Decentralized Money Is the Future. Just Ask Al Gore

Decentralized Money Is the Future. Just Ask Al Gore
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Everyone knows the joke about how it was Al Gore who invented the internet. The former Vice President and Senator said as much in a March 1999 interview with CNN’s Wolf Blitzer. Ramping up to launch his own campaign for the Democratic nomination for President, the would-be candidate was eager to tout his own contributions. To Wolf, Gore bragged:

“During my service in the United States Congress, I took the initiative in creating the Internet. I took the initiative in moving forward a whole range of initiatives that have proven to be important to our country's economic growth and environmental protection, improvements in our educational system.”

Even for a politician, it was more than a little brazen; thus, the ongoing folklore at his expense. In fairness, however, the guy was lightyears ahead of pretty much everyone else. He had been talking about the “information superhighway” for decades by then. Yes, decades.

No less than Newt Gingrich, his and President Clinton’s one-time Congressional nemesis, would later admit that though Gore hadn’t been the internet’s father, he sure had been “the person who, in the Congress, most systematically worked to make sure that we got to an Internet, and the truth is -- and I worked with him starting in 1978 [in Congress] - the fact is, in the Clinton administration, the world we had talked about in the eighties began to actually happen.”

The technological revolution centered on communication is proving to be one of those pivotal moments in human history; one that, like the introduction of the printing press, has the potential to unlock enormous advance – beyond merely the proliferation of cat videos, obviously.

The contribution of the modern printing press is a testament to the unrivaled power of decentralization. Though Chinese and Korean religious scholars had experimented with movable type for centuries, it took a German guy named Johannes Gutenberg to advance the process sufficiently – at the right time and in the right places – for its true capacities to be released to stunning effect.

Knowledge is power and for the first time knowledge came to be more widely available to the traditionally powerless. Around the year 1300, the largest library in Europe was in Paris which contained all of 300 expensive, hand-drawn manuscripts. Gutenberg’s press came along a century and a half later and within another century and a half, libraries had spread all across the continent and well beyond just its largest cities.

German religious reformer Martin Luther is said to have said that, “Printing is the ultimate gift of God and the greatest one.” And it was the Gutenberg press which had made Luther, as some have also said, into the world’s first best-selling author. Religious reformers had come and gone throughout the Middle Ages (also called the Dark Ages for these reasons), but Luther stuck around because his circulated works wouldn’t be so easily destroyed as others’ had been.

Once set free into the world, ideas, the best ones, could rightly claim their place over the weak objections of the powerful.

But it wasn’t just ideas alone, it was suddenly the ability to share knowledge across many boundaries. The scientific process had been a long and arduous one for medieval scientists, but more than anything it was a lonely affair. Correspondence among the greats occurred, sure, but the printed book allowed for widespread publication of what previously had been intimate.

Not just widespread, either, also accurate.

Interested observers no longer had to rely exclusively on second, third, and fourth-hand accounts of the great masters of science, nor the frequently illegible hand-written facsimiles of these second, third, and fourth-hand accountings. There were new masters springing forth with new concepts to test and ruminate over where people wouldn’t need to be in the very same room with them in order to have communicatedexactly what those ideas were.

Once the purview of the very few, knowledge spread into the lower reaches and up from it thrust the marvelous superstructures of the modern world.

Not all at once, of course. Change is a constant but the speed at which it occurs sure isn’t.

One reason is human inertia; sometimes called institutional inertia. The emotional itch to maintain the status quo at all costs is both direct and indirect; those with much to lose in the coming brand-new paradigm will resist with all their might, a survival instinct that is most powerful the closer to the top of the existing order. Then there are those without much to lose who might simply fear the unknown and unverified.

Progress has to overcome a great deal, enormous ingrained (even evolutionary) hurdles. Communication had been one of those, the limitations of ideas when those ideas were inescapably linked to our own literal voice. Printed words (or formulas) came along and hugely amplified their power. Now virtual words (and, yes, images of cats).

For those of us old enough to remember, Gen X-ers and Baby Boomers who grew up analog but have lived (and some have embraced) decades now of digital, it’s already happened. The transformation. The information superhighway itself seems awfully quaint by current standards; originally it had meant something more like the proliferation of libraries only in this technological leap the libraries would be relocated to everyone’s home.

That happened. But now the internet is so much more beyond it. I’m not just talking about the internet-of-things, either, though that’s part of it. A true revolution, one that’s still in the making.

Think about how it has already touched your daily life. Hardly a typical American today goes more than, what, five, maybe ten minutes without peering into some screen. Not just a single screen, no, often several different varieties in the course of regular habits and activities. We can now take the superhighway with us everywhere we go.

The current internet is closing in on ubiquitous; every library now resides in our pocket.

We do things and already take them for granted that previous generations would have thought the stuff of pure science fiction. The COVID shutdowns, while ridiculous and unnecessary, have at the least reminded us of this potential. In the blink of an eye, truly, businesses were transformed from everyone working in an office to everyone working from home. Not entirely seamless, obviously, but I have to believe  Johannes Gutenberg would have been enormously impressed.

This internet allowed businesses to realize the relatively simple creation of a virtual office, after having largely resisted the ad hoc associations it had fostered in people’s personal lives already. Facebook and social media are just the more formalized versions.

But if we already do the modern, decentralized digital stuff in our homes and in our everyday, including now, for many, our work everyday, why are there still so many backwards, reactionary industries out there?

Humanity’s evolutionary quirks.

For these, the internet revolution has meant embracing some minimal aspects like email and faster messaging while at the same time drawing a line in the sand and saying, NO FURTHER! Communication, some, but not truly decentralizing the very fundamentals.

It’s interesting – to me, anyway – that Johannes Gutenberg had previously studied as a goldsmith before experimenting with movable typeface and industrial permanent inks. His father, Friele Gensfleisch, was reportedly a gold worker for the bishop at Mainz’s coinage mint. Johannes maybe gained an appreciation for what, I think, has been somewhat lost in this modern digital age.

The exactness behind gold as money is what had given the metal its true power; money, like the printing press, is a derivative tool and one designed for precision. It is predictability and replicability which directs the benefits of both those things. Accuracy, dependability, these are how decentralization happens realizing with them you don’t need a middleman – or an entire system of priests to interpret (monetary) value or influential ideas for you.

That’s something that I believe Gutenberg, as his father, would have had to have appreciated. A direct parable for his coming printing press; for if knowledge is power, then it can at least be transferred via a monetary medium. The very best ideas, these people will pay for.

The best cat videos are incredibly lucrative.

I keep referring to these only somewhat tongue-in-cheek; in truth, think about what cat videos represent in the context of decentralization. For decades on end, entertainment had been the exclusive domain of big studios and big distribution networks (movies, TV or radio). Before those, big publishers and, yes, big printers. While Gutenberg had contributed much to the trend, he left it still bottled up and funneled down from the top, narrowed channels and avenues.

Nowadays, for little to no upfront capital, all you need is an idea and a YouTube channel. If it’s a good idea, you don’t need to pitch stuffy network types for them to spend hundreds of thousands to get the smallest chance (assuming they’re smart enough at all to see you have talent and have created something worthwhile). You don’t need a centralized infrastructure to find you and put you in front of their audience, you just put yourself out there and the audience finds you.

Never more beautiful, and democratic.

I personally cut the cord years ago and haven’t looked back. Knowing that, embracing the decentralized, personalized entertainment structure, I then look at my bank and I wonder what the hell it’s still doing here!

Banking and money remain with both feet firmly planted in the Dark Ages. Sure, they’re trying to evolve – but to adapt this modern potential to their existing business models rather than the other way around. And that’s understandable up to a point; after all, what we’re talking about here, what it really means, this potential renders the bank as it is constructed today entirely obsolete.

Decentralized money.

Inevitably, when talking about money and digital it necessitates reference to Bitcoin. And that, believe it or not, is a good thing. I’m not here to sell you on Bitcoin, believe me, instead to revisit something about it I wrote quite a long time ago. First, back in April 2014:

“What happens if Bitcoins progress to the point they no longer need to be convertible? The IRS rulings here cease to apply. At that point Bitcoins, or whatever crypto-currency can stand on its own, become both property and currency, i.e., true money. Competition with the government monopoly of legal tender then ensues which likely leads to a singular solution - either the dollar as fiat currency gets replaced or it gets reformed into something far more workable and, more importantly, no longer centralized where government rights continue to supplant all others.”

Bitcoin, to me, is a true token; not just of some digital monetary medium but a talisman of potential toward decentralizing the monetary structure. I had written the year before, in March 2013:

“Were money to again hold meaning, Wall Street and governmental economics would be curiosities, a side show distraction to the new giants of industry and innovation. Innovation is not dead, it is simply buried in a tsunami of meaningless tokens, and I fear the opportunity cost of delaying its arrival grows exponentially…I have high hopes for Bitcoins.”

Like the inefficient, centralized dinosaurs of TV and recording studios, banks and central banks, in particular, stand squarely in the way of realizing the fullest potential of innovative progress (realizing how that sentence reads as a jumble of nonsense corporate buzzwords). Digital money technology, like blockchain, could enable a monetary and credit system freed from banks entirely; the communications revolution finally penetrating one of the last frontiers.

Blockchain already replicates the payments system, which is all that most depositories are anyway; they are glorified bookkeepers. Cash usage continues to dwindle, so even ATM’s are outdated. Other than keeping statements and monitoring customer transactions, what does the bank actually do that a decentralized digital ledger could not already?

What’s left is intermediation. Lending and credit. Again, do we really need an entire bureaucratic banking system to perform these functions? Need I remind everyone of subprime mortgages? Like cat videos, we can do stupid things all on our own without needing to use other people’s money; and maybe finding simple value no else has while doing so.

The true power of the virtual revolution already exponentially beyond the original information superhighway gives us the power to work towards micro-lending. Ad hoc associations - like a Facebook Group! – that do what banks do only better without the baggage that comes with moneyed “tradition.”

Decentralized money, like the printing press, moves more everyday people closer to the knowledge and ideas they already want to pay for – but can’t, not directly, not with banks clinging to their special place of monetary privilege. Banks, especially central banks, resist a future that doesn’t need them.

Or, they deign the lowest form of participation in it with a bevy of press releases about how “they are studying the matter.” They certainly are, but these central bank studies and private bank experiments aren’t about potential, they’re about harnessing it, if possible, constraining it in order to figure out how to keep going forward with the same model which, arbitrarily, places them on top.

I spend most, near all of my time looking backward at the monetary system as it is and has been. The reason is simple: no one else apparently wants to, not really. The constant dysfunction of the eurodollar system therefore necessarily colors my commentary on the current state of the world in uniformly dark tones.

That’s not me; that’s the evidence and history of the thing, and where we are right now.

I’m actually tremendously optimistic longer-term. I see our future as post-Gutenberg.

Looking ahead, ironically, this systemic monetary breakdown actually represents real opportunity; and the best kind. Even though the eurodollar was a virtual currency long before anyone had thought up the term “virtual” for this setting, long before Al Gore claimed to have invented the internet, and even decades before he and Newt Gingrich were working toward it in Congress in the late seventies, the eurodollar is a centralized version and that’s the past.

Decentralized, that’s the future and it is one humongous, revolutionary opportunity absolutely on the cusp of being ready. To take what’s already happened in other industries and other facets of our lives and finally adapt them to what is a crucial factor for an already-decentralized economic system badly in need of this. To break free of these constraints that are, like the pre-Gutenberg era, holding back progress.

It won’t be easy, and “they” won’t go down without a huge fight; that was the point of both my earlier articles, the IRS on behalf of the government already staking out its own points of influence. And then even if we do get beyond these obstacles, and I believe we will, there’s a minefield of issues in trying to go from eurodollar to what might follow it.

In a simple domestic bank system, this would already be a formidable challenge. To rewrite an entire global reserve currency system? Oh boy.

But that’s not an argument against trying and moving forward. On the contrary, making such effort is demanded in the face of one useless QE after another. Far from stimulus, QE is legitimately harmful in that it’s true use is to convince as many as possible they needn’t be looking for alternatives. In many ways, this is the only way it has worked well.

Thanks to Al Gore, the technology’s already here. We already use it and the vast majority of us are already intimately familiar. Decentralized money isn’t scary; it’s only that you’re used to doing it the old way. Reframing the mindset of the public, massive opportunity awaits near everyone in the post-QE order more and more people are starting to realize is perhaps inevitable. 

Jeffrey Snider is the Head of Global Research at Alhambra Partners. 


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