What the cryptocurrency world is really about.
In the 14th and 15th centuries, the most popular and most available book on the planet was the Bible. They were each hand crafted by a whole bunch of monks hunkered over desks using vellum, as paper wasn’t widely available. These bibles were embellished with lots of flourish and gold foil, carefully and painstakingly bound by hand. Then, around the mid 15th century some guy in Germany by the name of Gutenberg invented this thing called a printing press. Now, books could be printed at scale, on paper. Then another German by the name of Martin Luther had this idea that many bibles could be printed at once and thus given to a whole lot more people. The Catholic church was rather bothered by this. But Luther went ahead and shortly thereafter, we had the Protestant Reformation. So, what does this have to do with cryptocurrency?
The first thing that comes to mind when we hear and read about cryptocurrencies is that it’s a bunch of people trying to make a lot of money and become very rich through coin mining. Many will also think of scams, ransomware and blackmail and a Wild West environment. This is true, but there are also, as with any technologies, good things about cryptocurrency. Today, the world of crypto is quite new. It is unregulated, which to some is the whole idea anyway. Eventually however, crypto will become regulated as governments and financial institutions begin to embrace it.
But this isn’t what cryptocurrency is really about. What it represents is something very human. It is also the first global example of what I term as Digital Social Cognition. It spins out of what is known as group cognition, where groups of three people or more, working asynchronously to achieve a task or project. In this case however, it is not just achieving a project it is achieving societal or cultural change.
Just as Martin Luther saw an opportunity to change society’s thinking about organised religion and foster massive social change, so are those who see crypto as a way to change society’s approach to thinking about and creating wealth. Protestants were fed up with the controls that Catholicism exerted over religion and wanted change. Catholicism dictated that people could only connect to God via priests and the church. Lutherism sad anyone could connect to God. This was a huge shift in societal thinking in religious terms. Cryptocurrency is forcing a huge change in financial systems.
The global system of finance has become so complex and difficult to understand and much like the Catholic church of the 15th century, inaccessible to the majority of people. Throughout human history, when inequality in wealth combines with systemic complexity, the underrepresented will tend to come together to force change.
Another driving factor behind the adoption of and drive for acceptance of cryptocurrencies is our global connectivity and massive migrations of the past decade. As people leave underdeveloped nations or nations torn apart by civil and regional conflict, these migrants that move to developed nations send money back to their families in their country of origin. This is known as remittances and in 2019, the estimate is that diaspora sent upwards of $554 Billion back to their country of origin. Moving money around the world is easier today than it was, but for many, who live on the margins of the economy, it is also expensive. But as cryptocurrencies are decentralized and easily available and instant, they offer these social groups an easier way to move funds, often cutting out the middle-man such as Western Union, who take hefty fees along the way.
Cryptocurrency is the result of Digital Social Cognition. People who’ve come together to fix what is seen as a major societal issue because of a lack of trust of an existing system. It’s really about reclaiming human collective and organizing in new ways. It’s decentralized and is an expression of dislike of the modern capitalist system that doesn’t deliver products to humans just as modern BigAg doesn’t deliver food. They deliver shareholders value. The role of the modern global financial system is to deliver profits to shareholders, not money to those who need it.
Some technology startups have also deployed mechanisms such as Initial Coin Offerings (ICO’s) to raise capital to bring their business to market. This is because finding seed capital is difficult and there is huge distrust of Venture Capitalists who’s objective is not to benefit the startup, but to return value to their shareholders.
How this will play out in the long term is anyones guess. For now, it will remain a Wild West, but it is changing. Cryptocurrency is a form of protest, but rather than just collectively yelling at institutions and writing letters, it is solving the problem through the application of technology.
