Are we on the brink of the ‘Third Financial Revolution’?
So much has been said about blockchain and its’ potential to revolutionize pretty much any walk of life you can think of — Insurance, scientific research, perhaps even music and football. Quite whether blockchain will make a significant impact on all these different sectors remains a matter for debate. However, blockchain’s real value might just be something even more profound — Nothing less than the Third Financial Revolution.
This may sound dramatic, but let’s think about the history of money. The First Financial Revolution occurred when human beings first realized that natural resources had value — Wood, animal skins and certain stones became commodities, which could be bartered or traded in return for other goods. Those with an abundance of these natural resources were perhaps the very first to become wealthy.
As time went on, kings and other rulers became wise to the idea of accumulating wealth. They understood that it could be an important tool for wielding power and controlling their subjects. And so, they began to oversee the minting and distribution of physical money, establishing banks in order to carry this out. All of a sudden, the accumulation of wealth was dependent on the say-so of a centralized authority — The Second Financial Revolution.
And so things have remained more or less the same, ever since the world’s first bank, the Medici Bank, was established in Italy in 1397. In the centuries since then, people have remained reliant upon banks and similar institutions in order to store money and generate wealth, through loans and other financial products.
However, blockchain promises to blow the long-standing status quo into the water. Centralized control has been the defining feature of finance for centuries. Blockchain offers a decentralized model, which for the first time since humankind was living in caves, does not require a bank or central financial institution. What is required in order to make a financial transaction via blockchain? Firstly, there is plenty of technology at play — In particular, smart contracts and cryptography. Most importantly though, a blockchain transaction requires the consensus of all its users.
In other words, blockchain has an inherent social aspect to it. Whereas finance has historically required the approval of the few, blockchain places transactions in the hands of the many. Of course, blockchain is the technological foundation which has spawned quite literally thousands of cryptocurrencies. Some may argue that these currencies too are an elitist form of finance, as they require experts to ‘mine’ currency through their computing ability.
However, blockchain doesn’t have to be this way and nor does cryptocurrency. Receiving crypto coins does not have to be dependent on ‘mining’ expertise. What if coins could be earned through any number of actions? Even through positive, social-minded actions? Well, they can. And that is the very essence of the City Currency we have been developing at Colu — We are working with city-wide partners such as municipalities and transportation companies to make such rewards a reality. City Currency is awarded to people in return for whatever is deemed to be socially responsible — From recycling, to volunteering, to saving energy and way beyond. City Currency is cryptocurrency with a social utility. In fact, for perhaps the very first time, it is ensuring that it really does pay to do good. And if that isn’t a financial revolution, then what is? Welcome to the Third Financial Revolution.
