The Second Financial Revolution — Part 1
This is part 1 in a 3 part series…
I will make a bold declaration that the future of finance, payments and money as we know it, will not be about the currency but instead about the network.
It will not be won by a single currency or value store that becomes a de facto standard unit of commerce, no. It will instead be dominated by a global, AI-driven, semi-autonomous, distributed ledger-powered network, which performs real-time atomic swaps of currencies or value stores as a function of trade/payment.
The sole objective here will be to efficiently and seamlessly exchange a specified value for another one, irrespective of the vehicle/currency being exchanged between parties. This future will see a purchase made by the first transacting party in one currency or digital value store, while the second transacting party receives payment in another currency or digital value store, with seamless automatic conversion between these currencies effected as a function of the transaction and not as an independent feature.
I will even go so far as to boldly declare that this new era is already upon us and we are presently sitting at the beginning of the Second Financial Revolution.
A little historical context
To the digital generation, the Financial Revolution is the modern movement started by a single academic whitepaper entitled, Bitcoin: A Peer-to-Peer Electronic Cash System. However, if you asked Western economists or historians, most would harken back to the Dutch Financial revolution or to the subsequent British Financial revolution at the end of the 1600s, which was initiated by a series of economic and fiscal reforms.
These first revolutionary events ceded control of economies to a new government and its associated houses of power and while it was a genuine revolution in its day, many believe that the resulting infrastructure has since passed its ‘sell-by’ date, paving the way for a much-needed revision of the order of things.
Like most obsolete social systems, however, the archaic financial-services model upon which our modern societies are built has been kept on life support by those who would much sooner see the world burn to a cinder than relinquish control to the public domain. This was the realization of a small group of mathematicians, cryptographers and computer scientists whose collective body of work, which has spanned a period of over four decades, has profoundly and irreversibly impacted our world today and has set the stage for the future of all mankind.
Before we can truly understand the implications and sheer massive potential of this modern movement, we must first understand the history of our social revolutions and what they have meant for humanity. The first great revolution in recorded history was the Agricultural/Neolithic Revolution which started some 12,500 years ago. In his book, Human Evolution: An Illustrated Introduction, Roger Lewin writes “the Neolithic transition involved increasing sedentism and social complexity, which was usually followed by the gradual adoption of plant and animal domestication.”
The resulting social complexity that emerged from this period of transition from the hunting and gathering lifestyle to the agriculture and settlement lifestyle, seeded the development of population clusters featuring ever increasing size and complexity.
It does not take an anthropologist, historian nor a sociologist to see the impact this movement has had on our civilizations for the past millennia. More importantly, that it has laid the foundation for further social evolutions and the inevitable revolutions born of them. If we jump forward a few thousand years, our Western civilizations have seen wars and famine, which some may deem the antithesis of our evolution from that post-Neolithic/Agricultural metamorphosis.
Humanity is nothing if not resilient and out of these dark periods have come the revolutions that have renewed the wellspring of innovation. A second Agricultural revolution (better known in western historical terms as the British Agricultural Revolution) followed the first British Financial revolution of the late 1600s, which itself followed a political revolution within the British Parliament. This latter pair of movements would see the formation of the Bank of England by the revolutionary heroes of that day.
From the second agricultural revolution was born an age of innovation which led to the socio-political event commonly known as the First Industrial Revolution. Once again, we can see the impact this has had on our modern societies and (to a less noble extent) upon our environment. This laid the foundation for the second industrial revolution which is better known as the Technology Revolution, itself giving way to the Information Revolution — our modern mathematics and computer science age — bringing us back to the current topic.
To be continued in part 2…..
