We Need a Decentralized Currency and Finance Model

By tying itself to the US dollar and a centralized system, global banking and finance creates global instability and imbalances, Coindesk writes. A bad decision by one nation cascades into negative outcomes for everyone. The solution is decentralized finance and currency.

What does that future system look like? Western governments won’t trust a currency issued by the Chinese government, and Europe’s coordination problems mean the euro isn’t really a contender. Perhaps it will be a multi-currency system.

When I wrote “The Unfair Trade” in 2011 – before I’d had any real exposure to bitcoin – I was in the Carney camp. As I saw it, a multilateral reserve currency managed by the IMF was the only way out of our broken financial system.

But now I see the problem in more sweeping terms: The rise of the internet produced a loss of confidence in governments and created new transnational communities of power as wealth imbalances in the age of globalization fueled resentment toward the incumbent neoliberal order. Whatever system emerges, multi-currency or otherwise, it needs to restore people’s sense of control over their assets and identities. And it needs to be digitally native.

That inevitably points to digital currencies – in some form or another.

While it’s not clear bitcoin is the answer, not with its failure to decouple from the past year’s slide in financial markets, I continue to believe in the principles upon which Satoshi designed it.

The dollar system’s replacement needs to incorporate some form of digital, censorship-resistant money that’s immune to the failures of centralized governments, something that looks and feels more like the original, decentralized design of the internet.

Whatever comes next, it must reflect the wishes of the human beings who use it. It shouldn’t be up to faceless international bureaucrats to decide.