Okay, you sonofabitch, let's talk about this because it's rare that I start so exactly in the same place as an author and then end up diametrically 100% opposed to his viewpoint by the end of the article. Also, this shit needs talking about. So let's do it. So... by and large, these are all economically accepted positions. Yes, there are crazies over at ZeroHedge that think the world is going to end, but most everybody else simply thinks that the central banks are working so hard to forestall recession that they've effectively given up control, and that's likely to be messy. This is an important point, and something that Piketty (who had been namedropped the previous paragraph) burned a lot of paper on. Nobody picked it up, though. Piketty argued that by anybody's best guesses, something between 40% and 60% of the world's real money is off the books in offshore accounts. He further points out that the first and only real change in this situation has been made by the US dept of commerce, which has started cracking down on offshore accounts, and that utterly without fanfare they've already recouped something like 10% of the known outstanding. Think about that - that's the United States, basically laying claim to 5% of the world's total money, just by saying "hey, that's ours." The author's link, by the way, unhelpfully points at a block visualization of the value of derivatives contracts. Which are never meant to be redeemed. So... whatevs. But more on that later - the "off-the-books money" is a big deal and let's put a pin in it, shall we? This is where the eyes start to roll. Who says the financial system needs to be fixed? Who says it can be fixed? Who says what "fixed" is? The financial system is making lots of people rich, and lots of people poor, and the poor people will never ever ever be able to do anything about it. Really, the financial system works, for better or for worse, for richer or poorer, forever and ever amen. ...aaaaaand we're done. Fuckin' Crusades, the Silk Road, The New World, Italian city-states, Colonial wars, revolutions, world wars, cold wars, Breton Woods, Euro and the financial system IS. It just goes. Even the Mark increasing by billions did not cause the financial system to "explode." Zimbabwean hyperinflation is a bitch, to be sure, but Brazilian and Mexican hyperinflation allowed those countries to shed their foreign debt and restart their economies. That ain't a bug, it's a feature and if the financial system can survive Europe in ruins it can bloody well survive the bond market. Let's assume the real case scenario, which is that your debts are money and your assets are things. I'll play along with your "utter and total collapse of the financial system" and assume that for some reason, the banks and all their recordkeeping ceases to exist tomorrow. Chances are you have: - a place you've been living, where you've been paying someone you know an amount you're both expecting - stuff - a laptop, a scooter, a wardrobe, a bunch of clothes, other things that you've traded money for - a reasonable presence within a group that exchanges goods and services, all of which are in the exact same spot as you, and all of which would rather not have to deal with global financial collapse over breakfast - credit card debt that is an arbitrary number held on a computer somewhere - retirement accounts that are arbitrary numbers held on a computer somewhere - student loan debt that is arbitrary numbers held on a computer somewhere So poof goes the economy and you're left with your stuff and your place in the world, while your savings and debt have been wiped out. if you have a shitload of liquid assets, you're fucked. But the majority of the planet doesn't have liquid assets. They have shit they can carry, drive, or huddle under. There's a hundred trillion dollars of wealth destruction going down right now and mostly what people are noticing is "shit, gas is cheap." So let's nuke the financial system and see who survives and who's fucked. Li'l secret: those guys with gajillions of dollars in liquid assets also have pretty pimpin' houses. I'll bet they come out okay in the end. Or, we could, you know... Just... no. When the world ends, check Twitter! No. Twitter, then Kickstarter. Dude... The Great Humungus is eating Alpo out of a hubcap and you're launching an Ethereum onboarding company on your Ubuntu phone. Somehow, I suspect that the trappings of your Ethereum lifestyle are going to require more civilization than will necessitate your Ethereum lifestyle. Unfortunately, the rest of them sat there starving, staring into the sun, unsure of what to do without the wondrous visionary wunderkind and his postapocalyptic Ethereum startup. If only he could have helped more... Never trust anyone who describes a CTRL-ALT-DEL reset of the entire world as "rosy."From what I’ve been told (and I really don’t pretend to have a clue), we’re in the midst of some strange experiment with negative interest rates, where income inequality is the worst it’s been since pre-WWII, the gold standard is in vogue again, and oil prices are a signal of worse things to come. I’ve heard that the financial system is going through a “natural reset”, while others are birdwatching for black swans. Capital is in flight. Silicon Valley is a bubble. Student debt is a bubble. State pensions are vastly underfunded. China’s growth is slowing. The Big Short was better than the Revenant.
We don’t even know how much money is flowing through the financial system at any given moment — much of the world’s notional monetary value exists in over-the-counter contracts where annual estimates vary by hundreds of trillions of dollars. Knowing what’s at stake, with one expert is yelling ‘THE SKY IS FALLING’ and the next is whistling ‘Don’t Worry, Be Happy’, who should we listen to?
Fixing the existing financial system seems to me an intractable problem if it’s to be centrally planned; a problem that’s shared by all but is no one’s particular responsibility, and goes well beyond my pay grade and proverbial salt.
And then, let’s say tomorrow the financial system explodes, or implodes, for no immediately apparent reason. Now what?
Let us assume the worst case scenario, that most of my personal wealth is wiped out and any assets tied to my name are worthless.
I pull out my Ubuntu phone (which happens to be running an Ethereum node), open up my mobile browser and point the address to uPort.me. I take a picture of myself and upload it to the blockchain; I fill out basic information about who I am, where I live and how to contact me. I link some of my surviving social media profiles to my uPort persona and finalize its creation. Boom. My self-sovereign identity is born.
Now that I’ve entered the portal into the decentralized web, I need to get ahold of some cryptocurrency to transact with. Luckily, there is a faucet offering a little amount of Ether, but that’s only enough to get me through tonight. I will need to find work. Unsurprisingly, no one is hiring right now, so I need to get creative. I logon to my Twitter account and turn on the GPS on my phone to pull in location-based content so I can see how everyone else is handling the crisis. Luckily for me, people are tweeting odd jobs and requests for information and placing bounties on their posts using Horde. I find several easy jobs that I can immediately receive payments for, making the prospect of tomorrow a little less dim.
I open up the DappStore on my Ubuntu phone and download a Dapp called WeiFund. This neat little Dapp lets me launch a crowdfunding campaign across the entire decentralized global network in as long as it takes me to write up a business plan. Thanks to my bounty hunting activity on Noncense and Horde, my uPort persona has been gathering a positive reputation that’s being collected in a RepSys smart contract and displayed on my WeiFund landing page. The combination of my high reputation and winning smile is bringing in many small investments and encouragement from people all over the world, but it’s still not enough to make this a success.
I fire up the Token Factory Dapp, which allows me to issue shares in my company, Average Joe & Co., in the form of digital tokens, which I send instantaneously to each owner. I link these tokens to BoardRoom, Ethereum’s decentralized governance tool, and grant each shareholder’s uPort persona access to the virtual boardroom dashboard.
Just a year later , business is booming. I’ve helped onboard hundreds of clients onto Ethereum, managing to operate solo, due in part to how easy it is to invoice my clients and receive payments.
This crypto-reverie paints a rosy, albeit simplistic, view of the future of finance,
So... I wish articles like this didn't immediately veer into blowing up TRW and kickstarting blockchain onboarding business plans. 'cuz it's bullshit. It's the thing that makes the conventional financiers ignore the cryptofucks, and it's the thing that makes the cryptofucks fail to see the reality of their situation. And I'm not going to pretend I know why crypto is hot right now but I can guess and it's a lot more prosaic than Ethereum nodes on your cell phone. The fact of the matter is, nobody trusts the market regulators anymore. The markets throw tantrums and get their way and we're left lofting this impossible ever-continuing bull market. It's synthetic, everybody knows it, and everyone's afraid of how big a splash it's gonna make when it stalls out. Really, everyone's gonna be fine. "Capital" is not "stuff" it's an integral of "stuff" and even after an inflection point a bunch of people working together in a positive-sum system will thrive, albeit at a new and unpredictable trajectory. But if you can protect your money, you protect your money. And the thing is, you used to protect your money in the bank. You saved for a rainy day, and you put money away for retirement where it could compound interest. But interest rates have been effectively zero for the better part of a decade and large swaths of the world are going to negative interest rates, which doesn't mean you're going to see anything that looks like that on your personal bank statement but mark my words, the fees are going to go up. Meanwhile every financial advisor that has so much as glanced at Yahoo Finance in the past six months is recommending you convert a portion of your holdings to "cash." That means "pull your money out of the market where it can't get hurt." That's a retraction and it causes recessions which are completely inevitable at this point but the regulators are doing everything they can to keep things in the black for as long as they can so they're penalizing "cash." Larry Summers wants to ban the $100 bill. There's talk of abolishing the 500 Euro. Meanwhile Japan, which went hard into negative interest rates at the start of the year, is buying all the safes they can find. Gold is up. And we haven't even talked about China, where the command economy that pretends to be a market economy is having to get more and more command-ey in order to prop up trade. So. you want to hide in cash, and cash is becoming hard to find. You want to tuck it away in foreign accounts, but Uncle Sam is getting awfully nosey. You want to put it in bonds, but bonds are cratering. And by "you" I mean that theoretical rich person that you usually picture as the "invisible hand" not actually you because you're proud that you have a retirement account, even if it would probably last you six months at your current burn rate. So, you. Gonna buy gold bricks? Gonna grab phat stax? I dunno, real estate? Sure. probably all of those things. But anybody with a little memory remembers BTC at a buck, and remembers BTC at $1200, and knows that it can't be traced. Bonus points if you're a Chinese Tong since you already own the servers it's on. And for everyone else, Ripple. Ha! So. There's these kids, and they read ZeroHedge, and they dream of a post-economic meltdown utopia where their Ubuntu phone launches them onto an exciting future of Ethereum onboarding for fun and profit. And then there's grownups who know that even Weimar Germany had rich people and diversification has gotten a little more interesting than it was back in the '80s but in the end, wealth is wealth. And in their world, the most useful thing about cryptocurrency is the fact that it doesn't charge them a fee for existing.
I almost feel guilty for not adding text to the top. However, I genuinely LOL'd here: We are pretty much on the same page. Ethereum is all kinds of useful, and will only become more so, but IMO the potential for Ethereum to enslave is real too. The blockchain is not going to be implemented from a clean slate. At best (worst), we are going to get a global depression out of our current financial situation. Ethereum is going to inherit the sins of this system, and only over a long time will our society reflect some sort of new possibility. I have a fondness for essays like this that try to patch together big ideas, but I also found it interesting because Tumlos does Business Development and Strategy for ConsenSys. They are working with Ubuntu to get Ethereum running on every Ubuntu phone, and with Microsoft to provide Ethereum as a service on Azure. IMO the fact that Ethereum can draw people with such visions is good evidence of its potential. Although I see his sequence of events as extremely improbable, I do see an alternate economy evolving that does not jive with 1099's and W2s, and I see it coming fast. A global recession isn't going to change that outcome very much. I just posted this: Which is going to give the Commodity Futures Trading Commission a wedgie. Funny, MS providing decentralized options as a service. Here in 2016, we talk about how much USD a BTC or ETH is worth. The Central Banks are trying to burn the fiat in your bank account, and fiat has no proof of existence/ownership. As you said, they are turning over more and more mattresses. It might happen before it, but if a reserve currency experiences bail ins, we are going to start talking about how much ETH or BTC a USD is worth. Part of the Core/Classic battle in bitcoin is fueled by this. Regardless of where Bitcoin Core's small block roadmap comes from, I've come to the conclusion that many small block supporters are modern gold bugs that see the ability to keep bitcoin light as a matter of long-term survival. Many of them don't care if bitcoin can scale. They don't see it as a payment system. They might be right. That's one reason why I have not converted all of my BTC to ETH.The Great Humungus is eating Alpo out of a hubcap and you're launching an Ethereum onboarding company on your Ubuntu phone.
And in their world, the most useful thing about cryptocurrency is the fact that it doesn't charge them a fee for existing.
Personally, I think change will be so gradual as to be invisible. Most people don't know that Apple Pay and Square are only possible because of the Check 21 Act of 2003. It was a good 8 years before that mattered to anyone for reasons other than they didn't get paper checks with their statements anymore. For consumers, it's pretty much "whoa! I can take a picture of my checks!" but for interstate commerce it kind of blows a hole in the whole ACH network.