Thank you for this awesome and excellent cryptocurrency post Ben! It’s a really great introduction to the subject. I’m looking forward to your followup that gets into more of the details of getting into crypto.
I’d like to point out that your financial history, although relevant, is oversimplified in a way that may lead to overly trusting cryptocurrency.
Gold is not the only historic standard of value. Societies tend to oscillant back and forth between credit and coinage systems. Gold is a form of coinage. Digital dollars held within bank accounts are credit. Cryptocurrency is closer to coinage.
As David Graeber points out in Debt: The First 5,000 Years, the primary determinant on whether a society utilizes credit or coinage is the amount of violence and volatility. Coinage can be stolen, credit can’t. In a war-torn region, or during the collapse of a culture, credit fails along with the failure of the social fabric overall. Coinage prevails, as it is “trustless.”
If your crypto wallet gets hacked, your credit card company’s fraud center isn’t going to reimburse you.
I don’t think it’s a coincidence that we’re seeing the rise of “trustless” coinage alternatives during this time of national and international turmoil—Brexit and Trump just being some of numerous artifacts.
Not to say that crypto isn’t a great investment during this time; I think it is. But it’s important to realize that all currencies gain value based on a social contract. Credit and coinage operate on different contracts. Gold and crypo operate on different contracts. That said, there is nothing universal about any of them, and their value is ultimately backed via the collective unconscious.
Additionally, there is no such thing as a foolproof trustless model. Either we’re putting our trust in people, or in technology. Both have their merits and their failings. By moving to trustless technoligies, we actually undermine the value we place on trust in eachother. If you treat people like criminals, they’ll behave as such. I don’t want to hype this concept too far, as obviously a society as large as ours needs safeguards. But it’s good to be aware of this underlying dynamic.