The Stories we Tell about Money

I originally wrote this piece for the lightalchemist website as cryptocurrencies are a key piece of the puzzle, and we’re keen to build a cryptocurrency into a regional food distribution system, for the ease it offers when transferring value / making micropayments. This is already possible and can be done with zero transaction charges.

Let’s say Johnny delivers some vegetables from Freyer, our local grower, to Cam, who has a plan to cook up a casserole he will post on the app for sale. When the delivery is made, the effort that Johnny has made needs to be rewarded, in this case with a $5 payment. Now Cam doesn’t have any cash on hand, but no problem because he can register the exchange in the app, transferring some of his currency directly to Johnny’s account with a few taps on his screen, and Johnny will see that appear as a notification on his phone instantly.

The question of tax

This always come up, because by moving the money around within a regional community using a cryptocurrency, there is no automatic obligation to pay tax on each and every transaction. So people want to know how will they be collected.

The best response was one Andreas Antonopoulos’ offered when asked this question at the Blockchain Conference: The reality is that right now the biggest corporations pay virtually no tax, and likewise the extreme wealthy. The blockchain and cryptocurrency promise to create a level playing field enabling the rest of us to enjoy the same benefits. If that shines a light on the abhorrent behaviour of individuals and corporations who are accumulating wealth and not contributing fairly to the good of the whole, then great. Maybe at that point we can create some different systems for paying for the things that taxes are intended to pay for, but which they often fail to do.

So help me understand the blockchain and cryptocurrency

Andreas M. Antonopoulos was a keynote speaker at the May 7th, 2017 Blockchain Conference in Auckland, and gave a magnificently thorough talk that will be made available as a video soon. While browsing his channel I came across this talk, which is really an excellent summary of cryptocurrencies.

Here is a detailed set of timestamps to help you navigate, should you wish to jump to, or revisit some portions of this talk.

In the beginning… 00:00
Digital scarcity 00:41
Peer-to-peer network 01:34
Solving the double-spending problem 01:59
Cash, peer-to-peer without intermediaries 04:10
People paying companies to maybe pay people 04:34
The un-banked and the under-banked 05:28
Bitcoin — digital money as cash 06:08
What is cryptocurrency? 07:16
Independent self-verification 08:42
Why the Internet is special — global free flow of information 10:24
Why Bitcoin is special — global free flow of money 12:24
The bizarre aspects of traditional banking 13:34
Adjusting to this new world 15:36
Governments attempting to control Bitcoin 16:48
“Who’s in charge?” — system of trust without hierarchy 18:18
People who see Bitcoin’s strengths as flaws 20:20
Multi-signature schemes for consumer protection 21:19
Our misunderstanding of the most ancient technology 23:20
What gives money value? Stories we tell, promises we trust 26:30
The shared hallucination of paper money 29:48
False promises and the myth of “zero-value” currencies 31:22
Gresham’s Law in India 34:02
The characteristics of good money & currency 35:13
Difficulties of barter at a large scale 36:49
Ancient tokens of values 38:13
Scarcity vs. inflationary supply, debt & devaluation 39:11
Bitcoin vs. traditional money as a store of value 41:52
“How much is a bitcoin worth?” 43:05
Digital gold 43:47
“Fake money” resolved by the market 44:21
Closing summary & remarks 45:17