Over centuries systems of exchange have evolved and right now we are at the ‘money’ stage, which has been around for some time. However, I’m not alone in thinking that fiat currencies won’t rule the roost forever. Chris Herd poses some interesting questions to think about in his article” Why cryptocurrency is the Next Operating System for Capitalism,” and he starts by suggesting that although traditionalists cling on the concept of cold, hard cash, it might disappear faster than they think.
The significance of a cashless society
We are almost at the point of becoming a cashless society for a start. More people than ever do not carry cash. Herd says, “I can count on one hand the number of times I have had cash in my wallet in the last 3 years. Paper cash and metallic coins are prehistoric.” This is true for many people, especially in larger cities. To some extent how ‘cashless’ you can be does depend on where you live; it’s a lot more difficult to rely on plastic in rural areas.
That brings us to cryptocurrency as a means of exchange. When the utility of notes and coins in your pocket decreases, it will be replaced by something the majority agree is more efficient. Herd argues that while the traditionalists shout that crypto is a ‘bubble’, he argues that fiat money is also a ‘bubble’, because as we know it is not backed by anything: “its price being entirely independent and it’s valuation contingent on what we collectively believe it to be ,” as he says.
If we stopped believing in the value Euros, pounds and dollars etc tomorrow, what would they be worth? With money we are in the land of ‘trust and belief’.
Loss of trust in governments
Herd writes, “Money is, and has been for the last 30 years, an intellectual construct centred on humanities trust in Governance.” And he correctly points out that right now, our trust in governments is at an all time low. And we have a solution to our loss of trust in them — a decentralised operating system.
Herd points us to the example of Venezuela, a country in deep financial and political distress. Bitcoin has enabled its citizens to have an alternative to the crippling inflation. They have an escape route from the government monetary policy.
Herd also argues that cryptocurrency can free us from government-imposed austerity measures, which plague a number of countries. As he says, the people who caused financial collapse are rarely punished for it; as we’ve seen Wall Street bankers are Teflon coated.
Crypto will destroy fiat?
What he believes we will see, and it’s a credible argument, is that Bitcoin and Ethereum will destroy fiat money and banks as well in the same way that Amazon has decimated the high street retailers and Facebook destroyed MySpace.
He admits that capitalism isn’t going anywhere, but states: “Cryptocurrency is simply a more efficient vessel which allows for its manifest destiny to be realised.”
It’s a compelling argument in my opinion, but what do you think?