Bitcoin

Is it time to end the monopoly of the Nation States over money?

Imagine you are living in Spain in 1630. Back then, State and Religion are intertwined. Catholicism is the state religion. You can either convert to it or die. The Church has official truths. For instance, that the Sun revolves around Earth.

If you disagree with the status Quo, you are an heretic. If you are an heretic you are subject to the Holy Inquisition, performed by the Institution of the Catholic Church.

Galileu Before the Holy Office

Heretics could either publicly retract what they said, like Galileu did, or could die by their beliefs, like Giordano Bruno did.

It took centuries, and generations of reformists to separate State from Religion. And, thanks God, our institutions evolved.

Is it time to end the monopoly of the Nation States over money?
Is it time to end the monopoly of the Nation States over money?

But imagine you are a good citizen of the spanish empire in 1630 and someone said that State and Religion are better of separate. What would be your reaction?

Well, it is 2017, and I will make a similarly controversial affirmation:

State and Money should not go together. For the good of the citizens, State and Money are better off separate.

For centuries we relied on a family (institutions) to protect our money: The State (the Big Brother) to print and control the supply of the officialcurrency, and Banks (the sisters) to store it for us and make sure we do not spend it twice.

However, very often this family do not have our best interest at heart. For example, the State can print too much money, which means the money in your pocket is worth less over time. This is the case of Venezuela today. Take a look at what the State did in Venezuela by managing its currency irresponsibly:

https://medium.com/media/5412d85633dcd624a6f13b6fb4066da0/href

The little sisters greatly benefit from this arrangement. This video explains how banks in fact create money by means of the Money Multiplier effect.

https://medium.com/media/d08646c9e9774e6fa9429e30a5a5fa46/href

Simply put: “If you print money, it is called counterfeiting. If the banks do it, it is called “Increasing the money supply.”

We did not have any say in this arrangement. As said by [1]Rosseau, this is the “Social Contract” in which we are born into. We give up a little of our liberty to gain the security that the State will protect us (and our money) from ourselves. But there is a question that is older and even more relevant today: [2]“Who guards the guardians?”

Money is a social construct. It has value as long as people believe it has value. First, money was grains, then it was salt, then it was gold, then it was paper backed by gold, then it was just paper issued by States, AKA fiat currencies.

And we did not have any alternative to fiat currencies and the bankingsystem until Satoshi Nakamoto published the [3]Bitcoin Whitepaper.

Bitcoin and its underlying technology, the Blockchain opened the Pandoratoshi box. Instead of trusting the state, we can now trust the code and cryptography. And because of that, modern thinkers like Don Tapscott are inviting us to think: [4] “Is it not time for a new social contract?”

Here is an heretic thought: What will happen if we take away the monopoly of the Nation States over money?

These are my thoughts:

(a) Free Competition creates efficiency: There will be different forms of money which will serve different functions. For example, as of today, Bitcoin Core is the best store of value, while bitcoin cash is the best means of payment. The fact that there are options and that I can freely choose in which currency to hold my value is good for me. The best currencies will appreciate in value, while the worst will fade away.

(b) Total transparency of public funds: Take a look at this picture:

These are boxes and bags full of brazilian Reais in an apartament which belongs to a politician connected to Brazil´s president. I would love to know the path of the tax reais I paid from my pockets until ending up in those boxes. Total transparency on public funds is another benefit which can be achieved if the money we give to public organizations or to governments through our taxes is stored in a public blockchaincurrency. The Aragon Network has a very interesting transparency tool in this page: [5] https://transparency.aragon.one/#/ Imagine if Government funds were run in the same way?

I do not expect the end of the monopoly of the Nation States over money to end soon, nor the Big Brother and the sisters will let go of their power easily.

Therefore, the transition torwards a worldpost-fiat currencies will not be easy. There will be many problems and unforeseen circunstances as we write the new social contract of the world we want to live in.

I am glad they are not burning people on fires anymore. And to my fellow cryptoenthusiasts, I leave this poem:

[1] https://en.wikipedia.org/wiki/Social_contract[2] https://en.wikipedia.org/wiki/Quis_custodiet_ipsos_custodes%3F[3] https://bitcoin.org/bitcoin.pdf[4] http://dontapscott.com/wp-content/uploads/New-Social-Contract-May-10-2017.pdf[5] https://transparency.aragon.one/#/


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