Monetising the future: Exordium
Roused by a remorseless alarm at half past too early as the world slumbers away dreaming in unison. There I glide through routine as my senses alight.
The European Union has announced it will start imposing duties as a proportionate response to Trump’s Steel and Aluminum tariff — the notification on my mobile phone which helped lighten the heavy drag in my movement.
“Ha. Funny Trump.”
It’s a June Tuesday. One of many Tuesdays where an ever-increasing lack of enthusiasm is apparent.
While stood to wait at the saturnine hour of pre-dawn, comes this zen-like reflective silence. The cool breeze of spring air reminds me that another season has passed. I begin to ruminate my purpose in deep contemplation, but like clockwork, my cab has arrived.
Now as any proud and responsible commuter, I meticulously performed my obligatory cab conversational duties: talking about the weather, how busy he was, how long the shift hours were, and his disdain for Uber.
I would have received an ethical score of ten and resigned the first leg of the travel to a silent yet triumphant achievement. However, a completely different morning began to take shape, for a topic worthy of a structured argument comes to surface.
The recycled air bears a faint citrus scent wafting from a half opened tin past its due. The dim glow of the taximeter illuminates the confined space of the hybrid Prius — serving as the backdrop for a friendly debate; a dialectic of philosophies and principles.
2017 is the year Cryptocurrency broke into the mainstream. The masses lured by melodic whispers of overnight wealth as the infamous $80 million pizza order where Laszlo Hanyecz’s 10,000 bitcoin transaction was forever immortalised into song and dance.
Such realities opened the floodgates to an astounding horde of wide-eyed hopefuls and dreamers. It was a modern-day gold rush for new-blood investors, dawning an exciting new era in financial markets yet still dancing to remixes of the NYSE greatest hits.
Its inception, however, heralded the fruition of varied purposes to an end goal. It was the savvy new technology — of the nerds, for the nerds, and by the nerds. A digital currency to augment the power of the internet.
But to an intimate circle, it was their digital version of defiance. A protagonist’s codified side-arm in the noir world of corruption and greed. An innovation that delivers purposeful efficiency in the silent initiative for disruption. It can be everywhere and nowhere, negating intrusion and surveillance.
The brilliant misdirection was that bitcoin was believed to be the revolution. Proponents of the old system laughed as they shot down the digital avenger destined to disrupt the old titan structures. However, In the midst of all the ridicule, from the deep dark laboratory of cryptology lurks the creation of a sacrilegious abomination — The Satoshi Frankenstein monster known as the Blockchain.
Its (a)live!! I imagine Cypherpunk Hal Finney saying, upon receiving the very first live Bitcoin transaction sent by Satoshi Nakamoto at block 170.
The coded revolt that cracked the Byzantine Generals’ Problem of trust. It was the brainchild of the sphinx-like enigma, Satoshi Nakamoto. Guided by the utopic vision of the Cypherpunks, it signified a new kind of insurrection, digitally aimed to disrupt a flawed system of control. The trustless insurgency has arrived.
In The Crypto Anarchist Manifesto, an essay written by Cypherpunk Timothy C. May describes a general outline of the thought processes and ideals of the techno-anarchist. It was distributed in mid-1988 at the “Crypto ’88” gathering.
An excerpt from the literature reads:
Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions. Combined with emerging information markets, crypto anarchy will create a liquid market for any and all material which can be put into words and pictures. And just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics come to be the wire clippers which dismantle the barbed wire around intellectual property.
Arise, you have nothing to lose but your barbed wire fences!
Promising as it sounds, it is nonetheless, a monetary architecture comprised of uninformed speculators and investors. Information is vital in the throes of system reformation — I have thirty-two minutes to articulate with impeccable precision.
Now although opposed in opinions, the mark of any healthy society is to confer conflicting values and beliefs, thus greasing the wheels of reason and enlightenment towards a brighter future. We uphold such values moving forward.
Given its digital stigma, we stand distant apart on the tainted history of the blockchain. Our difference in monetary views, myself and our distinguished car-hire operator, may lie in our sentiment towards Fiat money and its inherent global dependency.
Briefly, he argues that cryptocurrencies are primarily, if not only, an investment vehicle to be treated similarly to equities or shares since it cannot achieve global acceptance to either replace or render Fiat money obsolete.
“There are those who never heard of it.” — His argument holds water to a reasonable degree.
Bitcoin has held the world captive; mounting the world’s first decentralised Stockholm Syndrome. A seduction of the masses from tales of inadvertent wealth and promise.
But what are the definitive factors at play in considering traditional Fiat currency over cryptocurrencies? Some may argue an issue of fungibility, others deterred by the unfamiliar technology or its limited accessibility. But whether this preferential bias is valid in an economic sense or not, the question looms of a tendency much simpler — the possibility of psychological response.
Also known as the familiarity principle, the mere-exposure effect is when a person sees or hears something they recognise.
In controlled clinical studies, subjects exposed to a stimulus of familiarity have shown activation of the Parietal and Occipital lobes of their brain, therefore releasing the feel-good molecule known as Oxytocin. Verified in over two hundred clinical tests ranging from sight, sound, taste, and smell; this gives some merit to the phrase — “familiarity breeds likeability,” and just the opposite, any exposure to unfamiliar stimuli triggers the primary structure of the brain directly associated with conditioned fear — the Amygdala.
Whether or not this inferential analysis applies, our biological responses towards familiarity have played a significant role in every decision we have made in our lives. It is mainly responsible for why we keep a job we hate, stay in a bad relationship, or miss a life-changing opportunity.
Aware of my idealistic propensities, my argument stems from a trading exposure in the financial markets — sparking a curious observation on factors that influence global economics. Therefore, attempting to approach from a purely informative angle, a historical synopsis would prove essential:
The Banking system is a time-old power that has minted the vital structures of history.
Banking in its earliest form traces back to Assyria and Babylonia in 2000 BC. The first recorded practices were the issuance of Seed-loans to farmers where re-payments are collected from their harvest and grain-loans to traveling traders between cities. Later, evidence through archaeology reveals factual findings showing banking and lending practices in the Roman Empire, the Maurya Dynasty of India and the Qin Dynasty of ancient China; proof of an ancient existence of government banking. But its privatisation is of a more interesting origin.
Pauperes commilitones Christi Templique Salomonici
The Knights Templar are an elite order of warrior monks founded in 1119 by the French knight Hugues de Payens. They are the most skillful fighting unit in all of Christendom and acknowledged as one of the highest military orders of the middle ages. They were initially known as Pauperes commilitones Christi Templique Salomonici — The Poor Fellow-Soldiers of Christ and of the Temple of Solomon.
Following the successful campaign of the First Crusade, a call to arms of French Noblemen was convened for the aid and protection of the pilgrims. Their stated purpose was to subdue the mounting attacks of Muslim raiders, marauders and bandits on the pilgrimage.
They were declared an Army of God by Pope Honorius II, granting official Papal sanctions empowering the blessed monastic army’s advance. Thereafter, the Templars grew to be the most fearsome religious military of ancient Europe.
But given the allure and fascination of the Templar legend synonymous with the Papacy and the Temple of Solomon, one may ponder the relevance that lies beyond their mystery and intrigue:
The Knights Templar were the very first privatised Banking Institution.
A letter of credit is issued against a deposit of valuables in which its equivalent can be retrieved upon the pilgrim’s arrival to the Holy Land, and by building a financial structure within the vast expanse of the Holy See, the Templars were able to amass great wealth.
First to prototype bank cheques and credit options later to be utilised by modern enterprises such as Mastercard and Visa, the monastic brotherhood were the critical innovators of modern private banking practices.
Recognised by the Vicar of Christ on earth himself, for two centuries the Knights Templar grew their ranks to be a formidable force. Their legendary treasures rival that of all kingship of Europe; a religious soldiery achieving unprecedented power and authority.
But as history is certain to repeat itself, such magnificent rise in power often meets an equally tragic demise.
The king of France, Philip IV, ordered the arrest of the Knights Templar in 1307. With the support of Pope Clement V, horrific tortures of the Medieval Inquisition began. Its primary purpose was to acquire false confessions anywhere from heresy, paganism, homosexuality, sodomy — All deftly designed to scandalise and upset the Christian public.
As devised, the Templars suffered the ire of Christianity subsequently stripping them of any authority, privilege and accumulated wealth. But in return for their admission of guilt, the Templars were granted release from their inflicted sufferings; they were gifted liberation from anguish — a most welcome gift of Death.
However, such sliver of humanity was not extended to the last known Grand Master of the Knights Templar, Jaques de Molay, for his tribulations were to last. For seven more years, he would receive daily torture until in 1314 de Molay was burned at the stake and with him ends the story of the Knights Templar.
Banking however, did not meet the fiery demise of its doomed innovators. It has endured beyond the early obscurity and chaos. It has flourished to carry forth a pivotal role unencumbered as the Vatican. Hence, the great bequeathing of wealth and power throughout the millennia.
The Renaissance: Florentine Banking and The Artistic formulation of Modern Capitalism
In its forward momentum, banking has found continuity amongst the influential Florentine families of Italy. Notables of the Firenze class and prestige are the Acciaiouli, Bardi, and Peruzzi family but the true banking powerhouse of the Renaissance were the Medici.
Founded by Giovanni di Bicci de’ Medici in 1397, the Medici Bank was the main financial institution for the Roman curia. Having branches in Rome, Venice, Milan, Geneva, Bruges, Avignon and London — each a holding partner under the one Florence central.
The Medicis have capitalised on trade finance, currency exchange and may have innovated time deposits. But their genius lies in the cunning yet clever foisting of interest rates, craftily bypassing the church-condemned crime of usury.
It was under the management of Giovanni’s eldest son, Cosimo de’ Medici that solidified the Medici Bank as the most prominent financial institution of 15th-century Europe. Under his strict guidance, the Medicis rose to great social and political power, placing the family in the very centre of the Renaissance to become the rulers of Florence.
Since the death of Cosimo in 1464, the Medici bank have started its steep descent from dominance. Succeeded by his son Piero, who lacks the meticulous and shrewd business acumen of his father, his several attempts to control Florence failed miserably due to his sheer inadequacy in both experience and financial knowledge. Worsened by an absence of vital political, diplomatic skills, further accelerated the imminent ruin and disgrace of the Medici political dynasty.
From its infancy are cues of the present — a grim overture to man’s avarice. The oppressiveness of divine robes and lineages of reverence are but presages to its pernicious influence. We witness the cradle of history in a timeline awash with sinister elegance and virulent beauty, blending hues of abuse and crippling misfortune. A world inveigled by the high price of exclusivity, purposefully empowered and facilitated by financial institutions.
In this narrative of banking’s origin, it is evident from its early onset how the broad strokes of power are placed directly in the hands of the banking elite. Its dangerous haze of centralisation has come with an intimate shadow of subterfuge — a disquieting degree of terrifying precision in Machiavellian chicanery and manipulation.
With this precedent, quite noticeable in the decreasing speed of the unobstructed taxi, I am met with a silent acquiescence if only to see where my logic may lead to. Besides, isn’t this a topic that appertains to all? for indeed money is still, and for a very long time may well remain, a necessary evil.
Taking the small latitude in his momentary state of intrigue, and consequently penned as the second part to this article, In Reprisal, we discuss the genesis of the very instrument that which seats me in his working class motor — money.
