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    The Lesson of Cryptocurrency: We Can Design Better Money

    By design, cryptocurrency is made for equality by assigning value to humanitarian efforts, feeding the hungry and lifting people from poverty.

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    Money, and Our Economic System, Are Not Natural

    I think it’s fair to say that most people never question how money, or the economy, works. Ask pretty much anyone, “Who decides when and how much new money is created? Where does that new money go? How much is in circulation now? How would I even find out?” and they’ll shrug.

    Somehow, we’ve come to think that money and economic systems are natural. Nine million people starve to death every year? It’s a shame but so it goes. Forty percent of Americans can’t access $400 in an emergency? I’m sorry for them. Nearly two billion people don’t have access to basic banking like storing, sending, and receiving money because they don’t have official ID papers? Too bad. I wish there was something to be done.

    Then along came Bitcoin and suddenly we had a new money with new economic mechanisms. For instance, we know exactly how many bitcoin are in the world and how many there will be. That’s a dramatic change from the obtuse, shadowy ways of the Federal Reserve and its US dollar. And anyone can buy, sell, or store bitcoin — which is not true of national currencies. For those, you need a special piece of paper; for bitcoin, all you need is a phone.

    And just like that, two major issues of the current economic system — certainty around inflation and access to banking (as well as other problems) — were solved.

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    Designing Money for Desired Outcomes

    The fact is, our money is designed to operate a certain way. It is not natural. Money does not emerge from the world along with species, weather, and canyons grand and small. No, our economy is designed to produce certain outcomes. Sure, not everything can be controlled; there will inevitably be outcomes that could not be predicted. But the role of economic design is to create guard rails, hedges, infrastructure, and incentives that attempt to steer the flow of value to produce certain outcomes.

    The question, then, is: What outcomes do you want? What do you want to incentivize?

    • The uncontrolled centralization of wealth? Or the distribution of wealth across a greater number of people (without taxation)?
    • Do you want to incentivize companies to extract and hoard as much money as possible? Or assign financial value to services that lift people out of poverty, clean our oceans, build houses for those in need?
    • Do you want your economy to be inclusive? Or only for a designated group?

    Cryptocurrency is programmable money. We can use it to assign value to things beyond accumulating for wealth for wealth’s sake — such as helping others. We can create mechanisms that are inclusive, that value human needs, that work to uplift everyone, equally. Not through taxation. Not through extraction. But by design.

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    Updated on Nov 18, 2021  |  Originally Published on Nov 16, 2021
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