William Belk

@wbelk

Chaos vs. Order — The Cryptocurrency Dilemma

January 21st 2018

Crypto crypto crypto crypto. It’s here. It’s happening in a big way, and faster than anyone can keep track.

Let’s consider two main trends in the space:

  1. Blockchain as a technology — there is a nuclear arms race for the next best blockchain.
  2. Cryptocurrency as a disrupting force—this acts to destabilize and disrupt the world’s financial and state actors.

Blockchain as a technology is largely benign and community/consumer focused. It will serve to open up more transparency and collaboration in various world markets.

Cryptocurrency as a disruptive force is starting to emerge as an ancient narrative for the digital age—i.e. unregulated ‘chaos’ vs transparent order. This is the battle between community-based autonomy, privacy and anonymity— versus transparency, compliance and stately order.

In the United States we’ve seen this narrative play out since the 1800's:

  • States’ rights vs the Federal government
  • The autonomous and private individual vs government constraints
  • Global cooperation and financial compliance vs state and individual autonomy— we’ve seen this with organizations like the United Nations and the European Union

In other countries around the world this narrative is vastly more acute and important.

To date, global financial disruption has been constrained by things like real-estate, trade, shipping ports and the transparency and influence of the international banking system. USD $1M weighs 22 pounds and has a volume of 0.01282 cubic meters, or 0.45 cubic feet. Gold is heavier and more dense. Classic cars are much heavier and much less dense. Art is fragile and large. Real-estate cannot be moved. Sending an international wire for USD $50k is no small task. It is clear that value in the traditional system is highly constrained.

Chaos vs Order

The global community is the major player in crypto — and if global exchange value can now be decoupled from state-issued currencies and assets, while self-selecting and technologically savvy communities can autonomously dictate the terms and method of ideal financial exchange — it’s a revolution. These communities are breeding the most desirable cryptocurrency traits and making bold declarations about how money should be created, exchanged and how anonymous the process should be.

For the first time in history we see the possibility of financial freedom that is not aligned with the interests of sub-states, governments and global cooperatives. This will be the real narrative to watch in the next 10 years.

Moving forward it seems like governments will now only control a crucial piece of the puzzle—access to the Internet. In countries like China, North Korea and Saudi Arabia, this seems simple enough. In countries like England, the United States, and Australia, access to the Internet seems to be have become a fundamental human right.

Regulation vs The Innovation Born From Chaos

Regulation is here. At the North American Bitcoin Conference in Miami, the panel on regulation was asked about the real need to be ‘compliant’ around the globe when it comes to moving crypto money. The implication was that state actors are slow to act and far behind the curve. One of the lawyers on-stage put it simply: “well… the punishment for financial fraud in several countries is death…” The audience gasped, as they should. On other topics of compliance penalties, the panel seemed to agree that the USD $500M fines are near.

One of the most fascinating dramas of the next ten years will be watching the cryptocurrency community innovate toward greater autonomy and anonymity, while centralized industrial and state actors struggle to exert their control and regulation on top of decentralized systems. Bitcoin’s blockchain is just a test. Bitcoin, Ethereum, Dash, Monero and Zcash are live research and empirical education—they are teaching tomorrow’s communities everything they need to know to create a more favorable strain of crypto.

Follow The Money

Two things are clear, 1) the primary blockchain narrative is all about distributed innovation, and 2) the primary cryptocurrency narrative is all about money—who has it, where it goes, who knows about it, and the efficiency with which it can be moved.

So many fundamental questions arise from the cryptocurrency dilemma:

  • Who has a right to know about our personal productivity and speculation?
  • Should we have the right to self-organize and select our financial exchange systems?
  • What could happen with provincial taxation in an age of global financial anonymity?
  • Why should citizens be incentivized toward financial and productivity transparency when governments have proven a tendency toward over-regulation, inefficiency, stagnant innovation and corruption?
  • If the government is meant to have a monopoly on the use of force to enforce the rule of law—which often manifests itself financially—what happens if their financial authority is removed?

These are just a few interesting questions that the cryptocurrency phenomenon is forcing us to ask. Crypto has socio-political implications beyond the realm of imagination.

Moving forward we will need to pay close attention to the future of money. While Blockchain will usher in new distributed innovation, the narrative of Chaos vs. Order that cryptomoney brings with it will force us to deconstruct the meaning of social and governmental influence on a new digital planet.

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