Cryptocurrencies Offer Real Possibilities of Value-Based Economics
Cryptocurrencies, hailed by aficionados as the antiestablishment equalizer poised to disrupt wealth distribution, corrupt institutions and even governments, have led to an unsurprising backlash, with many governments and institutions clamping down on crypto, imposing everything from restrictions to outright bans. In many cases, however, the tighter restrictions have been rolled back, or nuanced enough to allow the ecosystems to continue thriving. Markets get rocked almost daily with kneejerk reactions that make investors question their sanity…the reality is, the market is volatile, and probably will be for the foreseeable future, but eventually it will settle down as governments across the globe implement regulations that strip out the most egregious risks affecting high-street investors.
Unfortunately, many investors bought in when the market was at its peak, and have been left licking their wounds, demoralized and probably a little wary. You may however be surprised to learn that even after this year’s lemming run, 18% percent of U.S. students own cryptocurrency and 26% want to learn more about cryptocurrency. Intriguingly, of those interested in cryptocurrencies 47% were social science majors (Coinbase Reports Aug-2018). The upcoming generation of cryptocurrency users demonstrates a strong concern for society and an appreciation of companies that support their causes (Millennial Pulse, The Shelton Group), hinting at a future society that might esteem a “values” based economy over a traditional fiat system. But more on that later…
Perhaps cryptocurrency’s most disruptive potential isn’t its ability to upend traditional payment systems, revolutionize fundraising, enable distributed computing or bank the unbanked: its greatest power may be the ability to make us question our value systems. If, in 2008, you’d told the average Bitcoin user that BTC would sell for anything from five to 15 times the price of gold in less than 10 years, they’d have laughed at you — then quietly stocked up just in case you were right. A one-ounce Gold American Eagle that currently sells for around $1,248 has a face value of just $50. So…what exactly is driving the other $1,198? Is it any wonder that most millennials don’t trust banks or governments?
Once you realize that sovereign currencies are no longer underpinned by tangible assets, fiat money can easily be viewed as a speculative system with little to no more credibility — and to many, far less — than cryptocurrencies. Central bankers and economists rally against cryptocurrencies because they know crypto threatens not just the mechanical aspects of asset swaps, but the entire underlying capitalist value system.
Despite the recent market retraction there are many good reasons to be bullish, given the near daily industry advances and government adoption initiatives being reported in the crypto press. And, even if the SEC clamps down on non-compliant cryptocurrencies and tokens, alternative value stores are here to stay. Alternative value stores will pave the way for new economic models, such as “action” or “deed” based value systems, essentially making “values” themselves a store of value. These “value” stores would be the highest expression of socioeconomic disruption, creating an economic meritocracy based on effort, not preexisting wealth, and not controlled by governments or centralized corporations. This doesn’t preclude governments or corporations from participating in the values economy; quite the contrary, “values” based economies are perfect vehicles for public/private partnerships, as consumers and corporations collaborate on common causes, with public adoption clearly indicating the degree of support and passion society holds for said causes.
A system that gains high consumer approval could be adopted by businesses as a statement of their commitment to a common cause. If multiple companies adopt the standard, users get more fungible rewards and corporations get recognition and an opportunity to create real impact.
Which is better: a value system based on fiat currencies such as the U.S. dollar, which is backed by nothing (except debt)…or one based on tangible actions and deeds?
It’s impossible to know how cryptocurrencies will be used in 20 years’ time, but it is possible to imagine a very different financial system than today’s. As automation eliminates jobs over the coming decades, creating mass global unemployment, “values” based systems of exchange could become the driving force of a new, revolutionary economic model.