This is a 3-part analysis on a more sociological take on the history of world reserve currencies to preface the purely financial or technical discussions of stablecoin and digital currency mechanics. By no means am I providing the end-all-be-all guide on stablecoin design, but merely providing some anthropological equipment on how to approach the stablecoin discourse and what other thoughts came about from this mode of analysis and way of thinking. Part II aims to explain a theory on the origination of the velocity (or vortex) of money created by this “mortal sink” and other sink candidates; part III briefly examines the new freedom of currency choice and the role of central wisdom authorities on debt and what commodity sinks might exist in a non-sovereign, digital society. Thematically, the following document centers the participant, not the government or issuing body, as the primary agent of a currency’s functionality. This will be essential in future designs for somea participant-owned, decentralized future.
Objective: To analyze and recontextualize the underlying, human vernacular that accompanies world reserve currency precedents, and using that to lay the fundamental vision for where stablecoins should lead
- Digital currency initiatives, such as stablecoins, are forgetting the “human” element in “human construct,” which isn’t how it works
- When you look at past world reserve currencies and their issuers, it’s not military strength but rather control of a vital commodity’s circulation
- Oil, tea, spice, salt, etc. The common characteristic between these precedents is that they were all human needs, what I coin as mortal sink
- If one central authority controls this sink: the minted currency will rule over humans that need the essential commodity, beyond one’s borders
- This, however, actually empowers the participant, since it is the participants’ needs that dictate what the natural mortal sinks are
- Creating a codified system that decentralizes such vital commodities will be necessary in moving toward a true participant-owned reserve currency, namely ABC Platform
- Part II explores the velocities of currencies with this mortal sink idea, and explores what the next “oil” or “salt” might be in the new economy
Table of contents:
1. #CIRC error on stablecoins
2. The missing human element in finance
3. Teleological fallacy (with a TL;DR)
4. Proof-of-Nuclear-Bombs & the Nixon Shock
5. The Mortal Sink theory
6. Role of commodities
7. Conclusion: onward to Part II
Note: This was first published with hype.partners on 19th January.
Part I: The Mortal Sink, and the missing faces on two-sided currencies
#CIRC error on stablecoins
Something bothered me about stablecoins and transactional digital currencies, or rather how they were discussed even before getting to the whitepapers and designs and algorithms. The logic seemed circular — and this logic was reduced to relying on brute force to get out of a chicken and the egg problem by pushing in as many of the functions that come with a currency into a single layer, like frogs in a tautological well.
The current thinking goes like this:
1) Peg: We need a stablecoin for crypto volatility, so we reluctantly peg it to USD for now (ie. decentralized: DAI, centralized: Tether)
2) Payments & utility: eventually this stablecoin will be used for other payments beyond just the crypto ecosystem, because its easier to use digitally
3) Autonomy: somehow the stablecoin is supposed to de-peg from USD, and become an autonomous currency with its economic value not being derived from a centralized authority/issuer
There is quite a big step that happens between step 1 to step 2, let alone if we ever truly accomplish the first step. It’s hard to fathom the gap that sits between step 2 and step 3. To be clear, this kind of thinking isn’t limited to stablecoins as it is to the broader currency discussion (BTC, Dash, ETH, etc.), it’s just that stablecoin discussions are usually more focused as a transactional medium discourse.
Perhaps it was a moment of intuition. An angst feeling underlined a lot of conversations I’ve had. Something felt synthetic and artificial, maybe I missed having Benjamin or the Queen on my stablecoins. To put this at ease, I ventured into the nuances into present discussions, but also precedent examples to see a pattern of currencies to get to the root of my nausea. The discussion about reserve currencies seems to be a forefront discussion in the public forum — even Ray Dalio has been researching about it recently (recommend his new book on 1937 big debt, it’s an excitable downer) and Friedrich Hayek has always pushed for the denationalization of the dollar since the 1970s. To start off the year, we look up to some gloomy global macroeconomic clouds overhead as we briefly step out of the crypto echochambers.
The missing human element in finance — a social mode of thinking
To label a few examples, there are various instances where people tried to loop back the uses of currency back at each other.
1) If this stablecoin is the medium of exchange, it should therefore be a store of value
2a) Stability is driven by constant usage and market forces, constant usage and market forces drive stability
2b) There are 16 different ways to order SoV, MoE, UoA and SoFP, which permutation will solve the stablecoin riddle?
3) Stability will make my currency useful for payments, therefore people will use it
4) Because I imitate all the functions of a fiat currency like a central bank, it’ll be just as stable and globally used
5) Bitcoin doesn’t have the properties of a currency, there’s no government or taxes to pay
6) I will turn my stablecoin into the medium of exchange for a popular website that increases its utility. Therefore, the rest of the internet will follow suit because it’s so widely used
How come I don’t pay my rent in Uber credits by now? If Uber ends up controlling all the cars in the world, then maybe that’s when I’ll use Uber credits to pay off my rent (then elect a tyrant as the CEO after the Uber central bank inflates my referral credits wage to oblivion through quantitative easing). Let me try to find a ladder out of this well. There is a pattern here and it’s not in the conversations, but the language itself — a fundamental flaw in our diction and our logic process.
Like any stablecoin enthusiast, I ended up coming back to researching how the ultimate stablecoin works: the US Dollar, the current world reserve currency. These digital initiatives expect that imitating the qualities of fiat will provide an electrical charge to resuscitate a digital Frankenstein’s dollar: from the now-defunct Basis to “peg-coins” like Tether or Paxos. I’ll tell you right now that it’s been done before and not very well. What they are missing is an almighty, nuclear-wielding superpower called the United States of America with the strongest military in the world — but even that alone does not guarantee a world reserve status historically or for the future. These thought processes fall into the common fallacy of a teleological deduction.
The following section might be a bit dense for a concept paper, so feel free to jump to the next section. Here’s a TLDR and continue at “Proof-of-Nuclear-Bombs…” for streamlined reading.
TL;DR: “non-teleological thinking” is to go beyond narrow causal thinking and to reject that cause-and-effects always have purpose. Sometimes, an event is driven by a phenomenon instead of a great designer, i.e. Darwin’s survival of the fittest. Both systems have merits: a watch has a watchmaker (Paley), but humans may or may not have a human designer (religious theism). I propose that currencies are not driven by their utility and function (SoV, MoE, etc.) but by phenomena of natural pegs and sinks which result in their utility and function thereafter.
What we personally conceive by the term “teleological thinking,” is most frequently associated with the evaluating of causes and effects, the purposiveness of events. This kind of thinking considers changes and cures — what “should be” in the terms of an end pattern (which is often a subjective or an anthropomorphic projection); it presumes the bettering of conditions, often, unfortunately, without achieving more than a most superficial understanding of those conditions..…. Non-teleological ideas derive through “is” thinking, associated with natural selection as Darwin seems to have understood it. They imply depth, fundamentalism, and clarity — seeing beyond traditional or personal projections. They consider events as outgrowths and expressions rather than as results; conscious acceptance as a desideratum, and certainly as an all-important prerequisite. Non- teleological thinking concerns itself primarily not with what should be, or could be, or might be, but rather with what actually “is” — attempting at most to answer the already sufficiently difficult questions what or how, instead of why.
— John Steinbeck, “The Log from the Sea of Cortez” (1995)
To use an example of a hammer, people often look into the physical qualities of the hammer to infer upward on the logic tree to the object’s purpose and design: one side of the hammer is flat and one part is made for the human hand, therefore it was designed to smash things in. While certainly useful for some exercises, this method does not work for everything, especially for human constructs (representative currencies), deeper abstractions (networks) and metaphysical logic (purpose of life). Other examples include God’s human design (Socrates), the famous watchmaker analogy (Paley) and even knowing why dogs sleep in certain places or “helping birds fly” (Taleb). While every watch has a watchmaker, not every chicken crosses the road with a triumphant purpose. To overlay this, teleological thinking is often seen from a single moment of time (synchronic), looking at the design purpose from the cosmetics that is visible– not everything ought to be deduced through and through, especially when the catalyst can no longer be visibly understood without the component of changing time (diachronic). Metaphorically, the way one takes over or creates the nation isn’t always the same way one rules it.
How did this thinking happen in this space? Perhaps because this is an industry where code is fully driven by causal mechanisms, entirely traceable and clairvoyant with search commands and action retracements. I set out to provide some meta-observation, or the human element, to this regulatory feedback thinking, or feedback controlled purpose described in papers such as “Behavior, Purpose and Teleology.”
In as early thinking as Greco-Roman antiquity in the 1st century BC, philosophers arrived at very different conclusions on how the world and anima worked:
Teleological thinking leaned toward nature’s divine designers and polytheistic watchmakers
Marcus Tullius Cicero’s De Natura Deorum, or “On the Nature of Gods” — using synchronic, reductionist reasoning
Non-teleological thinking lead up to early atomic theory
Titus Lucertius’s De Rerum Natura, or “On the Nature of Things” — using diachronic, phenomena-driven framework
While they are not usually pitted against each other, these conclusions and overtures on the histories of the world are fragmented from the very beginning through analytical methods. Lightning was not smiting by angry gods to Lucretius. He continued to observe the patterns in nature, such as moving sheep on a hill and declared those movements to be mere happenstance with no rationale. As such so should lightning because a clear reason for the function could not be derived. Let us reconstruct the logical progression and narrow down on the major divergence that happened with stablecoin and currency thinking, but one more rooted on phenomena and diachrony.
Using this lens, I wish to further explore how modern currencies were originally and naturally developed and use that precedent to help extrapolate the stablecoin future in its candidacy as a world reserve currency. Using a non-teleological, diachronic thinking, we look back into the catalysts for empirical precedents like the US dollar or the Dutch Gulden; this is nice timing with the growing doubt on the future of national currencies.
Counterpoints: The question remains, how do you discuss agency with this lens? As we move toward non-teleological reasoning, we must acknowledge that not everything is fully driven by a single deontological cause. Rather, we attempt to seek a sufficient accumulation of various catalysts that may or may not be intentional or driven by phenomena of the system, rather than the design by an entity or actor. While not as comfy as the instant gratification of seeing a cause and effect, some fruits of labor are seen only between long seasons.
From Ray Dalio to Larry Fink discourses, increasing stratification of money supplies from M1 to M3+, a growing China, and way too much debt, USD fiat is on the pedestal as the world reserve currency. However, instead of expounding on the controversial financial mechanisms that are currently being used to reinforce the strength or utility of the dollar like quantitative easing, a better question is how did the USD originally end up with this status? How did it get away with de-pegging from gold and being based on mere paper? I argue it was never de-pegged, but re-pegged whether it was intentional or not.
(Just to clarify, “re-peg” is probably not the right term since USD is not entirely priced against oil — my point is more about the hidden pattern of the control of an essential circulation leading to a naturally preferred currency of international settlement /reserve — not just commodity price correlations/cause-effects)
Proof-of-Nuclear-Bombs & the Nixon Shock
While I was traveling from eastern Turkey to Georgia in 2015, I met some truck drivers coming from Iran to Uzbekistan at a local gas station since my car broke down. Thousands of miles away from my apartment in New York, they were all dealing in US Dollars from buying groceries, gambling to dealing with debts. I inquired, they responded: it was because the dollar was as liquid as the gas in their trucks, the source of their livelihood. How did this happen?
In the late 1960s, the US controlled more than ¾ of the global gold reserve, but was facing a deteriorating US balance of payments by competitive economies through a loss of power and confidence in the US economy. Even other “pegcoins” today are facing the Triffin dilemma that the US once faced.
Bitcoin seems to be getting a lot of heat for being an “economic experiment,” but the USD was no less of an experiment when Nixon’s administration ventured into uncharted territories of fiat currency issuance. While the story behind the elimination of Bretton Woods and an international gold standard is well known in the history books and public forum, there were lesser known unilateral events that had an equally political and economic impact: namely the US’s unprecedented control of the world’s oil circulation.
Separate events may have indirectly contributed to an oil-focused imperialism through various initiatives, such as the development of SWIFT, that slowly made all transactions and oil trades to be settled in USD: an “oil-USD payment restriction.”
Counterpoints: I do not want to further perpetuate the debate about the petro-dollar theory in the present economy, there seems to be some consensus that this concept was a defendable theory at a previous point of time. Nevertheless, all of the oil continuing to be settled in USD seems not to be a coincidence, nor did the future involvements in the Gulf War, Afghanistan and Iraq. In reality the Proof-of-Nuclear-Bombs is a double entendre: it is not to show that the US is strong in order to reinforce the USD value, but rather it is the fabricated “proof” that can be used to prove that Middle East countries have stockpiles so the US government can take over the oil circulation. If I get asked to have a superpower, it wouldn’t be “nuclear power” or the “ability to control perceived reality,” but I’d like to have the “United States.”
There are a few qualities about oil that I want to highlight:
- Essential for industry/economy
- Scarce resource
- It is expendably used and not recyclable
- Essential for the human well-being in the modern age
The more basic questions arise, why is oil so vital from a modern anthropological perspective? Oil is the basis of mobility, industry and production in a consumer-driven environment, and to not have control over its circulation is to have no hold over one’s own economy and therefore currency — it is a human need, and every day that the US did not control this commodity was another day that they saw their mortality in the hands of the producers. This goes beyond economic well-being, military supremacy or strength. This constrained, mutually critical resource was a centerpiece of the world when the USD reinforced its status as the reserve currency, and this is also true in a world before a dependence on oil but for other mortality-revealing commodities. If the US already had its dollar face used to settle this resource, why proxy through gold? More importantly, this was a good that was used, and individuals needed a perpetual flow for their own well being — the USD was settling not just a commodity, but the flow of the river that fed the village every season. While this may have catalyzed the world to begin depending on USD fiat, I do not necessarily claim that it is the continued truth that we see today. The United States in the 1970s now controlled what I introduce as the mortal sink, or oil in the case of USD.
The Mortal Sink theory
I lay out a few examples on mortal sinks being paired with a world reserve currency. Supply sink has been discussed in an ancillary manner, Vitalik especially coming to mind and video game dilemmas, and now I plan to put it a little higher in importance with new clothes. On the left hand side, we see durability patterns, Mahmundov and Elmandjra provide great insight on how cryptocurrencies are a great representative currency on one side of the coin. I agree, the characteristics of bitcoin and well-developed blockchain tokens have, in my opinion, the best qualities of a currency that humanity has ever come across despite its occasional missteps (51% attack). I look into the other side behind the representation and characteristics.
Note: Portugal also owned the spice trade and issued the world reserve currency, being the first European country to have a naval campaign into the Eastern empires after they lost Silk Road trade routes access, but is excluded in this section given a duplicity of characteristics with the Dutch gulden.
Originally my colleague Kevin explained to me the history of currency through the control of energy, touching on points such as oil (industrial energy) and calories (human energy). Energy theories are nothing new, with early discussion from Max Weber to Nobel Prize winner Wilhelm Ostwald, but energy’s underlying correlation to the world reserve currency was an interesting proposition. This pattern, however, overlooked the spice and tea trades which played extremely outsized roles on early economies, more than one might expect; the tea trade produced 10% of government revenues for the British empire, which could cover the entire expense of the entire Royal Navy. The tea trade also pairs in with the sugar trade being centers of luxury, culture and conversations (the human sink for the aristocratic elite who control all policy at the time), and spices are a definitive part of the human cuisine, liveliness, health and culture in a bleak, grey world. To put these into the “energy” category seemed like a stretch and oriented toward world-systems (the renowned Immanuel Wallerstein). I decided to play with polemics and reorient the view from the bottom-up.
Another pattern in history was that it wasn’t always a single commodity that materialized into the mortal sink, but arguably a collection of goods that composes into a category, a “trade”: there’s a lot of spices out there, and the tea trade could be arguably be obfuscated into generally the cash crop industry (tobacco, slaves, sugar, beaver? etc.). Tin was not fully monopolized, so there was no real “world reserve currency” during the Bronze age. Nevertheless, tin was the essential ingredient in all the denominated currencies during that era. Even in controlled microeconomies with non-national “currencies”, we see the users proxy their human needs through representative goods as the essential driving force for price discovery:
1) Steam’s virtual assets such as TF2 hats and CS:GO skins as a proxy for gambling habits, “the need to sin”
2) Contemporary paintings’ seemingly unlimited stores of value originating from tax savings/loss reduction, not “taste”
3) The first art marketplaces (“pands”) in 14th century Antwerp sold art as proxies for religiosity and chances to escape purgatory, not “taste”
While these are more microexamples for non-reserve currencies, the “two-faced coin” pattern still applies.
Mortal sink: history has repeated a particular pattern of commodities as the vital material that feeds humanity’s umbilical cord. And whoever controls the medium through which that flow is transacted is likely the one who issues the world reserve currency that goes beyond the hegemon’s national borders as all human individuals, not just the nations, get pulled into this lower common denominator. If a currency is minted by such organization, the users, being subject to the commodity that dictates their wellbeing, will likely transact through such currency as it is needed at the end of the currency’s lifecycle: this creates the concept of the sink as shown in the following image.
In reality, the durable face of the currency (dollar, coin, etc.) is a representative vehicle for the organization which controls an underlying commodity, often through violence and power schemes such as military or economic pressure. By doing so, they are able impose on anyone outside of their network to fall into their jurisdiction through their currency medium, much like how a local national currency forces its citizens to use its currency through legal tender laws and tax-payment restrictions. The diagram above illustrates this relationship, and partially explains the “velocity of money” as a forced physical movement due to a grand issuer and an ubersink. After understanding this, feel free to continue using your abbreviations from SoV to UoA to MoE in your twitterstorms on who is the chicken and what is the the egg.
Using Ray Dalio’s empire characteristics index in his referenced blog post last week, the following diagram illustrates absolute supremacy (not slight advantages over peers) of such characteristics by each representative currency. While many are highly correlated, Mortal Sink control and Financial-center, size and power were consistently demonstrated as they are naturally correlated. Going back to the microexamples however, this framework is hard to put within these contours.
While the diction may certainly feel deflating, the “mortal sink” is not symptomatic of human fragility. Rather, it aims to empower the participant to realize that he has more control over his fate than previously thought, especially as we move toward a post-scarce economy (kinda maybe never). As the participant user begins to acknowledge his mortalities within the modern economy under a central authority, the user may be able to create a participant-owned vehicle to control such resources for the first time in history. I applaud the stablecoin projects for their effort in regaining control over the central bank, but I implore them to dig deeper into how a currency is forcibly imposed on the denizens and to control the commodity driver that underpins such currencies. The river that feeds the village does not have to be controlled violently.
The chart below may look familiar since it is the same intermediary-monopoly power controversy that arises with data in recent news today as our advisor Aeron Buchanan describes: Facebook is the intermediary for all our social data, credit cards know our spending patterns, etc. However, in our chart, we do it a bit differently with the world reserve currency: people usually point to the minting process or economic power or military supremacy as the monopolized resource, but I point to the circulation control of a vital resource as a the catalyst phenomenon. Once agency within the system can be identified, it is subject of being shifted.
In terms of etymology, future diction should move away from acknowledging nations within the equation (United Nation currency, international or intra-national, etc.) and more toward the human user participant (participant owned, decentralized, global).
Counterpoints: While I’d like to say military power is not the root of all currencies, it still has a very outsized role in our society today. We see the US still waving around its newer version of the Great White Fleet to the world, but now with spec-ed out nukes on board, China is imposing its new navy in its own seas and Russia will always be Russia. The mortal sink remains the destination, so the vehicle to approach such a location matters all the more — but it is this distinction that we must consider in future concepts, especially as we see active physical power mattering less than digital defense (just look at the elections). Secondly, can we mere humans ever fully predict what the “mortal sink” if it’s a phenomena-based future with unpredictable human propagation? Probably not, but we can get closer and have the right lens to categorically and thematically understand what direction to focus our attention on. I get into frameworks to approaches and plausible answers in Part II. For now I strive only to identify the pattern.
Societial dependence has already gone beyond basic sustenance (salt, tin for bronze), culture (spice, tea, sugar), and now mobility and industry (whale oil, steel, crude oil), by using and evolving out of the scarce vital materials that underpinned the currency and the commerce that we depend on. If a digital currency truly wants to be separate from the USD and be in the running as the next world reserve currency, then it must value capture the circulation of “oil of tomorrow.” While national government vehicles have typically been the medium as the central authority that controls the circulation, we are entering a new era of multiplicity, choice, and democratization that has never been seen before, inching closer to Hayek’s vision.
The role of commodities:
“I approve of Professor Hayek’s proposal to remove restrictions on the issuance of private moneys to compete with government moneys. But I do not share his belief about the outcome. Private moneys now exist — traveler’s and cashier’s checks, bank deposits, money orders, and various forms of bank drafts and negotiable instruments. But these are almost all claims on a specified number of units of government currency (of dollars or pounds or francs or marks). Currently, they are subject to government regulation and control. But even if such regulations and controls were entirely eliminated, the advantage of a single national currency unit buttressed by long tradition will, I suspect, serve to prevent any other type of private currency unit from seriously challenging the dominant government currency, and this despite the high degree of monetary variability many countries have experienced over recent decades.”
Milton Friedman, “Monetary Policy for the 1980s” (1984)
Today, we are in 2019, and governments’ handle on “private money” that exist in intra-nation space (digitally, international companies, etc.) is weakening — after 2008, there has been an explosion of financial products that go beyond national borders such as offshore banking to corporate tax inversion. We are trading more assets than ever in this world especially in the last few decades of unprecedented globalization and digitalization and artificialization. The trading happens so much that they begin to lose their object’s purpose (ie. Taleb’s green lumber example or ETFs fluffing up every EBITDA multiple). The last decade saw the greatest surge of sovereignless tradable assets through Bitcoin/Monero on the dark web, credit card point systems, company loyalty points, appification credit systems, video game credits, private market stocks (ie SecondMarket, Swarm Fund), more company stocks than you can count, etc. To overlay that vertically, we have an incredible amount of financial products and derivatives to multiply the tradability of the underlying — gold isn’t even “gold anymore,” as long as the bloated bullion banks control all non-delivered futures and have +500x paper gold to real gold ratios (see below). As Milton Friedman puts it, much of these are just reinforcing the reserve currency, much like how ATMs helped to create the M1 supply, but slowly we are moving away.
Looking vertically and horizontally: commodities
As I enlightened myself with this mortal sink theory, it felt prudent to find a sound proposal with some reasonable benefits, an approach with a good probability of leaving a tangible mark in this grand history of economic “experiments.” I knew that commodities, the world’s vital materials that underpins our economy, has an imperative backdrop role in the wheels of commerce, so I decided to go to the source.
As I have shown in my last post, I have been working with ABC Platform, a diverse team in the global hub of commodity trading in Zug, Switzerland. To explain, Dr. Mathias Bucher created a platform that addresses the vertical and horizontal issues I mentioned above, using commodities-based tokens as the basis-of-trade. The project has a vision that I deeply resonate with: to augment the way that individuals are able to interact with the world’s vital materials, but this time to include and involve everyone on the way up to there. It’s not their first rodeo in actual uses-cases with blockchain either: they’ve done some work with leading universities on blockchain education, major Swiss/EU banks on equity trading processes using blockchain verification, Swiss government on identity with uPort & Consensys, and public blockchain projects such as Polkadot & Ethereum. The team starts with the hardest-to-trade materials to resolve problems that only blockchain can solve and to create new markets that never existed before.
Horizontally, the platform is creating new markets with inaccessible commodities with no futures markets (lithium, diamonds, wood pellets, etc.), everything is physically backed
- Inaccessible commodities are looking to be the assets that will harness the industry of tomorrow, especially as we move toward 3-D printing, robotics, and other technologies with an urgent need for rare earth and metals like lithium, cobalt, etc. See more in Doubleline’s Commodity Supercycle thesis
Vertically, the platform is codified to be fully participant-owned, incorporate robust token incentivization and be open access for all, with trades, equations and calculations all verified on the blockchain and open-sourced
- Dr. Bucher uses statistical modeling for hard-to-trade asset to solve for liquidity design, using voter-controlled supply chain and established a nonprofit foundation based in Liechtenstein with passport rights between Switzerland and EU jurisdictions
- First product: diamonds are nonfungible, and therefore are not exchange traded transparently. ABC uses liquidity discovery to engineer the elements to make investment-grade diamonds fungible and into an exchange tradable good, like a stack of coins
By having the underlying commodities be infused with a participant-owned token, ABC Platform has a keen focus on the infrastructure robustness, yet maintaining that the circulation is fully in the hands of the token holders and users. As I work closely with the team this year, we hope to support partner projects, stablecoins and the blockchain ecosystems in directly and indirectly incorporating the mortal sink through our platform, such as collaborating with MakerDAO’s multi-collateral initiative.
Counterpoints: Nevertheless, I encourage all currencies to look into what exactly their currency surrounds, represents, controls or solves (namely a mortal sink) to not only expand adoption practices, but to ethically position oneself to undermine any malicious central actor to impose a hierarchy in the new economy. Being a handy medium of exchange like a crypto Venmo will never have far reaching effects — for example being a stablecoin on some Asian shopping store literally does nothing helpful, and will not suddenly make your stablecoin globally used. Initiatives like Celo, Reserve and Dash (they did really cool stuff in Venezuela!) are excellent examples of unique need-driven solutions and teams that are willing to adapt their projects accordingly. I’m not sure if I’m sold on go-to-market strategy thinking for projects like Terra which focuses on fast e-commerce adoption or TrustToken which seems to just be going for largest target market (oil, real estate, etc.) instead of markets in most need of help — the absent-minded “killer app” mentality that I am not a fan of. The mortal sink concept is not delimited by commodities themselves, its just the angle that I deduced based on my understanding of the trajectory in near future and the near past as production and materials will remain the wheels of all commerce.
Many of these stablecoins can’t write their own written securities laws, using a central national vehicle — even worse, going through an organization of nations is a bureaucratic spiral of doom. Tax payment restrictions are no longer the route that one can impose for national currency usage. Therefore, it starts off as a sprint from the get go, to immediately begin thinking like a world reserve currency, or rather the people’s reserve currency. Even if a currency’s usage is intended within a localized cluster, like in primarily emerging markets like Celo or Dash, addressing the mortal sink for the sovereignty of the digital space is not just the best path, but the only path to future prominence.
Just look at the phenomena of crypto’s nature today: Binance doesnt have a “home country,” regulatory arbitrage is the hot in (Liechtenstein, Malta, Singapore), not (China, US, UK), all coinciding with the movements in the post-2008 finance world with the massive rise of digital nomadism (individual), offshore banking (local businesses) and corporate tax inversions (national corporations). All these patterns echo the 14th century world of Dutch guilds in an aristocratic era and self-governing laws, but even then it was men that slowly corrupted the central authorities which left them remaining rent-seeking and inefficient and violent.
Should we dislodge the US as the de facto petrodollar? No, and no worries, Russia and China and Europe are already on it, and now its uber-political. Organizations are even using satellite images to measure how much oil is being not reported, by measuring how deep the ships sink to measure aggregate oil weight. Maybe we can just cross our fingers and hope that we miraculously reach “post-scarcity,” and live on some sesame credit. We must not just invent the future, however, we must live in it. Let’s see what’s next, and be sure to be in the right place and the right time.
From Encyclopedias to Wikipedia to Fake News
In a not so distant future and in a 2030 mortal animus, I see a pattern of increasingly localized manufacturing in production such as in 3-D printing and nanotech and virtual reality, an ever growing AI/ML and shittier security that dissolves our epistemological understanding of identity and sense of reality (oh, wait, that’s already happening), increasing reliance on inaccessible goods that will fuel the industry of tomorrow such as in IoT and computing (we are working on that), controlled data access making us Netflix-ers question our mortality and ontology, everything in biotech and the list goes … but that’s just in the tech space. A lot of the world is pretty slow: Iron ore just became exchange tradable in 2008 though short term swaps enabled by banks (the commodity happens to account for 95% of all metal usage in the world), coal somehow became great again and people still use Skype.
From the speedy to the lackluster and diverging technological speeds on this gradient chart, I seek to further explore new mortal sinks in the next part of the series, how they change over time and how to best approach them. I recommend the reader to consider as well, what will we depend on? From data access issues to a bleak agricultural future to mobility to information, who or what will be next to unbound Prometheus?
(Continued in Part II)
Stablecoins & digital transactional currencies
Visions of Bitcoin by Hasu and Nic Carter
Bitcoin: Winner Takes Most or Winner Takes All by Misir Mahmudov and Yassine Elmandjra from Ark Invest
Exploring market share capture in cryptocurrencies.medium.com
All about Stablecoins by a16z
The history, evolution, and use of money revolves around the important concept of debt: It’s what allows us to “time…a16z.com
Crypto Canon by a16z
Here’s a list of crypto readings and resources. It’s organized from building blocks and basics; foundations (&…a16z.com
The History of Money by Kenny Li
This article is an examination into the historical and current use of money and how Bitcoin and/or other…hackernoon.com
The Denationalization of Money by Friedrich Hayek
Non-teleological thinking practices
Mostly books over online readings given the philosophical study
The Beak of the Finch: A Story of Evolution in Our Time by Jonathan Weiner (Pulitzer prize)
The Log from the Sea of Cortez by John Steinbeck
Course in General Linguistics by Ferdinand de Saussure
De Rerum Natura by Lucretius
The Blind Watchmaker by Richard Dawkins
Antifragile by Nassim Nicholas Taleb
Behavior, Purpose and Teleology by Arturo Rosenblueth, Norbert Wiener and Julian Bigelow
The Mortal Sink influences
Salt and the evolution of monopoly by David Bloch
The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age by Simon Schama
For All the Tea in China: How England Stole the World’s Favorite Drink and Changed History by Sarah Rose
The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets by David Spiro
Private Equity Investing in Emerging Markets: Opportunities for Value Creation by Roger Leeds (great section on historical fiat-currency pegs)
Marketing Art in Antwerp, 1460–1560: Our Lady’s Pand by Dan Ewing
Role of Commodities
My last post on trade finance, commodity trading and ABC Platform
Converging crypto use-cases with capital flows and the commodity supercycle + the quest for the uniquely-enabled apphackernoon.com
Commodities Demystified by Transfigura
A guide to trading and the global supply chainwww.commoditiesdemystified.info
Is the Commodity Supercycle Dead? by PIMCO
rom the late 1990s until the 2008 financial crisis, most commodities experienced double-digit annual real (i.e…global.pimco.com
The Diamond Age by Neal Stephenson (Sci-fi)
I want to thank Dr. Mathias Bucher at ABC Platform, Kevin Han at Lombard Odier, Ha Duong at Cambrial Capital, Tom Howard at Taureon, John Esposito at Point72 and Melmoth for their reviews, insights and conversations that helped me in discussions and bouncing off my seemingly meandering thoughts.
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