I’m about to tell you the entire reason why I’ve spent the last 5 years - my whole software engineering career - working in crypto, and why I plan to continue to do so for as long as I possibly can.
People keep saying that after all this time, we still haven’t found a real world “use case” for crypto. All these years of development, and really how is it any better than technology we already have? It wastes energy, it’s used by criminals, what is the point?
I think now that we have the capabilities of smart contracts and Web3 and all these other tools that have come along with “crypto”, people are overcomplicating it; looking for it to be something that it really never was - or maybe could be in the future, but doesn’t have to be.
At the core, I think it’s very simple and as an industry we’re failing at making the mission clear. So enjoy a small history lesson with me as I give you: The Use Case For Crypto!
Banks have been around for centuries, providing a safe place for people to store their money. But in recent years, they’ve been consolidating power.
In the United States, there were once thousands of independent banks, each serving their local communities. However, over time, many of these banks began to be absorbed by larger institutions through mergers or acquisitions. This consolidation has been going on for decades, and the number of banks in the US has indeed decreased significantly.
According to the FDIC, there were 14,400 banks in the US in 1984, but by 2021, that number had dropped to just over 4,000 and is still rapidly declining.
Meanwhile, more banks than ever are at risk of failing, and bigger banks continue to seize the opportunity to consolidate.
This is happening on an international scale, as the number of banks worldwide has continued to decline year over year.
The consolidation of banks has led to several issues, but most importantly, a slow concentration of more economic power in the hands of a few large institutions. With fewer banks controlling more assets, these banks have more control over the flow of money in the economy. They can set interest rates, control access to credit, and influence the overall health of the financial system.
How can they do this? By continuing to expand their power of policy control through the Federal Reserve. In the US, the Federal Reserve is responsible for setting interest rates, regulating the money supply, and controlling inflation. As an independent entity within the US government, it operates with a certain degree of autonomy, and its Federal Open Market Committee sets the nation’s monetary policy. Through the buying and selling of government securities, the Fed can inject or withdraw money from the banking system to influence interest rates, and either stimulate or restrict economic activity.
So who exactly are these people at The Fed? Unsurprisingly, we find powerful bankers pulling many of these strings.
Let’s take Goldman Sachs for example. Here’s a list of just some of the people from Goldman who went on to serve as public officials, policy makers, finance ministers, central bank governors and government officials worldwide:
And this is only a few of the people from just one major bank. By connecting the global financial system and taking advantage of political appointments, central banks can basically have complete control of the world’s money. Your money.
Circling back to crypto, what’s potentially even worse than all this is that central banks are now exploring the possibility of creating their own digital currencies. These Central Bank Digital Currencies (CBDCs) would be backed by the central bank and could be used as a digital version of fiat currency. While CBDCs could potentially offer benefits like faster transaction times and increased financial inclusion, they could also give central banks (and the govt) even more control over the financial system.
With a CBDC, banks could track every transaction you make, and potentially restrict your ability to spend your money in certain ways. If you do something they don’t like, they can simply cut off all your access to funds.
Or, take a pandemic for example. The bank could decide that they need to “stimulate the economy” during the time of crisis and enforce a negative interest rate, essentially forcing you to spend your money or lose it.
If that sounds far-fetched… take a look at this direct quote from the International Monetary fund — a major financial agency of the United Nations (https://www.imf.org/en/Blogs/Articles/2021/03/03/blog-the-evidence-is-in-on-negative-interest-rate-policies):
“…the evidence so far indicates negative interest rate policies have succeeded in easing financial conditions without raising significant financial stability concerns. Thus, central banks that adopted negative rates may be able to cut them further…
Ultimately, given the low level of the neutral real interest rate, many central banks may be forced to consider negative interest rate policies sooner or later.”
A CBDC makes things like this even easier for banks to implement.
Personally, I’ve always known they’ll eventually do a CBDC whether we like it or not. If the technology exists, they are going to steal it and use it to their advantage, that’s just a given. Whether you think it’s a good idea or not, trying to stop them would be a losing battle.
So what can we do?
Well obviously this is all a very deep rabbit hole you can down. I’ve given you a very high-level overview of how a few greedy bankers could control the world’s assets, but this becomes a very tangled web the more you start looking into it. Whether you think these events are by accident or coincidence, or if you think this is all happening by design, the reality is that either way it’s happening.
And right now, however flawed, the only viable option we have for our assets to exist outside of the rules of this game is crypto — real crypto, not a CBDC.
We need to keep nodes running for non-cbdc chains, as just a small way to help us exist apart from the state, and have access to our funds anywhere no matter what. Thanks to the power of code and the advancements in math and technology that we’ve made over the centuries, for the first time in history we have the ability to store value in data and magically move it around on an immutable blockchain that a bank or government cannot control.
This is exactly why Bitcoin was created. The person who invented Bitcoin left a message in the first ever block, this headline from the Times newspaper the day the block was produced: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” That’s literally embedded into the Genesis Block of the blockchain!
To be clear, here is what this doesn’t mean.
This doesn’t mean that centralized crypto trading shouldn’t be regulated (I think it should be). But no amount of regulation can stop a truly decentralized chain from running, and no one can take your digital assets away from you.
This also doesn’t mean that we can’t still have a CBDC. This doesn’t mean that Bitcoin replaces fiat money and suddenly the whole world just uses crypto for everything. I think that’s where a lot of people outside the industry get tripped up, they think it’s all or nothing. But in reality, crypto just exists alongside these establishments as a little fallback loophole, like a small protest stopping any person or organization that thinks they can rule everything.
Whoever controls the money, controls the world.
That is the entire use-case for crypto. And that’s all it needs to be!