When I was young, I was fascinated by science fiction. Once I discovered a Jack Vance’s story  where the Earth had changed and regular causal relationships disappeared. That world became deadly for most average people (the Relics). New mentally ill members, also called Organisms, have succeeded in adapting to the illogical new world. That time the story seemed quite amusing to me, and I didn’t know that I would observe something similar in reality.
Much later, after learning about the concept of the “black swan” , I looked at this story in a completely different way. Generally speaking, the “black swan” is a highly unlikely event that does happen and can be easily explained in retrospect.
For Relics, every second of existence was like a meeting with the “black swan”. In a modern world, “swans” appear in increasing frequency. If we assume that this process continues, the fantastic world of Jack Vence’s story will become a reality.
Why is this happening? In the modern world, the amount of information is growing at a tremendous rate, and the human has reached the limit of its cognitive abilities . The gap between reality and a scope of knowledge about this reality is expanding more and more, and “black swans” actually appear from it.
In my honest opinion, the increase of this gap results zooming up in popularity of data mining: the tools to process large amounts of data that the human brain can’t cope with it.
But let’s get back to the point. The definition of value is quite subjective. A rare postage stamp is valuable for a collector, but a person isn’t engaged in collecting perceive its value as a quantity that this person can get for it. In other words, the faith in the future it can be exchanged for something else. These sharp changes in the concept lead to economic bubbles bursts.
In the 21st century, humanity passed into the information age. More and more funds transform into information values. The most costly companies have intangible assets to date, so-called know-how: Apple, Google, Microsoft. The usual business schemes are radically changing. For example, the transport company Uber (the court recognized Uber as a transport company), does not own vehicles at all, and this is nonsense from the point of usual representations.
These days technologies of virtual and augmented reality are actively developing. Although they are not widespread now, as soon as the dozens and hundreds of people start using them, the line between the real world and the virtual one will begin to blur.
What about money? “Money is an effective way to store and remove wealth: burdensome tangible property, such as land or goats, turns into a compact and mobile one – for example, into cowrie shells. But the shells are valuable only in our collective imagination. Their value isn’t due to a chemical composition, colour or form. In other words, money is not a material reality, but a psychological construction. Money is the universal thing and a perfect system of mutual trust in the history of mankind “.
Any valuable thing has the following qualities: a small quantity and a difficulty (or impossibility) to obtain it.
Until the seventies of the twentieth century, there was a peg the money to gold, a well-established value. This binding somehow guaranteed the value of the emitted money. Nowadays the emission actually depends on the governments and banks. There are lots of possibilities to make money, and the printing press is far from the main instrument of the issue. In 2006, the total money supply was 473 trillion dollars, and cash was less than 47 trillion of them , in 2015 even more . The state-issuer doesn’t guarantee that the issued money can be exchanged for something else, and as a consequence – inflation, the loss of confidence in the fiat money and the existing banking system.
Stalwart supporters of the gold standard are actively campaigning for its return, but gold does not satisfy all the demands required by the information age. As mentioned earlier, most of the money supply is represented by data in computers of the banking system. Electronic payments have firmly rooted in our lives. But the main problem of the existing system is the centralized control over the funds.
The appearance of cryptocurrency dramatically changed the situation in this area. Cryptocurrency has the following properties, allowing them to be the most convenient and protected (in many ways) kind of money:
- limited emission;
- the expense of forgery exceeds the cost of the benefits;
- convenient payments;
- the lack of centralization and, as a result, a decrease in the banks and states influence.
These properties make cryptocurrency very attractive in terms of protecting the savings.
There are arguments that cryptocurrency is a financial bubble and isn’t worth a penny. In fact, it is not a currency in the usual meaning. This is a public register of all financial transactions. Being based on the registry, you can tell how much money is stored on each account. And the most important thing is that this registry is extremely difficult to forge.
Try to answer the question: do you know anything possessing the property of money and being more trustworthy as a kind of exchange? I agree that there are manipulations with cryptocurrency. It is possible owing to the relatively small amount of funds and people involved in this field. However, the general trend suggests that such statements are just attempts of the Relics to stop changes in the surrounding world.
At the moment, we are only at the beginning of the financial revolution, and, considering the speed of technological changes, I can assume that crypto-currencies will become the usual means of payment in the next five years.
A new era assumes new values. I hope you are both insane and reasonable enough to accept upcoming changes. Welcome to the digital world!
- The Men Return. Jack Vance.
- The Black Swan: The Impact of the Highly Improbable. Nassim Nicholas Taleb.
- A Brief History of Humankind. Yuval Noah Harari.
- Information overload: a curse or an evolutionary barrier?
- World’s money supply.