This week we continued with our quest regarding the drawbacks of fiat currencies and how we can solve those drawbacks using cryptocurrencies. We saw that while the major argument is fiat is stable, there are many loopholes in design that allows for manipulation, and the fact that there is fair distribution.
Edward Deleon Hickman, Founder and CEO of Anatha
DeLeon has been involved in cryptocurrency since its inception and is a leading limelight in Hawaii’s decentralized digital currency space. He is a certified blockchain professional with a background in both finance and digital media, and has personally participated in over 60 initial offerings and serves as the foundation for the ANATHA ethos.
When we talk about fiat, what are the main bad sides about the fiat money system as regards wealth creation and distribution?
The problem is centralization of power and a breakdown in terms of efficient decision making. Allow me to frame it this way, even if we were to assume the small, insular group of individuals who manage the creation and distribution of nationally endorsed fiat currency were the smartest, most well intentioned human beings on the planet, they simply cannot make efficient choices for hundreds of millions (if not billions) of people simultaneously. There will always be “collateral damage” even under the best of circumstances when you attempt to address needs at scale in this way.
If you study the history of fiat currency, in particular the history of the Bank of England you discover that it has generally been used as a means for controlling a region without the need for having a large occupying military force. Simply by demanding, (at the point of a gun if need be) that its colonies use the English Pound a small island nation of roughly 40mil people was able to control the largest empire the world had ever seen and all of it hinged upon the forced use of a unit of account that only the Bank of England could issue.
So while Fiat currencies have allowed for a small subset of groups and individuals to become monstrously wealthy, the assertion that they have by and large “created wealthy people” is based on a very myopic view of the world. Fiat doesn’t “create wealth” it distributes the wealth and value the society itself produces, more specifically it *re-distributes* wealth according to the whims and fancies of a small insular group who don’t seem to have our best interests in mind but more importantly don’t allow us a voice in the way in which our collective wealth is distributed.
How do you think crypto can fix these problems? How can it do this?
What crypto allows for, first and foremost, is a competitive landscape in the most important market on the planet, MONEY which is ultimately the tool which allows for the diversification of labor that gives rise to civilization.
It forces the very economies we live in to compete for our inputs and in doing so allows for levels of innovation and efficiency far beyond what the current monopoly on “money” fiat has had for all of living memory might allow for. It realigns incentives and pushes decision making out to the edges, which in term gives rise to the beginning stages of collective intelligence. That is to say, it gives us back our voice; it allows us to choose for ourselves and in doing so leverages the collective brainpower and life experiences of the entire human race.
As the open source movement has taught us, a large group of humans coming together in open participation towards a common goal will, by and large, produce more useful results than any group of “smart” people locked in a room together attempting to solve the same set of problems.
If you’re still not convinced, consider this; in our current economic system 9 million people die every year of hunger and hunger related disease (on a GOOD year, 2020 was FAR worse due to the economic lockdowns). We produce more than enough food to feed everyone but due to a lack of proper resource allocation and the current economic policy of the major nation states we lose roughly as many lives as we lose during a major world war per annum simply because of bad design on the part of the current economic overlords.
The good news is we can now replace them with a few lines of code and we are no longer trapped in one economy due to geographic limitations. We can now join a new economy simply by installing an application. We can then choose from a highly competitive landscape of options and in doing so discover the economy that best suits our highly specific individual needs and objectives. While most people are just realizing now that they even have a choice, seizing that choice will create the largest transfer of wealth in human history and unlock a period of flourishing unprecedented in living memory.
Fiat will continue to exist in this new paradigm but unless the leadership at the various central banks that are now competing for our inputs start making smarter, more mutually beneficial choices about how they manage their respective economic fiefdoms they will find themselves disintermediated and disenfranchised by the market, as evidenced by crypto’s incredible growth and price performance relative to ALL fiat currencies in the market today.
Wouldn’t crypto create inequalities as well?
Deleon Hickman: It is entirely possible for us to build shiny, new, faster more efficient forms of totalitarian economic tools that continue to serve a small insular group above the needs of the many and in doing so generate tremendous wealth stratification… except that any such system would find itself competing with open, transparent, highly efficient systems which are predicated on, if nothing else, creating a more level playing field in which everyone has access, regardless of who they are or where they are in the world.
While our economies will always be a competitive landscape in which exemplary individuals will be afforded the opportunity to rise in stature while accumulating resources, we can at the same time afford upward mobility while ensuring that no participant in the global competition we call “the economy” is living in poverty.
The promise of crypto isn’t to make all members of society have the exact same level of economic resource, the promise of crypto is give every the same level of *access*. By not locking anyone out of our economies we not only will be able to raise the lowest rung of the economic ladder we can also raise the top rung as well.
The part that will surprise everyone, is that we can wipe out poverty while simultaneously allowing for individual wealth and ambition. These two objectives aren’t mutually exclusive, they are synergistic. The more people we raise out of poverty, the more economic energy we will have in the market for everyone to participate in.
If you take nothing else away from what I am saying here, it’s that including the billions of people who are currently locked out of our economic system, locked out of what we call, “The World” we will create more wealth for everyone including those who are already wealthy.
What is likely to happen when people get used to using crypto in the system? Won’t rich people curve ways to enrich themselves also?
Deleon Hickman: The smartest, most driven members of society will always outperform others in any competitive marketplace but we can, at the very least, create an economic landscape in which everyone gets a chance to compete. No system can promise everyone will self-actualize, since self-actualization by its very nature is a personal journey. We can however create an economic substrate in which people are more likely to self-actualize and in doing so unlock human potential across the globe.
Again, this isn’t purely about altruism. It isn’t philanthropy; it’s making use of the most valuable resource we have in the global economy, human beings. It’s simply smart design to include everyone in the global game; we call “The Economy”.
In our current model we lock most people outside of meaningful participation and in doing so create enormous inefficiencies, lost productivity, and unfavorable outcomes. We have essentially built a global human farm but we only water a small portion of our crop. All I’m suggesting is that we water everyone to see what grows.