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Once upon a bit, back in the nineties,
Dial-up internet? Xennials liked this
w times 3, though static and slow,
compared to the library, ’twas rock ‘n’ roll!
Ask Jeeves was TikTok, we surfed for info,
chat crazy for facts, whatever, you know?
Fast-forward, iPhone, Mother Smartphone,
giving birth to apps and web on the roam.
An era online, now known as ‘the cloud’,
Web 2.0 reigned and Lords over now;
but behind screens, brains have been building
systems back better than data-stealing
Zuckerberg’s Facebook; look at the twins:
instead of losing, they doubled their wins.
Crypto investing, building attention,
helping pioneer decentralisation,
more freedom promised: a future indeed,
‘cos web3 point oh! a system conceived:
to tackle the greed of bankers, elites;
and take back control from those who mislead.
Truth is our weapon, the blockchain our steed.
Fairer play coded. But will you believe?
Once upon a bit,
back in the nineties,
Dial-up internet,
Xennials liked this
w times 3,
though static and slow,
compared to the library,
’twas rock ‘n’ roll!
Ask Jeeves was TikTok,
we surfed for info,
chat crazy for facts,
whatever, you know?
Fast-forward, iPhone,
Mother Smartphone,
giving birth to apps
and web on the roam.
An era online,
now known as ‘the cloud’,
Web 2.0 reigned,
and Lords over now;
but behind screens,
brains have been building
systems back better
than data-stealing
Zuckerberg’s Facebook;
look at the twins:
instead of losing,
they doubled their wins.
Crypto investing,
building attention,
helping pioneer
decentralisation,
more freedom promised:
a future indeed
‘cos web3 point oh!
a system conceived:
to tackle the greed
of bankers, elites;
and take back control
from those who mislead.
Truth is our weapon,
the blockchain our steed.
Fairer play coded.
But will you believe?
Blockchain technology promises to revolutionise almost every facet of society, industry and commerce. To understand how this new technology is being programmed to build a better tomorrow, we need to recognise the problems our current systems have failed to resolve. Despite individuals and nations becoming increasingly divided along lines of politics and nationality, most would likely agree the status quo of a minority profiteering at the expense of the majority and planet is unsustainable and unethical.
For the promise of blockchain technology to materialise, we need to up our game with smarter thinking to fell the Goliath of centralised money creation.
“Money is a good servant,
a dangerous master.”
Francis Bacon
Money is what we use to buy and sell goods and services. Whether it’s cash (notes and coins), cheques, debit/credit cards, or wire transfers, money acts as a medium of exchange between trading parties.
Money is a store of value, such as our labour and potential. For example, society values the work of a teacher, who transfers the energy (labour) they invested in their planning and lesson delivery into the curious minds that will potentially become tomorrow’s educators, scientists and thought leaders. Monkey see, monkey do. We rely on money having a consistent value to ensure the work we get paid for today is worth the same when we spend it tomorrow. Next month. And, ideally, by the time monkey does. In a nutshell, money transfers energy (work) and its associated value from the present to the future. Money has value because we believe it stores the fruits of our labour over long periods of time. Gen-X, Y and Z.
Just as our work differs from person to person, so does what we value. Some people prefer apples, whilst others prefer oranges. Depending on how many apples and oranges are available (supply), and how many people want them (demand), determines their price (value). The fewer apples and oranges there are (scarcity), the more valuable (expensive) they become. By the same logic, printing more dollars ($), pounds (£) or euros (€) makes them worth less. Some might argue they’re becoming worthless in the age of quantitative easing aka money printers go brrr! This devaluing of currencies is caused by printing money more quickly than the rest of the economy is growing, meaning your money becomes less valuable simply because there’s more of it sloshing around society, chasing the same amount of goods and services. This leads to inflation and, in the worst cases, hyperinflation.
“He who tampers with the currency, robs labour of its bread.”
(And apples and oranges.)
Daniel Webster
US Sec. of State (1841-43; 50-52)
Historically, people have used various items to act as a medium of exchange, such as a bushel of wheat, salt (hence, salary), whale teeth, seashells, coins, and precious metals (silver and gold). European countries and the US began backing their currencies with gold in the 19th century, creating what came to be known as the Gold Standard. The US valued an ounce of gold at nearly $21 in 1834, and $33 by 1933; highlighting the reduced purchasing power of the dollar over 100 years. In 1933, the US nationalised ownership of gold, making it illegal for private citizens to own the yellow metal.
Nations, however, continued to cash their US dollars (USD) for gold at a rate of $33/ounce, which increased to $35 by 1970. France calculated the US was printing more money than it had gold reserves to back those bits of paper with pictures of dead US Presidents. Alive French Presidents, Charles de Gaulle and then Pompidou, continued to cash in France’s USD reserves for gold until 15th August 1971, when President Nixon declared he was suspending the convertibility of US dollars into gold. This became known as the Nixon Shock.
This led to all currencies, which had been pegged to the dollar (and, indirectly, gold), becoming fiat currency overnight, meaning they were no longer backed by any tangible asset but, unbelievably, the word of politicians. Technically, the confidence people put in their national governments, and, by extension, the confidence national governments had in foreign governments to repay their debts. Global currencies were now worth nothing more than the confidence we had in the promises made by the ruling political class, which – regardless of country or political persuasion; one might confidently argue – universally translates to something Pinocchio is infamous for.
In the wake of the Nixon Shock, the dollar devalued as it became clear the US had truly printed more dollars than it could back with gold. To counter the dollar’s waning power and influence, the US Secretary of State, Henry Kissinger, brokered a deal in 1974 with Saudi Arabia, the world’s largest producer of oil, to influence OPEC to sell oil only in US dollars. This meant every country in the world now needed dollars to finance the purchasing of black gold. The world went from a fairer monetary system pegged to (but, from the US perspective, weighed down by) gold to one fuelled by oil. This was the birth of the Petrodollar.
Humanity’s need/addiction to black gold meant the new petrodollar system created a huge demand for dollars, which not only further hooked the world to the dollar as the global reserve currency but rocketed the dollar into the stratosphere in terms of power and control. Since then, the US has defended what it perceives as attacks on their power and control. Iraq 2003? The reality is the US went to war with Iraq not because of WMDs (weapons of mass destruction) but because in 2000, Saddam Hussein switched sales of Iraqi oil from dollars to euros. One theory is his decision was a political statement against American Imperialism and weaponisation of the dollar (through the use of sanctions), as the move was expected to cost Iraq millions in lost revenue. However, in late 2001, the dollar depreciated 17% against the euro, and the decision proved extremely profitable for Iraq. However, following Saddam’s defeat, sales of oil were converted back to dollars, despite the fact it wasn’t in the best financial interests of the Iraqi people. And the story spun by the Allies (voiced by liars, George W. Bush and Tony Blair) that they were there to liberate, not conquer.
As uncomfortable as it might be to some readers, the more likely reason terrorists target Western nations has little to do with defeating enemies of Islam but rather a reaction to the monumental abuse of power, particularly by the US, in effectively stealing a country’s most valuable resource and, thus, robbing its people of prosperity and causing them to fight over scraps to survive. Desperate people…
The US, having successfully supercharged the dollar as the world reserve currency, is also the champion of the debt-based monetary system. Whenever a borrower takes out a loan or a mortgage, the money isn’t necessarily borrowed from the deposits made by savers. Instead, banks literally create new money out of thin air and add it as an asset to its balance sheet, which is actually a debt (liability) to be paid back in the future by the borrower. Hence, debt-based money. The creation of new money and debt is a feature of fractional-reserve banking, a system which also allows a bank to legally lend out 90% of deposits as loans; keeping a fractional reserve of just 10% in the bank. Hence, you get the picture.
The US, the world’s largest economy, finds itself in a collective debt to the tune of $36 TRILLION. Historically, the way governments have tried to deal with such huge debts is to inflate the supply of the currency (print more money), which makes the debt worth less. Inflation rewards behaviour which spends more than is earned, and punishes those who are financially responsible. This type of monetary policy means the national currency will become worth less over time and, eventually, worthless.
If all depositors attempt to withdraw their bank savings (usually due to a loss of confidence), a bank run occurs. In 2007, Northern Rock experienced the first run on a British bank in almost 150 years. News stories showed queues of people lining up to withdraw their life savings, which many lost.
In 2008, the sub-prime mortgage crisis hit the US and collapsed huge investment banks, such as Bear Stearns and Lehman Brothers. What came to be known as the ‘credit-crunch’, almost led to the entire collapse of the world financial system. ‘The Big Short’ brought the story to the big screen. The problem is the debt is now even larger, so the sequel will need a bigger screen. All the world’s a stage but most of us are silent characters, who didn’t read the script.
Governments deemed certain banks and organisations ‘too big too fail’, and bailed out banks and corporations. Politicians financed (private) corporate losses with (public) taxes, meaning the consequences of risky behaviour by private companies would be paid for by the general public, who were outraged that rewards were privatised but risks socialised; especially as no bankers were jailed for their greedy antics.
Sometimes, instead of trying to fix a broken system, we have to build a fairer one that will reward responsible, rather than greedy, behaviour. One that will elevate, rather than suppress, the poorest people and nations. Otherwise, the madness will get crazier and inequality more outrageous.
In 2009, Bitcoin became the first real-world application built on blockchain technology invented 18 years earlier in 1991 by Stuart Haber & W. Scott Stornetta. They wanted to create a transparent record of transactions, which would be tamperproof because they would be digitally timestamped to prove a particular version existed at a specific point in time. Records could be updated but it would show as a newer version at a later date. The original and all previous versions would still exist on the blockchain. The system created a chronological list of events and all subsequent changes. This was an elegant solution for financial transactions, legal documentation and any other area which would require proof of a particular truth at a certain point in time.
Bitcoin created a trust-based peer-to-peer (P2P) decentralised payment system using cryptography to secure its blockchain network, hence: cryptocurrency. This technology doesn’t need middlemen, meaning users are their own bank. Despite this financial revolution, it is yet to dawn on the masses. The largest US bank, JP Morgan, whose CEO (Jamie Dimon) called Bitcoin a fraud in 2017, started offering clients crypto-related financial services in 2021. If you can’t beat ‘em…
2008’s Great Recession was the great reason for Bitcoin’s creation. Creator, Satoshi Nakamoto, wrote a message in the first (Genesis) block: “Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Although the identity of the Bitcoin creator, Satoshi Nakamoto, is a mystery, one thing is certain: it was created as a digital form of money that could neither be controlled nor corrupted by governments or central banks. The genius was creating a digital store of value with the same properties as physical gold: there is a finite supply (21 million Bitcoins); blocks needs to be mined (this is known as minting: converting electrical energy consumption – proof of work – into the next block), which acts as a store of wealth (yes, Bitcoin’s value is volatile but that’s because it is still considered a new asset class and is in price-discovery mode, so will become less volatile as adoption increases); the rate of inflation (new blocks mined each year) is about 2%; and people believe in it. This is what makes it digital gold. Unlike physical gold, however, it’s easy to move across borders because it’s encrypted on a device, which can afford a customary glance.
The threat from Bitcoin to the status quo of money creation controlled by governments and central banks is the reason why, in the summer of 2021, China made it illegal to mine Bitcoin. The Chinese Communist Party (CCP) saw it as a threat to their CBDC (Central Bank Digital Currency), the Digital Yuan. So, what happened to the miners? They packed up their rigs and left for crypto-friendly countries, such as Kazakhstan, the US, and El Salvador.
El Salvador (The Saviour) became the world’s first nation to adopt Bitcoin as legal tender. In response to concerns about Bitcoin’s proof-of-work mining consuming more energy than some countries, President Bukele stated the cryptocurrency would be mined using renewable geothermal energy from the country’s volcanoes. Perhaps, the Second Coming will be a decentralised eruption, spreading incorruptible truth.
Blockchain 1.0 was Bitcoin (BTC) but it is slow to process transactions and offers little utility, other than being a digital store of value and a peer-to-peer payment system. It is built upon proof-of-work (PoW), requiring computers to mine the next block by completing mathematical puzzles which increase/decrease in difficulty, depending on the number of miners. The value comes from the energy consumed to mine new blocks and maintain the network, which has caused controversy due to the alleged damage it causes the environment.
Blockchain 2.0 is Ethereum (ETH), which introduced the world to smart contracts and created a platform for third parties to build decentralised apps (dApps). Originally built on a proof-of-work model – which causes problems with scalability (not ideal when building a global supercomputer) and high gas fees (network transaction costs) – it transitioned to a proof-of-stake consensus in 2022, drastically reducing gas fees and energy consumption and, therefore, the detrimental effect on the environment. However, this transition has not been without problems and Ethereum is now borrowing ideas from Cardano…
Blockchain 3.0 are proof-of-stake networks, such as Cardano (ADA), which consumes 99% less energy than Bitcoin and is considerably faster than PoW networks. Like Ethereum, Cardano allows 3rd parties to create smart contracts and build dApps. Whilst Cardano has been criticised for being slow in its approach, this is due to its measure twice, cut once philosophy. When comparing Cardano and Ethereum, some draw parallels with the tortoise and the hare. Some argue there’s room for both to be winners. In reality, there’s likely to be many, just like the current web2 world of Microsoft, Apple, Google, and Amazon, which all offer similar services and products, and compete for market share with each other.
Evolution evolves a revolution
nx generation implements solutions
gifted to the future
whose children dream past designs
walk new paths & hope truth to find
to learn their mind
and mind their teachings
a conscious revelation reaching.
Bitcoin inspired an entire industry based on blockchain technology. Altcoins, disparagingly referred to as sh¡tcoins (and there are many), refers to all other crypto tokens, which numbers 14,000+. Potentially, a big pile of 💩
However, as the technology has evolved, more and more projects have been created to address real-world problems. Bitcoin (BTC) seeks to address the inherent unfairness of the global monetary system, and other networks like Ripple (XRP) have created near-instant cross-border payment solutions, minus the extortionate fees associated with international bank transactions. XRP finally won its case against the SEC in July 2023 (a case in litigation since 2020) after successfully arguing XRP wasn’t a security.
The SEC now has three other cryptocurrencies in their sights: Cardano, Solana, and Polygon. Cardano, led by Input-Output Global, has rejected the SEC’s claim that ADA is a security by responding to the SEC complaints, saying: “Under no circumstances is ADA a security under U.S. securities laws. It never has been.”
It’s not just about the financial system. Decentralised blockchains will disrupt (and improve) Supply Chain Management, Data Management, Insurance, Data Storage, Charity, Voting, Governance, Health, and Energy Management.
One particularly promising project is the Energy Web Foundation’s Energy Web Token (EWT), which is building a decentralised energy grid, allowing energy producers of all sizes to trade with any customer, anywhere. It will help speed up the adoption of renewable energies and address problems such as greenwashing (selling green tariffs to consumers, even when some of the energy comes from fossil fuels). As of Autumn 2021, the current energy price crisis (known as the EFFing Crisis in the UK) may lead to government crackdowns on the vast energy use of Bitcoin mining, whilst potentially encouraging further investment in greener blockchain technology solutions.
Another promising project that is music to our ears is Audius, engineered to rebalance the music industry’s greedy problem of streaming platforms stealing the lion’s share of profits, instead of sharing them fairly with the musicians. In every industry where centralisation is the soundtrack, tinnitus is the score.
Blockchain technology has unleashed a wave of innovation, similar to the World Wide Web (www) dot.com boom, and the smartphone and app revolution called up by the iPhone. Decentralised blockchains are building a fairer internet, which will reshape companies, industries and societies. It promises to bank the unbanked and connect the unconnected (like World Mobile).
If the current madness and division is to end, we have to start building a better system. If you believe the current financial and political systems of the world are no longer fit for purpose, what instead will you choose to believe?
Perhaps, it’s believing in an incorruptible and trust-based technology built by some of the smartest minds to benefit the majority and the planet. If you believe a fairer system is possible; believing decentralised blockchain technology might be a part of the solution isn’t as crazy as some would have you believe.
“Insanity is doing the same thing over & over and expecting different results”
Attributed to Albert Einstein
Here’s a glossary of the key terms mentioned and is intended for those unfamiliar with blockchain technology or financial concepts:
Blockchain: A decentralised digital ledger that records transactions across many computers in such a way that the registered transactions cannot be altered retroactively. This technology is the foundation of cryptocurrency.
Cryptocurrency: Digital or virtual currency secured by cryptography, making it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralised networks based on blockchain technology.
Decentralisation: Involves shifting control and decision-making from centralised entities, such as governments and central banks, to distributed networks. This shift aims to redistribute power from a few small, yet powerful, entities to a wider group that is currently disenfranchised, thereby digitising democracy and fostering a more equitable distribution of power and influence across global society.
Proof of Work (PoW): A consensus mechanism requiring a participant in the network to expend effort solving an arbitrary mathematical puzzle to prevent frivolous or malicious uses of computing power. Bitcoin uses PoW.
Proof of Stake (PoS): An alternative to proof of work, where a person can mine or validate block transactions according to how many coins they hold, thus potentially reducing the energy consumption associated with mining. Cardano uses PoS.
Smart Contracts: Self-executing contracts with the terms of agreement (TOAs) written directly into the code, and used on blockchains like Ethereum to automate transactions, without the need for intermediaries.
Fiat Currency: Money that a government has declared to be legal tender, but it is not backed by a physical commodity. Its value comes from the relationship between supply and demand, rather than the value of the material from which the money is made.
Quantitative Easing: A monetary policy whereby a central bank buys government bonds or other financial assets to inject money into the economy to expand economic activity.
Hyperinflation: An extremely high and typically accelerating inflation rate. It quickly erodes the value of the currency, as all prices increase rapidly.
The Gold Standard: A monetary system where a country’s currency or paper money has a value directly linked to gold. Countries on the gold standard exchange paper money for a fixed amount of gold.
The Petrodollar: Refers to U.S. dollars being the global currency for the transaction of oil worldwide, which strengthens the dollar’s dominance in the global economy.
Central Bank Digital Currency (CBDC): A digital form of central bank money that is different from balances in traditional reserve or settlement accounts. Governments spin benefits like financial inclusion and making payment systems more efficient. However, CBDCs, due to their centralised nature, are the antithesis of decentralised blockchains, potentially granting governments unprecedented control over financial systems and people.
2 responses
Hi James – I’m possibly the least well qualified to comment on your piece, particularly as I still carry actual cash and prefer to use this in preference to any form of electronic transaction. Indeed, if a client offered to pay for my services in anything other than cash (generally received via BACS transfer to my traditional bank account) I would break a sweat, and I have absolutely no concept of paying for goods & services in any other way. Regarding the actual text, I confess that much of this is very new to me, hence a glossary might be helpful, and whilst you have endeavoured to enlighten us, the section on R/Evolution baffled me. Finally, I assumed the reference to fiat was in fact a typo relating to affordable Italian cars…..sorry!
To conclude, and in a vain attempt to preserve my reputation as a ‘modern kinda guy’ might I suggest that you invite my 38yr old nephew to comment – I suspect he might have more constructive observations!! Best wishes, Daniel
Hi Daniel.
Thank you for taking the time to read the article. I really appreciate your feedback.
As for fiat making you think of the Italians, maybe we should let them rebuild the financial system, given their successes in manufacturing cars and football teams!
As for being a lover of cash, you’re clearly a C.R.E.A.M man (Wu Tang, not Eric Clapton!) Therefore, you’ve successfully preserved your ‘modern kinda guy’ reputation 😉