How History Points to a Blockchain Future
Introduction
As with any major technological upheaval, there’s always doubters. In 1943, Thomas Watson, then CEO of IBM, famously said that there only needed to be 5 computers in the world. With retrospect, this may seem like a foolish prediction, but bear in mind that over 30 years later, Ken Olsen, the CEO of Digital Equipment Corporation, stated that, “there is no reason anyone would want a computer in their home”. Computers weren’t an overnight success. They weren’t at all perfect. They were clunky and big and complicated. Similarly, blockchain won’t be an overnight success and certainly isn’t understood by the masses yet. However, there certainly is a need for blockchain. This article is dedicated to all those who believe that cryptocurrency is just a fad. If that’s you, then continue reading.
To dispel the myth that systems of money don’t change, let’s look back in history:
A History of Change
A long time ago, people used to use shells as money. In fact, there’s an island in Papua New Guinea where you can still trade in shells for Kina, Papua New Guinea’s national currency which is named after a… shell. But, imagine carrying all those shells around! There’s other problems too. How much different shells were worth was a commonplace disagreement. Then there’s the idea that some people could get rich by strolling along a shell-lined beach. Governments wanted a new way to facilitate the exchange of goods.
Unlike shells, coins had fixed numbers on them. People were also hard pressed finding a coin-strewn beach in their vicinity, though no doubt shipwrecks did make that a possibility. Lydians, who lived in modern-day Turkey 2600 years ago, first used stamped coins and coins are still popular today. However, even though modern-day coins aren’t made of silver and gold, coins of any metal are expensive to make. They’re also relatively easy to counterfeit with sufficient know-how (the dark web will no doubt tell you how) and are bulky and cumbersome. In short, no one likes coins. If you’ve ever had a vacation to Vietnam, you’d know that many societies have started to ditch coins already.
After coins came paper money, a lighter and cheaper alternative to coins. Sure, it’s harder to counterfeit modern paper money, but counterfeit bills are still produced by the thousands. Carrying large amounts of physical money may lead to you getting mugged or pickpocketed (again, those vacationing in Vietnam may have experience in this)! Moreover, a bigger problem to governments than you getting mugged abroad is systemic tax evasion. Such is the problem of tax evasion with cash notes that the Indian government, in 2016, banned all large bills (that made up 86% of all Indian money in circulation). Sure, they row backed on some of this due to widespread disruption, but you can easily see that the future of cash is grim. Modern European economies increasingly use cards for day to day transactions and the circulation of cash in modern economies such as Sweden is declining despite rising populations.
So, that’s the history of money summarised in three paragraphs and you can see that there have been large revolutions in money at various points. Every revolution has occurred due to the flaws in the former currency and have marked a great improvement each time. The above wasn’t an exhaustive history, here’s a more detailed timeline:
Timeline of major changes to the monetary system
Unknown — Shells used across multiple continents.
Circa 600 BC — Coins first manufactured in modern-day Turkey.
Circa 600 BC — Bills of exchange used in international transfers.
Circa 1050 AD — First paper money used in China.
Circa 1300 AD — Marco Polo brings back tales of paper money to Europe from China.
1659 — First cheque used, in London.
1949 — Credit card industry born, in US.
1967 — First ATM used, in London.
2009 — First Bitcoin transaction
2014 — Fintech boom, companies like Transferwise allow P2P currency exchange.
The Current Situation
As you can see, large changes in how we exchange money have accelerated over time. It is of no surprise then that the next revolution in money has already reared its head. But, we have discovered that revolutions in money only occur when there are current problems that need to be solved. So what are the current problems?
Well, for a start, many people have stopped trusting governments (if you believe that anyone trusted them in the first place). Politicians have frequently put the interests of the few ahead of the interests of the many or simply been inept at running an economy. As a result, corrupt politicians in places like Venezuela and Zimbabwe have ruined their economies. From Zimbabwean independence to 2008, the Zimbabwean dollar inflated 79,600,000,000%. Yes, that chocolate bar that cost $1 in 1980 cost $79.6 billion in 2008 and all money you had saved became completely worthless. There is no point believing that a fiat currency has intrinsic value just because it is backed by a government.
Furthermore, even respected wealthy governments do strange accounting tricks. After the 2008 global banking crisis, the European Central Bank started a process of quantitative easing. Quantitative easing is buying things with newly-issued money (at the press of the button) to put more money into an economy. The result? All your money is worth slightly less than it was before. This inflation persuades you to part with your cash and buy things instead of holding money that is depreciating. People are fed up with inflation taking a cut into their wealth. Cryptocurrency fixes this ill. It takes money out of politicians’ hands and lets the currency take a predictable issuing pattern. Although, just like any currency, cryptocurrency is only ever worth what people perceive it to be worth, it will become more stable with time and will appreciate if widespread adoption takes hold. As a decentralised venture, cryptocurrency is taking money out of governments’ grubby hands once and for all.
Blockchain also holds multiple advantages over conventional currency and has been hailed by critics and proponents alike as a more efficient way to transfer information. This is due to the unique way that blockchain records transfers on a ledger and thus reduces the possibility of a “double spend”, the idea that a token or unit of currency can be spent more than once. Whilst individual digital wallets or exchanges have been hacked, the problems have been due to poor coding and a lack of awareness of or focus on cyber security. The problems found at SWIFT, a worldwide major financial transaction system, however, are much more alarming. Tens of millions of dollars have been stolen each year from the global financial system since 2015 and this failure comes from the nature of the system relying so heavily on trusted central authorities.
The Upshot
Though imperfect, blockchain and cryptocurrency offer a far more secure way to transfer information and monetary value around the world. They also offer the chance for people to become empowered and to control the systems that control their lives. Blockchain offers the next big technological jump and societal shift and we want to become a part of it.
At Delicia, we wanted to become a part of this revolution because it is both an efficient and more ethical way to run the Delicia network as compared to the conventional alternatives. We fully expect blockchain applications to increase in the years ahead and believe ourselves and others to be ahead of the curve in this respect. Of course, blockchain and cryptocurrencies are in their infancy. But, just like the fact that the wealth of today is built upon the world wide web and computers, the wealth of the future will be built upon blockchain.
Delicia.io is a start-up that is transforming the food sector. Delicia is reducing food waste by allowing near expiry food waste to be distributed to other consumers before quality food is needlessly wasted. To find out more about Delicia, watch the below video.
