Look no further than the news, whether you watch financial networks or mainstream networks and you can’t help but see stories about Bitcoin, the cryptocurrency founded by what was thought to be a secretive Japanese resident Satoshi Nakamoto. It turns out that reporters now believe he is living in Los Angeles.
All of this is of great interest to me – a while back I penned a piece on why Bitcoins were a better investment than Gold. Since then, the value of this new currency has shot up (and down) dramatically but central exchanges holding the virtual currencies of customers have gone belly up, costing customers millions.
One reason why virtual currencies are attractive to many are they are free from government intrusion. They can’t inflate the money supply and they can’t decrease the value of your investment. Not surprisingly, it seems Nakamoto is not a fan of the government as his daughter describes a game they used to play at home which involved hiding from the government.
Bitcoin has also been a great way for people to get money out of a country when government regulators have made it illegal – places like China and Argentina for example.
Getting back to the media – what you’ll see on TV and online is talk of whether Bitcoin will make it and the answer at this point is not certain. There are lots of competitors and new currencies are appearing all the time. What we do know however is there is a huge need for something new.
We sit at the intersection of technological advancement and economic irresponsibility at many central banks which is causing a perfect storm which will result in a class of solutions I call currency 2.0.
Wolfgang Münchau may have summed the situation up perfectly in a recent piece in the Financial Times when he said:
The combination of financial deregulation and globalisation, national economic policies and a lack of global co-ordination is unsustainable. Something that is unsustainable either ends, or is made sustainable.
The experience of our handling of the global financial crisis and its various regional cousins would suggest that big-system change is unlikely. The G20 and other international debating clubs have achieved little in terms of financial sector reforms and monetary policy co-ordination. The financial lobbies are stronger than ever. Just as 10 years ago, the policy establishment has no clue how to control financial bubbles. Whatever the priorities are of the advanced countries, making the financial system sustainable is not at the top of the list.
If global instability persists it will produce more crises. Whether the next Bitcoin or its successors can succeed is impossible to forecast. But the environment is one in which an alternative decentralised system could flourish.
This is the logic behind TMC’s newest conference Currency 2.0, July 22, 2014 in NYC. Anyone who follows what the Federal Reserve is doing – even casually, (called quantitative easing) understands that when you virtually print $75 billion+ dollars per month to pump into your economy, there is something majorly wrong. Any student of history knows this sort of policy ends poorly every time.
Could it be different this time? Perhaps. But would you bet your life savings on it? How about your children’s economic future? Probably not.
This is just part of the reason why I think the world needs to gather at a centralized conference to discuss the future of currency.
This event will discuss Bitcoins of course but much much more. It will be a place where tomorrow’s currencies are discussed, evaluated and designed while today’s opportunities are explored. Investors, regulators, libertarians and technologists are all invited to attend.