Why is crypto much more consequential than AI. The future is hybrid money. Do we really need institutions in DeFi? Reflections on Point Zero Forum in Zurich.
In Zurich at Point Zero Forum I closed the loop I had opened in Kigali at the Inclusive Fintech Forum. The conclusion? We need crypto more than ever.
Zurich, Switzerland
It was only when I arrived at the hotel that I discovered my AirPods had been stolen, somewhere en route to Switzerland.
I can’t live without my podcasts and my music.
I opened my laptop and ordered another pair. Or I thought I would. At check-out, I duly inputted my credit card number.
Declined.
Credit card #2.
Declined.
Credit card #3.
Declined.
Reasons? Unspecified, in the best TradFi tradition.
Was it maybe because I was buying something on a Swiss site using Singaporean credit cards? No clue.
Frustrated, I scrolled down to find an alternative payment system. And yes, there was one, that worked immediately:
Crypto.
That reminded me of the question I asked at Point Zero Forum in the plenary session on the future of money:
"Let's assume a 2030 hybrid world scenario, like the one postulated by Leong Sing Chiong, Deputy DM of the Central Bank of Singapore, where public money competes with private money. This is a scenario I do advocate for as it would enable freedom of transactions, which is absolutely not a given today. In such a framework, I assume that monetary policy transmission would be severely weakened. If this is true, what becomes of the role of central banks?"
Leong Sing Chiong agreed with the fact that the transmission of monetary policy could be weakened. And offered a possible solution: Central Banks’ widespread adoption of programmable money or purpose-bound money (PBM), which could be coded or wrapped to perform policy objectives.
This a sensible answer, from a once-again fearless regulator, but the fact remains that if private money becomes predominant, CB levers become weaker.
I would add, programmable money designed for monetary policies has never been tested so it’ll have to be seen if or how it’ll work in a hybrid state of money.
The rest of the panelists did not provide particularly convincing replies. Tommaso Mancini-Griffoli underlined that banks already offer private money through fractional banking, which misses the point. Dante Disparte played it safe as one might expect in such a circumstance and professor Eswar Prasad agreed that the risk was real and that hybrid - ie competition in the forms of money - is not necessarily a positive for societies.
This conversation aside, my central point was in reality today’s flawed freedom of transactions. If it hadn’t been for crypto, I could not have bought my new AirPods.
And that brings me to my central, recurring postulate:
Freedom = Full ownership of money + Full privacy
Full ownership of money can only be achieved with the use of crypto (and in particular, with decentralized, permissionless crypto held in a non-custodial wallet)
Full privacy can only be achieved outside of centralized systems. The latter can be made privacy-preserving but the temptation and possibility to go rogue will always exist and with it, the inconvenient need to have to trust such systems.
Hence
Freedom = Full ownership of money + Full privacy = Decentralized, permissionless, non-custodial Crypto
Hence
There is no technology nowadays that is more consequential than crypto. AI might be mind-blowing, immensely powerful, and life-changing, but without freedom life is meaningless.
Freedom means equality of opportunities.
TradFi means equality of outcomes.