vacuum
23rd April 2013, 06:03 PM
Internet technology has a history of dramatically reducing capital costs associated with certain activities and enterprises, which brings wide availability to the people.
For example, today anyone can publish a book, create a video channel, set up a website, blog, online store, or get a project funded without all the overhead of inventing and maintaining these complex systems.
As the technology spreads and becomes available to anyone, the old organizations which used to be the biggest and most efficient can no longer compete because their core infastructure has become commoditiezed. For example, the music industry's distribution ability and production studios are slowly becoming commodities. Newspapers and broadcast television is no longer the only source for news.
Bitcoin is doing this to the banking industry. The system of trust, bank transfer protocols, and exchanges are becoming commodities. All that overhead isn't fundamentally needed anymore.
But I don't believe bitcoin will replace the current system as a singular competitor, because that's never what happens when entire industries become commodities.
What will happen is that anyone will be able to start a crypto currency just like anyone can now start a youtube channel - the difference being we're talking about governments and corporations rather than individual people.
All that is required is that payment for employees and raw materials be paid for in one's currency, and one accepts one's currency in exchange for whatever goods are produced.
For example, we could have usacoin in which the US government requires taxes to be paid in it, and it uses it to pay for government employees and other expenses. There could be cokecoin which Coca Cola uses to pay it's employees and expenses, and which it accepts for Coke products. There could be amazoncoin, fordcoin, etc.
The value of any one of these coins would depend on how many there are and the total gdp of whatever the sponsoring entity is.
This would solve a number of issues. The money supply would be flexible because anyone could create their own currency as needed, as long as they had something of value to offer. The issue of early adopters getting very rich simply so people could gain access to bitcoin would be solved because there would be no singular deflationary currency. The entire system would self-regulate because every unit of currency would represent some sponsoring group producing a real product. There wouldn't be an artificial need for a reserve currency simply so two producing entities could trade with one another.
Loans would no longer be needed to start new enterprises. The debt-based model would yield to the intrinsic money model based on goods, services, and credit. Investors would buy the coins early, and if a successful business is created, those coins would become much more valuable. If there is a default, assets would be liquidated and bid upon by whoever holds the coins.
Fractional reserve banking, loans with interest, debt-based money, and central monetary policy to balance money supply with economic activity would all become a thing of the past. None of that will be needed anymore for the simple reason that money will no longer be limited by monopolies, interest rates, or physical supply. Rather, it will be directly proportional to credit and economic activity.
Note that strictly speaking none of these would be currencies, but rather they would be money. Currencies could be built on top of these different reservoirs of money.
For example, today anyone can publish a book, create a video channel, set up a website, blog, online store, or get a project funded without all the overhead of inventing and maintaining these complex systems.
As the technology spreads and becomes available to anyone, the old organizations which used to be the biggest and most efficient can no longer compete because their core infastructure has become commoditiezed. For example, the music industry's distribution ability and production studios are slowly becoming commodities. Newspapers and broadcast television is no longer the only source for news.
Bitcoin is doing this to the banking industry. The system of trust, bank transfer protocols, and exchanges are becoming commodities. All that overhead isn't fundamentally needed anymore.
But I don't believe bitcoin will replace the current system as a singular competitor, because that's never what happens when entire industries become commodities.
What will happen is that anyone will be able to start a crypto currency just like anyone can now start a youtube channel - the difference being we're talking about governments and corporations rather than individual people.
All that is required is that payment for employees and raw materials be paid for in one's currency, and one accepts one's currency in exchange for whatever goods are produced.
For example, we could have usacoin in which the US government requires taxes to be paid in it, and it uses it to pay for government employees and other expenses. There could be cokecoin which Coca Cola uses to pay it's employees and expenses, and which it accepts for Coke products. There could be amazoncoin, fordcoin, etc.
The value of any one of these coins would depend on how many there are and the total gdp of whatever the sponsoring entity is.
This would solve a number of issues. The money supply would be flexible because anyone could create their own currency as needed, as long as they had something of value to offer. The issue of early adopters getting very rich simply so people could gain access to bitcoin would be solved because there would be no singular deflationary currency. The entire system would self-regulate because every unit of currency would represent some sponsoring group producing a real product. There wouldn't be an artificial need for a reserve currency simply so two producing entities could trade with one another.
Loans would no longer be needed to start new enterprises. The debt-based model would yield to the intrinsic money model based on goods, services, and credit. Investors would buy the coins early, and if a successful business is created, those coins would become much more valuable. If there is a default, assets would be liquidated and bid upon by whoever holds the coins.
Fractional reserve banking, loans with interest, debt-based money, and central monetary policy to balance money supply with economic activity would all become a thing of the past. None of that will be needed anymore for the simple reason that money will no longer be limited by monopolies, interest rates, or physical supply. Rather, it will be directly proportional to credit and economic activity.
Note that strictly speaking none of these would be currencies, but rather they would be money. Currencies could be built on top of these different reservoirs of money.