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Why decentralised currencies are a PEST!

Sometimes you debate stuff and a realisation comes. I had one of these today. When futurists talk about the future, they generally based their opinions on forces of change, known colloquially as PEST. Political, Economic, Social and Technological change. So I was having this debate with a friend about the future and that’s when the realisation came. Governments (Political) control Societies (Social) through Money (Economic), which is changing fundamentally thanks to The Internet (Technology).

Banking sits in the heart of this mix as people are moving from being social locally to social media. Social media has no boundaries. I can be social with Chinese via WeChat, social with Europeans via Facebook and social with Americans via Twitter. Or all of those things. So society is moving from being nation-bound to being unbound. We all network and talk to each other everywhere, with no rules or governmental oversight.

Now, that Technological change to Society is a problem for the Government. Governments need to control societies and they generally do this via money. Hence, why banking sits at the heart between government control and social upheaval. And there’s the rub. As technology unlocks society from governmental control, banking sits in the crossroads of change. Maybe that’s why I can blog every day about this fundamental shift, as it’s so interesting.

Take Libra, the Facebook currency.

Facebook has over two billion active users in over sixty countries. It’s a new nation on the network and connects people like never before. Facebook doesn’t recognise the borders between nations, but governments do. So when Facebook (Social) comes up with the idea of offering currency (Economic) that does not recognise borders (Political), well, of course there’s gonna be a knockout.

The thing is, and this is the real question: who is knocked out?

In the case of Facebook, it’s pretty easy. Facebook is a US-registered firm adhering to US laws. But Libra? That’s a different matter. That’s registered in Switzerland, a nation that doesn’t give two hoots about the rest of the world, as long as the money flows. For more on regulating Libra, see my last blog.

Now take bitcoin. bitcoin decentralises money (Economic) through the network (Technology) so that anyone (Social) can trade without government (Politics). Fantaserooney. Until the government (Politics) wakes up to what the democratised, decentralised users are doing (Social) with the internet (Technology) and realise it’s gonna truly mess up their balance sheet (Economy).

In both cases, Libra and bitcoin, government will do their utmost to control and regulate it or ban it.

You get the idea. These four elements are in constant friction and harmony. Balancing the needs of governments to control for healthy economies with the aspirations of citizens to do whatever they want without oversight is a constant battle. Always has been, always will be.

Ah well, that’s my two-penneth for today. Hope you liked it.

Meantime, back to banking and finance. Yep, it sits firmly in the cross-hair of governments and society. Technology is messing that whole thing up, but it’ll work itself out.

About Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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