While COVID-19 is far more deadly, contagious, and difficult to treat than the 1957 flu (it’s not even a type of flu), it likewise received an aggressive public response, as did the recession it left in its wake.

I expect we will put COVID-19 behind us by next summer. Medical science is too swift. Its discoveries are too compelling.

By the end of this year, we will probably know everything we need to know to crush “the global bastard” and get back to normal — whatever “normal” means in the post-COVID-19 world.

It may take many months longer to get vaccines and treatments to everybody who needs them, but it will happen. The world will recover.

At that point, we will have to confront all the problems we had before pandemic disease and economic crisis consumed the world’s attention.

The list of problems is long, far longer than I have room to include here. It includes racism, inequality, poverty, reckless government monetary policies, and an almost unbreakable commitment to debt, deficits, and spending among the world’s leading economies.

Meanwhile, we continue to endure the slow whittling down of public discourse, the gradual destruction of free markets, and the silent erosion of the value of labor, as measured in money.

Cryptocurrency can fix all of that.

And what does the cryptosphere care about?

Sushi, hot dogs, pickles, and pasta. “Price go up.” Moon. Lambos.

Awesome tech, LOVE the mission, freedom and all that . . . should I buy that latest DeFi token?

Cryptocurrency will fundamentally change our modern notion of money, wealth, privacy, property, and commerce.

For the first time, we can create financial networks that everybody can participate in.

You won’t need to know somebody who knows somebody who can get you in, nor will you need to meet somebody else’s standard for what “qualifies” you for admission. You’ll just need to download the app or visit the website.

Everybody can participate in finance, join a group, start a business, and trade property no matter where they live, how much money they have, what political or religious organization they belong to, their family’s status, their race or religion, their level of education, or their nationality.

Computer programs can’t discriminate. Algorithms can’t shut you out.

No lobbyist can change bitcoin’s rules. No dictator can punish it to silence.

The three Ds of the next crypto bull run — decentralized finance (DeFi), decentralized autonomous organizations (DAOs), and decentralized exchanges (DEXs) — will test the limits of monetary thought and yield paradigm-shifting discoveries for the benefit of all humanity, not just the rich and powerful.

These discoveries will be every bit as significant as penicillin, steam power, and electricity.

For the first time, we can test monetary concepts in the real world. We can go beyond the efficient market theory and Pareto charts. We can observe monetary policy in its purest form, without political influence and interference.

What discoveries will we find? What innovations will we create?

Everything is possible.

Possibilities abound — and we’ll get around to that.

First, the money. After all, it’s not called cryptomaketheworldbetter. It’s called cryptocurrency. Literally, the technology of money.

No matter how much good it does for humanity, somebody will get rich from it.

In some ways, that’s the whole point. Create value and ye shall receive value. What good is a new money system if nobody uses it?

Consider Ampleforth, a financial network that rebalances users’ funds whenever the value of its token, AMPL, moves too much. Theoretically, users can preserve the purchasing power of their money as the network grows or shrinks. The number of AMPL tokens will go up or down based on an algorithm designed to keep the token price stable.

Will it work in the real world?

We shall see. Meanwhile, you can play the rebalance for SICK gains, bro, as long as you don’t get rekt.

Some cryptocurrency teams like GoodDollar and ZoloUS have started exploring universal basic income. They’re trying to figure out how to give everybody access to money without moral hazards and market inefficiencies.

Will it work in the real world?

We shall see. Did you get my link for the airdrop? Easy money!

These experiments and dozens of others will lead to profound insights about humans, markets, and finance.

They will lay the building blocks for the financial networks of the future. Just as telescopes forced us to rethink our assumptions about the earth and electricity forced us to rethink our assumptions about physics, cryptocurrency will force us to rethink our assumptions about money.

This will take time to sink in. Technology moves fast. People do not.

Perhaps we can be forgiven for obsessing about staking rewards and yield farming. After all, in a few years, rewards will slow down and yields will fall — by design.

Now, it’s never been so easy to buy into the same types of wealth creation machines that wealthy people have used for so long to make money off of their money. We owe it to ourselves to participate.

In doing so, we play a small role in weaving the financial tapestry of the 21st Century.

We risk our fortunes in support of this new asset class and the technology behind it. It’s only fair we benefit from that.

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As cryptocurrency markets grow and prices go up, you will hear people revert to the old, trite arguments over what is money and what is not money.

They will focus on cryptocurrency as a way to transact or invest, rather than a way to create trustless networks for the benefit of all. Even bitcoin maximalists will fall into this trap.

They’ll miss the true revolution — humans organizing themselves without a central authority to coerce them into doing things against their own best judgment. People breaking down the intermediaries and gatekeepers that cause bottlenecks, complexities, costs, and conflicts.

They won’t realize cryptocurrency gives humanity a chance to promote choice and community without undermining consensus and governance. Nor will they care how cryptocurrency can create fairer, more inclusive financial and social networks.

That’s ok. We will.

While the rest of the world will obsess over central bank actions, the intrinsic value of money, and archaic financial concepts, we will pave the financial roads of the future. We don’t need to wait for economists and political theorists to present solutions. Once we have an idea, we can put it into action. Nobody can stop us from doing so.

As a result, the financial discoveries of the future will not come from academics and politicians. They’ll come from entrepreneurs, computer scientists, developers, mathematicians, and common people like you and me.

And we will reap the benefits.

Will we use our good fortune to build open, permissionless financial networks and trustless, censorship-resistant communities? Promote monetary innovation, privacy, and inclusive markets? Make money systems that allow the poor and marginalized to contribute to the world’s markets and, as a result, build their own wealth and financial security?

Or will we recycle made-up tokens from one lending platform to another? Shill get-rich-quick schemes? Use cheap cash to drive up prices so we can sell our stakes to somebody dumber or more greedy than we are?

In the midst of worldwide economic decline, political discord, pandemic disease, and social crisis, we are fortunate. We have the time, money, and opportunity to invest in the financial networks of the future.

While we will benefit from doing this, we have an obligation to go further.

People are losing faith in their leaders and questioning the traditional financial system. Investors have no good places to put their money anymore. Rich people want to protect their wealth against currency devaluation and reckless governments. Businesses need better digital goods and services to prosper in the post-COVID-19 world. Workers suffer from the financial vampire of inflation.

Everybody worries about how long our economic crisis will last, and what will happen to them before it ends.

Those are real problems, today.

Cryptocurrency can solve these problems — if we choose to let it.

Perhaps DeFi will get rid of pyramid schemes, interest-rate shenanigans, and . Some tokens actually do solve market inefficiencies or present new financial paradigms, they’re just mixed in with a bunch of scams, quick-money rug-pulls, and bad ideas.

In time, we will see what works and what doesn’t. Trial and error will end the old debates over soft vs. hard money, central banks vs. private money, fiat vs. whatever.

Anybody can create a financial system and release it on a global scale. Let’s use that power for the benefit of humanity and discovery. Even better — let’s support everybody trying to do so, whether or not they do it with bitcoin.

While we owe it to ourselves and our families to think about the wealth-making opportunities in crypto, it’s too easy to lose sight of the bigger picture.

In the post-COVID-19 world, where humanity struggles to find its path forward, cryptocurrency will not thrive if its biggest advocates talk only about prices and its biggest selling feature is “it goes up.”

Think about the true revolution — open, permissionless financial networks that nobody can manipulate, defraud, or deceive.

That revolution will not fail because of any flaw with blockchain technology or any of the new financial systems it will spawn.

It will fail only if we lose sight of all the reasons it began — as a response to a world where money flows only to the wealthy, privileged, and well-connected.

How many will remember this once the shoe is on the other foot?

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