Around six years ago, when I started working close to financial services, I quickly realized rules around money are perhaps the most important regarding determining social orders. Money is the fundamental representation of value, value is the most basic instrument of power, and power can be used to shape all social interactions. Money is social (dis)order.
Today money is mainly controlled by centralized authorities. National governments, through central banks, control money supply and determine the rules of how that money is going to be distributed in society. As such, governments take full control over ‘monetary sovereignty’ and with that they monopolize the legitimate use of any sort of power, granting themselves the right to determine the only acceptable social contract.
Governments build credibility through the monopoly of money and through such credibility they establish controls that determine the way in which most people on earth live. Most of these controls are based on the concept of identity, usually tied to nationality, or immigration status. If you are born in India, to a low-income family, or in the United States to illegal immigrant parents, your chances of having a fulfilling life are significantly lower than if you are born rich in Germany or Spain.
These barriers are sticky because there is no such thing as global mobility or universal value. The governments of the world decided that if you are born in Bangladesh, you should not have access to opportunities in Japan, and you should not have easy access to japanese yen. And if you are born in France, you should have the right to defend your position of privilege from ‘foreign threats’.
Based on the monopoly of money and identity, the government naturally fulfills a lot of critical roles for society. From law determination to law enforcement. From capital controls to rules of capital deployment. From defending property rights to providing public services. From setting trading rules to establishing border controls.
(Some) governments do a lot of good to society and act out of good faith of course. They make sure human rights are respected, try to provide for the disadvantaged, build transport and communication infrastructure, and grant access to healthcare and education. But even when acting out of good faith, they often make value judgments without fully understanding the real underlying needs of the population.
A year or so ago, I met a brilliant guy who had left his masters in computer science from a very prestigious university to work on a project that I found totally fascinating. He would forever change the way I thought about these problems.Today that guy is my business partner and that project is my full-time work. It all started when I was forced to ask myself “what happens if we can break the monopoly of money?” And later “can the underlying rules of society be changed by Bitcoin?”
I realized that, at least conceptually, Bitcoin and blockchain are technologies that can disrupt the way we organize societies fundamentally.
- Monetary sovereignty can be controlled by a decentralized network, even though CBDCs are threatening to centralize it even further pretending to be something they are not
- Identity can be built on decentralized and anonymous identity systems; being a citizen of a country you were not born in or visited could become a reality (just ask Estonia)
- Laws and law enforcement can be written and executed in code (and not only in Ethereum but also in a Lightning Network empowered Bitcoin; and not only digitally but also in the real world by connecting smart devices)
- Capital deployment can be decentralized and everyone can participate in attractive investments (ICOs failed but they are not the end of the road)
- Trade of goods and services can be truly global and frictionless (with a globally accepted asset running on a P2P network anyone, anywhere, can buy/sell goods and services at the same price)
- Job markets (at least for remote work, such a coding and designing) could become authentically global
Bitcoin is not only about money, it is about inclusion, fairness and social order. Bitcoin is not a financial innovation, it is a social one.