I was partially mad and partially confused when I first got into BTC as it was all hyped up as this super-secret untraceable media of currency and when I went to put my money in, the first thing I noticed is that almost every single site required a SSN, name, address and time to verify that info.
I also realized that the blockchain, by design, makes every transaction and btc wallet/holding completely transparent.
But then I thought about it and realized that that is the beauty and the future. That we’ll be completely okay with this transparency so long as people don’t link it to individuals. It’s as much of an open-source checks & balance as any system can have.
Still, I don’t think BTC is the future. Too many flaws in my book, specifically about the scarcity of the media. I think that BTC is the doorway to the future. The real currency of the future will have the redundancy and transparency and the secure coding of BTC, but it won’t release coins solely based on time and it won’t have a limited number of coins. It will manufacture coins based on the actual demand. It will be able to tape into the internet, check all the markets and demands and interest rates and consumption rates and birth rates and death rates and compute exactly how much currency there is a demand for.
The one thing that I’ve been thinking about a lot is how banking in a bitcoin or cryptocurrency world would work. Specifically working with currency that has a set volume that can’t be changed, as BTC does.
I got to thinking that in order to have banking with lending and interest, that the value of the future currency won’t be based on just how much of something it can be exchanged for, it will require something else as well. I’m sort of working out my ideas on the fly here, so walk with me, if you will. Perhaps it will be based on a value-added system. Where there is a time-based calculation that figures out how much value a single coin can buy today and that sets the actual value of the coin. For example, let’s say today a glass of a drink can quench your thirst, but we engineer it so that it takes half as much product to quench your thirst, the coins value will adjust accordingly so that it still costs you the same amount to get the same amount of nutrients.
Why is this important? For making loans and such. This is more if BTC becomes and remains the main currency. Since there is a limited supply, banking with interest is impossible. But banks or lenders would still like to profit for their services and borrowers or creditors would like to also make a return. So if I lend you 1 coin today I can’t just get paid a single coin back unless that single coin buys me more. If that coin buys the same or less than when I lent it, I lost out. So the value of the coin get’s pegged to the value of commodities and this changes the entire idea of banking.
Now, you can borrow coins and if what you create makes the world that much better (say you improved the rate of tomato production by inventing a machine with the coins you borrowed) the value of each coin increased while you held it and now you don’t have to pay back the same number of coins, you only have to pay back the same value. So let’s say the baseline was 100BTV (Bitcoin Value) when you borrowed and today it’s 107BTV and you had borrowed 100 physical coins and the rate you borrowed at was 2BTV. You now only have to pay back 102BTV worth of coins, which in physical BTC coin is less than you had borrowed. So, even though the bank got less physical BTC, they got more BTV and they actually hold more purchasing power and you, in turn, paid back what you borrowed in full and still got to keep something as profit.
It’s an odd way of looking at things and this notion of a system is still rugged and has holes, many of them, but it’s something I’ve been trying to mentally work through just to see how banking in the future might look and how it might work to still allow for capital exchange to take place or at least allow for some incentive for those exchanges to take place.
After all the greatest accomplishment of capitalism isn’t that it allowed people who weren’t born into money to acquire it, that’s the side effect. The greatest accomplishment of capitalism is that it makes it possible and even enticing for people to pool ideas, capital, assets or whatever to create this synergy or development and progress. It allows people to come together and create things that not only seemed impossible on their own be were nearly inconceivable.
I think it’s important that we maintain those capabilities in the future, regardless of the currency or government that we live with.