Incent, Money and the US election
The American people’s decision to elect Donald J. Trump caught both pollsters and markets by surprise. Stock markets around the world fluctuated wildly as traders digested the news. The dollar fell, with funds moving into gold and the Japanese Yen as safe havens. Even bitcoin got a boost from it. The biggest loser of the night — aside from Hillary Clinton — was the Mexican peso, which took a hit of some 10% before recovering a little.
When something like this happens, Brexit being a recent analogue, we often look at the numbers and accept that this is the price of doing business in a hyper-connected global economy. One or other currency changes in value against the others as traders adjust their expectations about the relative strength of its national economy. It’s a symptom, collateral damage. But there’s something badly wrong with that idea.
We’ve been discussing the concept of Open Value recently — the idea that the greater the freedoms and transparency around a reward, and the fewer the conditions attached to it, the more valuable it is. Traditional reward tokens are the epitome of closed value. You can’t transfer them, you can’t spend them outside of their issuing business, and they often expire after a certain time. In trying to retain the value of rewards for themselves, issuing businesses have instead killed it. The proof is in the unused loyalty cards and points that litter wallets and smartphones around the country.
The American election should be a wake up call that our money is another model of closed value. It comes with strings attached. It’s not really yours. Think about it. Less than 70 million people vote for a given candidate in the US, and markets around the world go into shock. That’s one percent of the world’s population, but the impacts are felt by billions. For a start the peso, a national currency used by 129 million Mexicans, suddenly buys significantly less than it did the day before. Markets in the US, UK, Asia — more or less everywhere — take a hit. That’s real pensions, college funds, housing deposits that are impacted.
This is emphatically not to say that America should have voted Clinton. That’s America’s democratic decision to make. (Democracy is arguably another form of Open Value, which is why it needs to be free, fair and anonymous. It’s a right that is worth most when it’s completely unrestricted.) The point is that no poll or election outcome should have the effect it does on the cash in your pocket and the value you otherwise hold — not if you don’t want it to. Closed Value says, ‘Take this value, but only on my terms.’ We can’t erase risk altogether — and goodness knows crypto folks know enough about risk — but we can try to address unwarranted and unfair risk.
In Incent, we’re trying to build an ecosystem of Open Value, with tokens backed by revenues from merchants around the world. We can’t meddle with supply, which is fixed. We can’t take decisions about interest rates or QE in response to wider economic conditions. We don’t try to centralise or control value. We don’t intervene with merchants to tell them what percentage of each transaction should be converted to Incent and sent to the customer. Our philosophy is that Incent will be worth most if we genuinely give it away with as few strings attached as possible.
There are three weeks left of our crowdfund, so if this sounds like something you want to be involved in, visit www.IncentLoyalty.com or join our Slack to discuss it further.
Update: I’ve actually made a little bit of a category error here, conflating the concepts of Open Value and Agreed Value. In due course Pete will explain to you why I’m wrong and what I really meant :)
