The world’s finance structure is built upon foundations that are millions of years old. The act of trade, the concept of interest and the process of buy and sell pertain to systems that the modern world has kept on inheriting. There is no evolution in it, neither is there debate, thought and contemplation about it. The only entity persistently of absolute matter is the currency. Currencies, some of which are more prominent and important than others and some that carry a diluted stature to the world financing. This extraordinary prominence, is the feature of today’s financial structure, that is based on centralization in all of its substances. This paper aims to argue over the relentless damage this centralization does, in all its natures, and focuses on to present a viable solution in the process.
Centralized currencies and authorities
Speaking of centralization of currencies, there certainly should be a deliberate mention to the centralization of authorities functioning over these very currencies. When you hear about a central currency, the immediate thought coming to mind is of the U.S. Dollar or the Euro and when there is talk of the central authorities, more appropriately to be called as monopolistic authorities, they are the governments and the banks. These entities control the entire financing of a state and thus are responsible for the wealth and well being of its people. However, a sad reality is that they have not fulfilled this responsibility to its desired border. The fiscal recession of 2008 and onward, one that still has its repercussions is just the one example where these institutions have failed to carry out their designated responsibilities and took steps against priority of long-term planning and well-being of the people. Especially, owners of the central currencies, like the USD, the American Government is going all guns blazing in its attempt to establish absolute central authority as the world’s finance power. This madness has resulted in invasions, wars and imposition of ridiculous sanctions on nations that are not even at fault.
The U.S. government has established firms like the International Monetary Fund (IMF) to provide “loans” to lesser developed countries in need and in return, they implicate near-impossible conditions on the financial and developmental structure of the country. They raise the price of buying for the USD subjected to the countries they provide aid to, in addition to the already imposed rate of interest on return. This heinous corroboration only goes on to break the financial backbone of the already troubled states and it makes them permanently reliant on American aid.
To others, they simply send in soldiers and carry out an invasion. This not only takes thousands of lives every year, but also ends up costing billions of dollars in operational costs to all parties involved. In this circumspect, we establish that this financial monopoly that has embedded itself to the core of the world financial structure should be abolished and there should be thorough revampment of the so-called pertinent financial powers.
At this point, to show how the situation has been taken out of the common man’s hands is a remark by Paul Samuelson, who aptly tells:
What we know about the global financial crisis is that we don’t know very much.
So, what can the common man do? One common man did envisage something nothing short of a revolution in 2009. His name was Satoshi Nakatomo and he is the creator of Bitcoin. Many of us do not know Bitcoin, neither have we ever heard about Satoshi but the concept he presents is one that is by all means the future of world finances. What he called Bitcoin, has now evolved into a complete eco-system that is called Cryptocurrencies.
Cryptocurrencies are a set of digital tokens and Bitcoin has come about to be the biggest of it. These digital tokens function in an absolute decentralized manner and that is the core feature about its concept. A person A, sitting in a location W, can send a person B, sitting in location P, an amount X in a matter of minutes, without having to go through the worry of banking, fees and transactional boundaries and security. Cryptocurrencies enable financial independence to just about everyone. From workers to employers, payment methods, procedures and amounts are operated digitally which not only saves time but also caters to more safety features.
Patience is key
This exact set of benefits is the reason that authorities and governments are reluctant to inculcate education about this technology and concept, because it is in direct conflict with their monopoly. Cryptos are made illegal across the world by labeling them as a source of laundering and branding them not safe enough to become means of finance. But that is all a part of general acceptance that will take its due time to commence.
Cryptocurrency expert Anthony Pompliano, who is a staunch supporter in the prospects of the space said:
It is a progression of thought.
First, they don’t believe in digital currencies. Then they fight them. Then they say there could be a role for them if state backed. Eventually they realize that Bitcoin is the answer.
Patience is key here. Everyone eventually comes around.
Another famous saying comes from Rick Falkvinge, who envisages the future prospect of cryptocurrencies. He said:
“Bitcoin will do to banks what email did to the postal industry.”
Anthony and Rick’s words come across as a call for patience to the one who believe in the space and a message to at least make belief that digital currencies will eventually take over. In some parts of the world, cryptocurrencies have become inherent as more work is being done on it to make it a complete part of finance. But widespread acceptance is yet not achieved because people do not understand how cryptocurrencies work. We will try to explain it here.
How it works
Cryptocurrencies are built on the concept of a digital ledger. This digital ledger is cited upon a blockchain. The blockchain is a very interesting concept and cryptocurrencies are its biggest application. The blockchain is a digital ledger of a kind, which stores all transactions and records taking place with digital currencies in a linked list of blocks. This set of blocks is updated as each transaction is added. But it doesn’t work this simply, the blocks to be added are verified by all users on the network and cannot be added if there is no consensus achieved that a certain transaction is valid.
For this consensus to be achieved, the validating nodes have to solve a cryptographic problem which generates a private key that is linked to the incoming block. Once a validator has verified that key, the block can be added to the blockchain and the validating node is rewarded with some more digital coins. This way, there is no danger of a hack or phishing attack as there is no time for a hacker to come in the network, reap out the linking information of the previous node as well as the incoming node, which is a requirement for the block to be added or manipulated and all this takes place in the matter of seconds and minutes.
This way, digital currencies use blockchain technology to pertain to the following key features:
- No or minimal fee
Verily, Bitcoin Jesus Roger Ver says:
“Bitcoin is the most important invention in the history of the world since the Internet.”
The biggest apprehension that cryptos are facing is of the anti-narrative set against them. People are listening to influencers whose pockets run with the corrupt financial system that they have helped establish. They speak against Bitcoin and predict for it to die out very soon. They do that because they are afraid and they see digital currencies liberating nations and people to own and control their own currencies while these bullish concepts of debt, interest and loans along with banks and finance ministries will be the actual entities to die out.
This anti-narrative can be observed from comments made by one of the world’s most-richest men and CEO of Berkshire Hathaway, Warren Buffet.
“Stay away from it. It’s a mirage, basically. In terms of cryptocurrencies, generally, I can say almost with certainty that they will come to a bad ending.”
Comments like these play with the people’s heads, and they feel as if the whole mechanism is some sort of a scam and they will falter further behind an already derailed economy if they make investments in it. This is plain wrong. The features that Bitcoin provides cannot be falsified, neither can be the problems it solves. It is a solution for the currently broken economic structure and it brings equality, transparency and accountability for everyone. Something that is clearly missing in the current financial status-quo.
While financers are busy setting an anti-narrative against the space, developers and technical gurus from all over are busy not only endorsing it, but also working further for its development.
Kim Dotcom, CEO of MegaUpload says:
“[Bitcoin] is a very exciting development, it might lead to a world currency. I think over the next decade it will grow to become one of the most important ways to pay for things and transfer assets.”
One only needs to remember that there was a time when paper currency came in to replace gold and other material forms of currency, people were as skeptical as they are now and probably more. It just needs time and a chance. Verily, this is only the beginning. The future is digital and cryptocurrencies will definitely, eventually, completely, take over.