Money Burning

Is This How the Dollar Gets Replaced?

In Global Trends by Chris22 Comments

I’m sitting here at my desk, laptop open, 7 browser tabs open, a half dozen documents open, emails popping in every few minutes, Skype messages coming in, and bunch of PDF reports open for review. A smartphone collects calls and texts coming in, and next to this is a Kindle with 3 books I’m reading at the moment. That’s just the technology.

Then I have a fly buzzing around, annoying the dog sitting at my feet. And as I look outside the window, a jasmine bush in full flower attracts bees collecting nectar from it.

Taking it all in it struck me why we are wired for narrow-minded thinking. Why the majority misses some of the biggest changes that have taken place. Changes that have taken place right under our noses.

You see, in order to make sense of everything around us our brain has to simplify it. Thousands of auditory, tactile and visual inputs every minute bombard us. In order to survive we have to narrow down and focus on what’s important. It’s a human trait which ensures survival and it’s been around ever since our grubby-looking ancestors were to be found running from lions in the savannah.

Our brain has to quickly categorize, file, and trash information. It sure is an efficient search and retrieval system. But in its search for efficiency the brain looks at a particular piece of information, goes and rummages around in the back and retrieves anything similar as a reference point.

The more instances of our brain coming up with such reference points, the greater our reinforcement of that particular item or topic. If we’re staring at a strange round-shaped object trying to figure out what it is, our brain searches diligently for information on round shaped objects – baseball, cricket ball, tennis ball… you get the picture. It then attempts to match those retrieved pieces of data with what we’re looking at.

The default in our brain is therefore to something which already exists, or something which looks like something which already exists. It is far easier for our brain to compute this and takes far less work.

Remember the brain is an absolute energy hog, consuming a quarter of your body’s energy even while it accounts for barely 2% of your body weight and it therefore is constantly attempting to conserve energy.

This explains why drastic, revolutionary, disruptive answers to existing problems very rarely come from existing channels or are identified by those who are embedded in the particular sector experiencing the problem.

To prove my point consider that Uber wasn’t conceived of by a taxi driver. Paypal wasn’t birthed by a banker. Airbnb wasn’t the product of hoteliers, and Instagram wasn’t the brainchild of a photographer. All have disrupted industries in their own right and yet none look remotely like the industry which they disrupt.

What Does All This Have to Do With the Dollar and Currencies?

Ask nearly anybody what will replace the mighty greenback and you’ll get a mishmash of politically inspired views. The Chinese renminbi, gold, or an SDR currency are all popular. I’m sure you’ve heard the arguments before.

I submit to you that the future of currency will be none of the above. It will not be a centralized currency. In fact, it may not be one currency at all. It will not be coercive, and it will be transacted on the blockchain and will be market driven.

The dollar will be replaced by asset transfers sitting on the blockchain protocol. This is the world’s largest distributed computing project on Earth. It’s a global payment platform which doesn’t require any centralized authority for its functionality, and it’s as close to incorruptible as anything the world’s ever seen, including Mother Theresa.

New technology is often misunderstood. Anything new and different is initially going to be misunderstood. Well-meaning critics dismiss it together with self-interested critics whose profit stream is connected in some way.

This is true of Bitcoin and its underlying architecture – the blockchain.

Ask yourself why today we use fiat currency and I think there are essentially two main reasons:

  1. We trust it long enough to hold it for periods of time, and
  2. The alternatives aren’t as liquid.

What happens when alternatives start rearing their heads and they don’t require trust. Note: I said DON’T require trust not that are trustworthy. There is a difference. Certain fiat currencies have been trustworthy for brief periods of time but the blockchain provides a trustless system. That solves the first reason why fiat currencies are used.

What happens when you add liquidity to alternatives?

The answer is that market forces take hold and the consumer makes the decision to transact based on what’s best for him. Couple that with frictionless transactions and liquidity can explode faster than Uber grabbing market share of the taxi industry.

I’ve not even mentioned the fact that you can stand in the Sahara desert and transfer an asset to Hong Kong on your smart phone for free, in seconds, and far more securely than any transaction you’ve ever conducted. I’ve not mentioned that the functions of authentication, validation, escrow and delivery are handled seamlessly and for close to zero cost.

I’ve not mentioned that the blockchain is asset agnostic. What this means, and this is important for the dollar, is that if you wish you can trade your 1965 Ford Mustang on the blockchain; and you should, because quite frankly, old cars are horrible, noisy, uncomfortable and bring down the neighborhood. I know, I’ve got a neighbour who stores a gazillion of these horrible things.

Why is this important for the dollar?

In case it isn’t obvious. A world where money is decentralized means a world where nothing you’ve ever seen before will become the new norm and the new norm is unlikely to include a scrap of paper issued by a bankrupt government.

I very much look forward to it.

-Chris

“We want a whole sequence of companies: digital title, digital media assets, digital stocks and bonds, digital crowdfunding, digital insurance. If you have online trust like the blockchain provides, you can reinvent field after field after field.” – Marc Andreessen

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