The decade of the consumer-civil administration dilemma

8 min read

The health of the currency of a democratic nation is formed by two forces: monetary policy established by its Central Bank; and fiscal policy established by the government of the state. The purpose is that currencies and politics are interconnected, whether we like it or not. But that is old news.

Citizens of the cryptosphere are already aware of this, because many members of the community will feel attracted to crypto due to dissatisfaction with the governance of modern currency and the influence that politics has on it. We at least recognize it and make choices to cover our exposure to it.

National politics are increasingly unstable – the political landscape is broadly colored by polarized opinions. More and more, elections around the world are leading to coalition governments, because no party reaches the majority consensus. Issues such as the Brexit – or the incredibly narrow results of the last presidential election in the United States – demonstrate the deeper gap in opinion, with the result that governments stagnate or act against the will of a significant proportion of the population entitled to vote.

These are not solid foundations for the money that feeds the life of the citizen of a nation state. Due to the power of technology, we are now global citizens and global consumers. Yet our global identities are tied to and limited by our standard currency – that of our own nation state. Take the British pound – the currency of almost 68 million people for example. When the Brexit voting result was announced in 2016, the value of the pound fell – a decrease, the currency of which has not yet been fully recovered. Regardless of whether or not you voted for the UK exit from the European Union – the weight that this sudden depreciation placed on the public's wallet was the same.

Although it is only January, we have already seen an increase in political unrest in 2020 – such as the rising tensions between the US and Iran, with a historically tense political background in the Middle East and concerns from leaders worldwide – how can currency and the value for holders, playing out in a sustainable way against an unstable political background in the next decade? We see three forks in the way ahead.

Central banks are in charge

We have already seen a number of central banks accelerate to enter the cryptocurrency space. The central banks of the authoritarian countries Russia and China seem to take the lead, whose initiatives have been in the news for some time. Central-state nation-wide banks across the eurozone have taken mediocre positions – indicating that as they examine the application of technology, it is unlikely that they will soon see their own rollout.

Related: the financial system of the future – who benefits from CBDC & # 39; s?

But let's say, for the sake of argument, that central banks are rolling out the digital iteration of their respective currencies in the next decade. While this may seem like the most logical progress, there are two sides to the digital currency: a digital currency issued by the central bank is built in but does not accept the challenges of paper currency.

What's more, this digital national currency is still subject to government tax policies, as well as to the challenges of a nation whose consensus is increasingly divided. This scenario is not sustainable for the same reasons as non-digital national currencies.

Companies take the lead

Another scenario is that digital currency initiatives from companies come forward. This would potentially isolate the purchasing power of a particular currency holder against government agendas and central bank policies, since the management of such a currency would be the privilege of the company.

Related: Libra seen as a threat to the sovereignty of the national currency, argues with G-7

Yet this can be a case where you jump out of the pan into the fire. Companies are primarily managed by their shareholders, or by the board of directors, who trust that they act in accordance with the values ​​of the shareholders. While this means that decision-making on governance issues could be more efficient, we must remember that shareholder values ​​tend to be more profitable.

This is of course completely healthy for a company, but currencies should not be seen as a business opportunity. If a company were to produce and implement a new currency, the direction of which would be determined in accordance with shareholder values, we would essentially return to the fiscal governance of pre-democracy. In this case, decisions would be made by an elite ruling class, exposing consumers' purchasing power to an agenda set to make a profit for a select number.

A technological change of tact

In my opinion there is no doubt that technology will take into account the future of currencies: technology has already become intertwined with most aspects of modern life. When it comes to money and accounting, technology can offer enormous value through its agility, security and automatic, unchanging administration.

The dilemma of civic governance is really a matter of purchasing power – and how much of the purchasing power of a currency needs to be controlled according to political or business agendas. Of course, identifying a challenge is diagnostic – and a diagnosis is not a solution. But here the argument for technology becomes particularly attractive.

If the technology is applied correctly, currency holders can set the agenda for managing their money. So, instead of peripheral factors – such as the public sentiment or spending agenda of a particular government – that determine the health of a currency, individuals can have a democratic voice in how they want the currency they own to be governed. This kind of monetary democracy is unprecedented – because until technology revealed the building blocks, it would not have been possible.

Now it is. With the help of blockchain technology and a thorough approach to drawing up issuance policy and governance policy, we can build a currency that is not dependent on a national or business entity for issuance. Instead, the crucial functions that control the money supply can be based on predefined rules and algorithms – which offer built-in transparency and reliability and the certainty that these functions will be performed as intended. Because this is not limited by geography or borders, it can function as a true global currency, accessible to anyone with an internet connection.

The key issue is this: there is a growing need for a global currency that is not a by-product of national politics. In our opinion, the governance of a currency must take into account the wishes of its holders. Particularly as we are increasingly involved with global goods and services at the individual level, national currencies are increasingly showing that they are not suited to the needs of modern citizens at the global level. National currencies usually meet their needs of national economies – they are designed for this. It makes sense that a global economy needs a tailor-made currency that meets its needs. With modern technology, users of a currency can become real decision-makers; therefore, a global digital currency – which will unite all humanity and serve the needs of users without political interference – is the most compelling part I can imagine.

The opinions, thoughts and opinions expressed here are from the author only and do not necessarily reflect the views and opinions of Cointelegraph.

Ido Sadeh Man has spent the past 10 years leading product and technology organizations including Odysii and Mobli. Consider blockchain as one of the required tools for creating updated governance structures for the data age citizen, Ido has set up an applied research project within Saga the New Contract Policy Institute. The project contributes to the process of defining a new paradigm for a coherent social exchange of value – i.e., an updated social contract.

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