The great revolution of the 21st century will be led by the bankers and it will transform money from a national currency to a privatized commodity. Surprisingly to all, the winners of that coming revolutions are going to be the poorest of all and the shrinking middle class. The biggest losers are going to be the Dollar and national patriotism.
“Chain Issues Investor Shares on Nasdaq Blockchain Platform. 12 More Banks Join Blockchain Consortium R3. Visa Europe: The Blockchain is ‘No Longer a Choice’ Allianz joins a growing number of mainstream financial firms, including insurers, that are testing the technology for possible applications. Australia’s Biggest Stock Exchange is Taking a ‘Close Look’ at Blockchain”
These above are a few of the headlines on Coindesk from the past two weeks. The entire financial industry is adopting the blockchain technology and by doing that they will for the first time become an independent private entities. We are used to think of the financial sector as a regulated private sector but in actual it is all tied to the monopoly of national currency. If it was truly a private market the interest rate of the central bank would have been a minor factor.
By adopting the blockchain technology, The financial institutions are in actual arming themselves for the great independent war against our democracies, a war that they themselves may not fully be aware of. After all the winners of the last financial meltdown were the largest and strongest financial institutions. However…. we need to start thinking in terms of risk management.
Financial institutions are all rooted in risk management practices, they are the result of risk management thinking. The DNA of the financial institutions and the product of financial industry is risk management. Yes like any other industry it aims to create profit, but profit don’t stand alone, it is built on a product.
National currency represent the major exposure to risk banks and financial institutions have. The blockchain technology is the key factor to reduce significantly the exposure of private financial institutions to the national currency risk .
Now those who are active in the markets will be able to come up with many new solutions once the spark will hit. and the spark is the token itself . The separation which formed in the past year between the coin and the blockchain show us that the understanding is not there yet. How ever while The Christmas lights of 2015 exploded into the fire works to mark the beginning of 2016,The blockchain hype is exploding into millions of tokens.
The banks are experimenting with tokens as assets, we name them smart contracts, but in actual they are expressed as token. these new tokens are tokens of high fungibility . For example: If you can mark a commodity using a token on the blockchain, you can then trade it securely directly on that blockchain. And if you can trade it directly and securely in the blockchain why would you need to exchange it to fiat at any point along the way if the token service is provided by the same institutes which have the exclusive guaranteed excess for that exchange? Well you will not!
We will keep our money in these tokens and we will exchange these tokens one for the other based on the bank guarantee. How ever that guarantee is based on fiat money. And this is were the sweet sweet deal for us as individual users come into play. Since the banks now have to compete between themselves on the most reliable private blockchain tokens, They actualy for the first time start to really compete with their own risk tools. Now the value of the tokens we use is no more backed only by the state sweeping guarantee to all the banks but rather attached directly to the bank which run that blockchain.
By creating blockchain based competition between the banks, they themselves have to start reducing their own exposure to national currency. They will voluntarily reduce the lavage based on fractional reserve to a level which match a real trajectory of growth in their assets and the solidity of their issued credit commitments.
To conclude, the implementation of private blockchain enables the beginning of real privatization of financial institutes and real competition between them. The tokens issued on those private blockchains will break the currency production monopoly held by states by offering these more secured token as a medium of exchange.
The next stop of that speeding train which already left Pen Station in NYC will be at the “border” itself. National boundaries held by a national currency propped up by patriotism which fueled the dollar wars is about to become an history. And by the time the icicle will be formed on the Christmas trees of 2017, we all are going to see it crystal clear.
