It amazes me how many people misread, half-read or assume things based on what you say. There were two instances in the last week. The first:
If you click on either tweet, there’s a thread that people interpret statements as my beliefs, but it’s based upon their interpretations. The first was challenging the statement:
“Unbacked cryptoassets are highly volatile, given that they have no intrinsic value”, made by Sir Jon Cunliffe of the Bank of England, and not by me.
The second is my statement:
and the assumption that the word ‘governor’ means the State.
I guess another tweet adds to the depth of this debate:
In other words, as I’ve said so often, you cannot have money without government. It's a bit like you cannot have medicines, hospitals, airlines or other areas, without some form of government to license those involved and regulate and monitor their activities.
This is a debate I’ve had with the cryptocurrency community for a decade, and their reply is always you’re a Statist. The thing is, I’ve never said that the government is a nation state. The government could be the network of citizens, which is what bitcoin has promised.
However, when you have things on the network that break the trust of that network, you have a house of cards. This is why the gradual crumbling of Terra-Luna, Celsius, FTX, Genesis and more is a challenge to the community. They break the people’s trust and the people lose their money. This is why you need money with government.
But when I use the words government, governance or governor, I don’t mean a regulator, state or national government. I mean a structure to provide oversight to ensure that people don’t lose their money. Without such controls, you just have Ponzi schemes.
Nevertheless, and I learned this one way back with MtGox, Terra-Luna, Celsius, FTX, Genesis and more are not the foundation stones of our next world of money. They are just schemes and poorly manages exchanges for cryptocurrencies. When you come back to the core of blockchains, the foundations are still stable.
Meanwhile, I had another comment that gold has no governor.
Gold also has governance. The governance is in the trading of gold, assessing its quality and value, and the belief that gold has value. Specifically, having bought and sold gold, the wholesale and retail markets are controlled by licensing and credentials. Otherwise they’re just pyrites (ed: or is that pirates?). People within the precious metals market know this. Just look at diamonds, as mentioned yesterday:
“Diamonds are intrinsically worthless”, Former De Beers Chairman Nicky Oppenheimer
Anyways, I’m writing this as something to specifically refer to more regularly which is that you cannot have money without government, as I’ve always maintained. You just need to define what the governmental system is. Is it the network and connectivity of citizens that is censor resistant and controlled by algorithms; or is it the citizens ruled by a nation state, who regulates and monitors activities?
Millions of people believe in the former; but billions of people are run by the latter and, until there is stable, non-volatile cryptocurrency, it will probably stay that way.
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...