The Importance of Money

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Hello and welcome to the second episode of the Proof of Writing podcast, a different kind of crypto podcast.

As I mentioned last week, today we’re going to be talking about money. Because I believe in order for people to understand the importance of eCash, they must first understand the importance of money.

Now I know most people already think of money as being important. After all it’s what we use to pay for everything from food, to rent, to our kid’s birthday presents. But I think that’s barely scratching the surface.

Maybe it’s because we’re all so caught up in the pursuit of money that we never stop and think about what exactly it is that we’re pursuing. We never ask where our money comes from, or how it works, or what kind of impact it has on our society. And yet we do ask those questions about the water we drink, the food we eat, and the energy we consume. So why don’t we ever ask those same questions about money?

Is it because as I said, we’re so busy chasing it we don’t bother to ask what we’re chasing? Or could it be because we’ve been using the same form of money for so long we can’t imagine it being any other way?

This episode I want to explain why I think money is so much more important than we already think it is, with the hope that it will get us to start asking ourselves how can we make our money better. We all want cleaner energy, why not cleaner money?

In order to help the discussion, I’m going to use three famous quotes about money to highlight the different ways in which it impacts our society. We’ll begin with our first quote:

Money talks.

When someone say money talks, what they generally mean is that money can buy you influence. You also hear people say talk is cheap, or put your money where your mouth is, all of which is basically to say that money speaks louder than words.

And while I agree with that, that isn’t why I chose to use this quote. Instead, what if we interpreted “money talks” to mean that money can be seen as a form of communication. Not just as a way to demonstrate you have skin in the game, but that it literally speaks to us. Hear me out.

We talk to better understand one another, to discover truths, to coordinate our efforts. Wouldn’t you say money helps us do all those things as well?

In an interview last year, Amaury Séchet, the founder of the eCash project, compared money to the pheromones of ants. He was referring to the fact that while ants aren’t able to talk to each other like humans, they are able to communicate through chemical signals that allow them to mark trails to sources of food, send alarms to signal danger, and even distinguish between ants that belong to their nest and those that don’t.

If you think about it, money performs a similar function for humans. For example, when the demand for a good is high but there’s very little of it, the price of that good goes up and signals to people that money can be made by producing more of it. Once enough has been produced, however, the price goes back down and signals to people that they should move on to producing something else.

This is why money is so critical for humans to thrive, it helps us figure out where to allocate our resources in order to derive the most value. It acts as a coordination tool and helps us build things at scale to drastically improve our overall quality of life and increase the average lifespan. But our money can only do that if it’s healthy and sound, not if it’s been debased to the point of no longer working. Which brings us to our second quote:

Money makes the world go round.

Once again I’m going to take artistic license and reimagine what this quote means. Instead of the conventional interpretation that it’s about how money makes things happen and powers the world we live in, let’s pretend it means money makes the world literally go round and round, as in repeating the same cycles and patterns over and over again. Because if you look closely, that’s what you’ll find.

When you think about the history of mankind, you think of empires. There’s the Roman empire, the Byzantine empire, the Ottoman Empire, and more recently you have the British and American empires. And as we witness what some say could be the end of the American empire, we seem to be following a familiar pattern: that an empire’s demise is often preceded by the debasement of their currency.

It makes perfect sense if you think about it. It takes a strong economy to build an empire, and that takes having a strong currency. When the currency fails, it becomes harder to facilitate trade, and without trade you can’t build anything at scale, and it takes scale to build and maintain an empire.

But it doesn’t just have to be empires. This applies to any nation and its national currency. We saw it happen to Germany’s Weimar Republic as well as in Venezuela, Argentina, and Zimbabwe, jus to name a few. In each case hyperinflation and currency debasement led to societal breakdown and immense suffering by the people.

The point here is that our money doesn’t just influence our daily lives, it shapes the course of human history. Our money talks not just by telling us where resources are needed most, but by helping us measure the health of our society. When the money is sound, so is the society that uses it. But if the money becomes debased, that society becomes debased as well.

Don’t just take my word for it. Go read Ray Dalio’s recent book, or watch the YouTube video based on it, where he talks about all of this in great detail.

Except there’s one thing Mr. Dalio failed to consider, and that’s the advent of cryptocurrencies. I believe crypto has the potential to free us from this pattern for good, because we now have the opportunity to have a form of money that can be better in every way. One that can act as a better market signal, is more transparent, and has a better immune system making it less susceptible to the problems faced by traditional currencies.

Based on historical observations, the average lifespan of a fiat currency is supposedly 27 years. That’s not a very long time. Imagine having to rebuild your society every 27 years versus being able to keep iterating and improving for thousands of years. Instead of having to go through the equivalent of a civilizational pump and dump, what if it was just up only?

Imagine the amount of technological, social, and economic progress we could have made.

Which begs the question, why does our money keep failing to begin with? What leads to things like debasement and hyperinflation?

This brings us to our third and final quote:

He who controls the money supply of a nation controls the nation.

For hundreds, if not thousands of years, humans have had to rely on a central authority to control our money. Whether it’s a king, or a government, the only way we could have a financial system that scaled to serve the masses was by relying on a central mint to issue our money and safeguard it from counterfeiting.

What this means is that whether we’re talking about a monarchy, or a democracy, our money has always been controlled by a small group of people who alone got to decide when we need to print more of it.

But we all know people are flawed, especially those who are entrusted with great power. What inevitably happens is those in charge will one day find themselves in a difficult situation and decide the only way to fix things is by printing more money. Centuries ago this was done by reducing the precious metal content in gold and silver coins, but in today’s world all it takes is a few keystrokes on a computer and trillions of dollars are magically created out of thin air.

This is why our money keeps failing over and over again. Because we keep having to entrust it to flawed human beings who may not always have the best interest of the people in mind when deciding policy, not to mention the fact that they probably have no clue what they’re doing.

And for anyone thinking to themselves, but wait, our money has changed, we’ve gone from using gold coins, to paper money, to plastic credit cards, to the apps we use today on our phones, let’s be clear that none of those things have changed our money’s need to rely on a central authority.

The situation has only grown worse over time as we’ve added even more layers of trust to the system. In addition to a central mint, we’ve added banks to the mix so they can store our money in vaults rather than being able to safely store it ourselves. Then came other financial institutions like credit card and fintech companies that help facilitate transactions over the internet. Something we can’t do with physical cash. In exchange for providing us with these services, these rent seekers take their cut in the form of taxes and fees, while simultaneously making us even more reliant on these trusted third parties because we have no other choice. Trusted third parties that have the ability to not just track all of your spending but can close your account anytime they want at their sole discretion.

This is why I believe cryptocurrencies are so important, because they make it possible for us to finally have a form of money that is inherently different than any form of money that’s come before. Money that no longer needs a central authority or trusted third parties.

When we think of the government, we tend to think of the services they provide like our criminal justice system, public utilities, schools, and so on. But we rarely think of our money. The fact is that while we can pretty much have private versions of everything from healthcare to education, up until now, it was impossible to have a private version of money. But crypto finally changes that.

It’s no wonder governments are fighting so hard to kill crypto. Because they see it as a threat to their very existence. If he who controls the money supply of a nation really does control the nation, using a form of money that our governments can no longer control could lead to the end of their control over us.

And putting an end to their control, is becoming more important than ever, because it’s not just the threat of our currencies being debased, it’s also the threat of our currencies becoming weaponized. The danger of central bank digital currencies is a very real one that most people don’t seem to take seriously. CBDCs would suddenly make the government everyone’s bank. Every citizen would be assigned a digital wallet that’s fully under the control and scrutiny of big brother. It would set the stage for the ultimate panopticon that was once only thought possible in sci-fi novels. A world where our freedom is conditional, a world where we must obey or fear losing access to everything you’ve worked your entire life for.

Up until recently, this kind of control simply wasn’t possible. The technology wasn’t there. While paper money may have its flaws, physical cash served as an important check against the government. It allowed us to transact freely without giving up our privacy. If for whatever reason they closed your bank accounts, or credit cards, as long as there was cash, you could still operate in this world. But as our societies become more and more cashless, we are quickly losing this last line of defense.

You might think I’m being an alarmist, but the weaponization of our financial system is already happening. From the Canadian truckers who lost access to their bank accounts last year for protesting the vaccine mandates, to Nigel Farage who recently revealed that he’d basically been cut off from the British banking system for his political views, we’re starting to see these types of actions happen with greater frequency. Last year PayPal was in the news for changing their terms of service to include language saying they could charge you up to $2500 for “misinformation”. Now there are reports that Bank of America customers are getting their accounts closed for no other reason than being customers of the cryptocurrency exchange Coinbase.

You may be thinking to yourself none of this is your problem. Your aren’t a radical, your political views aren’t problematic, but that can quickly change, because the only certainty is uncertainty.

This is why we need eCash, to serve as an alternative that can keep the government in check. So that we can have a form of money controlled through private keys, rather than in private backroom meetings. Money that can help free us from tyranny and protect our freedom of speech rather than helping those in charge protect their positions of power.

To recap, money is important not just because we use it to pay for food and rent, but because money talks, it helps us communicate and signal to one another where to allocate resources.

We can see evidence of just how important money is because history has shown us how money makes the world go round and round. We’ve witnessed time and time again how the debasement of our money always leads to civilizational failure. What might we accomplish if we didn’t have to keep repeating the same mistakes over and over again?

And the only way I see to break this cycle is by setting our money free, by creating a form of money that can’t be crippled by its caretakers because it no longer needs caretakers. Money that is no longer controlled by useless bureaucrats but by code and consensus, because if nobody controls our money, maybe nobody can control us.

Next week we’ll begin to cover how eCash aims to become the best form of money the world has ever seen. As always, thanks for listening.