The Future of Digital Currencies

“Oh, but now Digital.” “Digital” – a word whose origin is the Latin digitalis, from digitus (“finger, sock”); now its use is synonymous with computers and televisions, cameras, music players, watches, etc., etc.

At one time, the printing press caused a revolution that many saw as a democratic force. The books available to the masses were indeed a revolution; and now we also have e-books and technological tools to read them. The fact that the original words have been digitized and decoded back to the words electronically does not mean that we trust the words we read less, but we can still prefer the aesthetics of a physical book to a piece of high-tech plastic that needs to be continued. charge the battery. Can digital currencies, such as bitcoin, just as effectively contribute to positive social change?

To answer this, we must ask what about money, how can we understand, use and incorporate it into a sustainable model of “a better world for all?” Money, unlike any other form of ownership, is unique in that it can be used on anything before it even happens. It means nothing, but can be used for great good or great evil, and yet it is only what it is, despite its many manifestations and consequences. This is a unique but much obscure and misused product. Money has the simplicity of buying and selling and the mathematical complexity demonstrated by financial markets; and yet it lacks the notion of egalitarianism, moral and ethical decision-making. It acts as an autonomous unit, but is both endogenous and exogenous to the global community. It has no personality and is easy to replace, but in a global context it is seen as a limited resource, its growth is governed by a set of complex rules that determine behavior. However, despite this, the results are never entirely predictable, and moreover; a commitment to social justice and an aversion to moral disorder is not a mandatory requirement of its use.

In order for a currency to be able to perform its financial functions effectively, the intrinsic value of money must be a common belief of those who use it. In November 2013, the U.S. Senate Committee on Internal Security and Governmental Affairs recognized that virtual currencies are a legal tender, an example of which is bitcoin. Due to the very low transaction fees charged by the “bitcoin network”, it offers a very real way to allow the transfer of funds from migrant workers who send money back to their families without having to pay high transfer fees that are now charged by companies. . The European Commission has estimated that if the global average remittance of 10% decreases to 5% (the 5×5 initiative, approved by the G20 in 2011), it could lead to an additional $ 17 billion to developing countries; using a blockchain will reduce these fees to almost zero. These money transfer companies, which extract wealth from the system, can become direct when using such infrastructure.

Perhaps the most important point to note about cryptocurrencies is the distributed and decentralized nature of their networks. With the rise of the Internet, we may only see the “tip of the iceberg” in terms of future innovations that can use the untapped potential to resolve decentralization, but on an unprecedented or unimaginable scale. Thus, while in the past when there was a need for a large network, this could only be achieved using a hierarchical structure; with the consequence of having to give “power” to this network to a small number of individuals who have a controlling stake. We can say that bitcoin is a decentralization of money and a transition to a simple systemic approach. Bitcoin represents the same significant progress as peer-to-peer file sharing and Internet telephony (such as Skype).

There is very little legal regulation of digital or virtual currencies, but there are a wide range of existing laws that can be applied depending on the country’s financial framework: taxation, regulation of bank and remittances, securities regulation, criminal and / or civil law, consumer rights / protection, regulation of pensions, regulation of goods and stocks and others. Thus, the two key issues faced by bitcoin – whether it can be considered legal tender, and if an asset, it is classified as property. It is common for nation states to explicitly define a currency as the legal tender of another nation state (e.g., US dollars) without allowing them to formally recognize other “currencies” as currency. A clear exception to this is Germany, which allows the notion of “unit of account”, which can thus be used as a form of “private money” and can be used in “multilateral clearing circles”. In other circumstances, which are considered property, the obvious difference here is that, unlike property, digital currencies have the ability to divide into much smaller amounts. Developed, open economies tend to allow digital currencies. The US has issued most of the instructions and is very much represented in the map below. Capital-controlled economies are by definition effectively controversial or hostile. As for many African and several other countries, the topic has not yet been addressed.

Based on the principles of democratic participation, it is immediately apparent that bitcoin does not satisfy the positive social impact component of such a goal, as its value is not one that it can influence, but is subject to market forces. However, any “new” cryptocurrency can offer democratic participation if the virtual currency has different management and issuance rules based on more socially democratic principles.

So what if a “digital” currency can provide a genuine alternative to existing forms of money, playing the role of a favorable contribution to: the goals of promoting a socially inclusive culture, equal opportunities and promoting reciprocity; which, as the name implies, are alternative and / or complementary to the official or national sovereign currency? Virtual cryptocurrencies such as bitcoin are a new dynamic emerging in the system; although in the early days the pace of innovation in cryptocurrency was dramatic.

There are many factors that determine the “effectiveness” of money for achieving positive social and environmental change; penetrating political ideology, economic environment, the desire of local communities and people to achieve alternative social results, striving to maximize economic opportunities, increase social capital and much more. If the local digital currency can be designed to create additional resilience in the local economy and improve economic performance, then the introduction on a broader basis deserves investigation. If the current economic system cannot provide for itself, it manifests itself in ways such as: increased social isolation, higher crime rates, physical experience, poor health, lack of sense of community, among other undesirable social consequences.

The future is digital?