It’s funny how we divide politically but agree on the same subjects.
Today’s digital money easier than ever to use, but it almost is exclusively owned and operated by corporate entities. Large banks and Big Tech (Cashapp, Venmo, Square) control the rapidly growing digital money space. It seems so easy though, with a smartphone you don’t have to carry a bulky wallet anymore. Practically every store has a POS system for taking credit card or debit payments and some business refuse to take coins and bills due to the extra cost of storing, transferring, and counting.
I’ve always felt the overreach of the state with digital money. The government is partnering with Big Tech and Big Banks to create “Total Information Awareness.” Post 9/11 intrusions to our digital selfs are ubiquitous and wide spread at this point. And we don’t really seem to care or demand better consumer privacy.
Digital money forces us to ask key questions of our relationship with the state and private businesses. Do we as a society want to turn over our entire digital money existence to a private group of multi-national corporations who have their shareholder value first? What does it say when a company like FTX goes under while in effect acting like a modern bank? Should entities or persons be frozen and kicked off platforms for holding politically distasteful opinions? Can we trust multiple large organizations to keep our data safe and not fall to hacking attacks?
A couple of weeks back I came across Cloudmoney: Cash, Cards, Crypto, and the War for Our Wallets, by author Brett Scott, and immediately bought a copy. My work here at Flywheel has looked deep into the digital money space and seen potential cracks that could harm our economies.
In crypto, it’s the rising dominance of centralized stablecoins, USDC & USDT, which provide a regulatory backdoor into immutable, censorship resistant networks. Additionally, this says nothing of their business model which render them bank-like through the issuance of cash liabilities.
In reply we wonder, “But what about the simplicity and peg tightness of USDC? It’s so good. Why should I use a different stable with lower liquidity? How do I bridge the gap between TradFi and DeFi?” Stables attract demand in crypto due to their perceived safety and ability to be redeemed. They just work for most everyone.
Bitcoin as “digital cash” in its early years was supposed to replace any need for bank/corporate money. The panacea to Big Banking’s contagion. A refusal of Big Tech. Bitcoin has and continues to finding “mass adoption” by rarely being used as a payment method.
When 1’s & 0’s flow through digital economic rails as money, there will always be some or all concession to the state. Our footprint is pervasive, grows exponentially and is insatiable for more data. Like a water jug that overflows faster as its drained, torrenting waves of data are caught, saved, and eternally analyzed no matter the network. Crypto may sever the chain of custody for OpSec demanding transactions, but a typical user journey starts and ends with a Centralized exchange.
The only place we can find true immutable, censorship resistant privacy is with good-old greenbacks. Paper notes and coin bullion are “checks on the balance of power” as Brett Scott describes. Cash needs to exist to keep Big Banking and Tech’s power at bay. Cash isn’t a replacement for digital money, rather is a bastion of personal freedom, the core thesis of our liberal societies. Newer variants of the 10,000 year old invention are weakened in some respect when copper wires transmit value.
Cloudmoney is at its core, a call for open, transparent discussion on the role of the state and businesses in our lives. Its stories provide view into the mechanisms of modern money, finance and the power derived from those who control it. His use of metaphors humanizes many of the opaque technical concepts like blockchain, proof of work consensus, Ethereum and stablecoins.
I hope you enjoy the interview and pick up a copy of his book. I really enjoyed it and recommend it to anyone interested in learning more about the One-type-of-money belief and its economic consequences.