Will Blockchain Technology Force Greater Government Accountability Or Fuel Cryptocurrencies?

By October 7, 2018 No Comments

Currency is a universal representation of trust created by humans. So much so that we don’t even ask why two pieces of paper with green, gold, and black ink is accepted as a medium of exchange for goods and services. One piece of paper can be exchanged for a cartful of groceries. Equally important, currency has enabled people to save the value of their labors for use at a future point in time.

Traditional currency we use everyday are issued by sovereign governments in which people base their trust and faith, in varying degrees. If we look around the world, currencies are generally losing value compared to the U.S. dollar. This is an easy point of comparison of the relative trust and faith that people have in their respective currencies. This trust and faith is built on the premise that governments issuing the currencies will manage the currency responsibly and be fiscally prudent in management of their economies. Any government that behaves irresponsibly (as witnessed time and time again) by issuing more currency to advance political or short-term agendas will suddenly find inflation, devaluation and economic turmoil following in its wake – the ultimate retribution for loss of trust.

So the fundamental question is whether the government, itself a creation of humans with all its intricacies and foibles, can withstand its nature to act with self-interest related to its currency in which its citizens have put their trust and faith. History says that eventually, even the most trusted and powerful governments succumb to the pressures that prompt the emergence of new countries with transference of wealth from those holding the old currency to those creating the new. At some point in the future, even the U.S. dollar will fall victim to this inevitability and another country will take its place of leadership in trust and faith. Or…

Technology advancements may present a new alternative to the presumption that only governments can issue and manage currency. Specifically, blockchain technology offers a path to cryptocurrencies with a new paradigm of symbolic trust previously placed in government issued currency. Cryptocurrency is an alternative, anonymous currency in the digital world. Without identity verification, the trust has been shifted to a technology platform and (hopefully) insulated from governmental/human influences that can affect the inherent value of the currency.

Currency creation is one of the most powerful tools a government has in its arsenal for the management of its economy; one of the most important roles expected by their citizens. So I don’t expect governments to subjugate themselves while cryptocurrencies proliferate. Criminal money-laundering and other legitimate concerns of governments will not step aside; regulation and integration into the fabric of society will take place. It may even force more government accountability as the often free-wheeling use of currency to manipulate the country’s economy will be muted by its citizen’s ability to have an alternative store of value in cryptocurrencies. Cryptocurrencies could become in the future, what the U.S. dollar is to the rest of the world today – a safe haven to store and retrieve wealth.

About Lawrence Bergenfield:

Lawrence Bergenfield serves as an advisor to AQUA. Lawrence is a serial entrepreneur who has had several successful exits within the nutraceutical, technology and financial services business segments. His experience and passion is centered around marketing, product development, strategy and sales. His experience also includes conceptualizing, creating and deploying platform products and strategies for Fortune 100 Technology and early stage Companies. Lawrence sits on the Board of the University of Pittsburgh’s Innovation Lab via its School of Pharmacy, is an advisor to several early stage technology companies and has previously created and been issued patents around technological processes.

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