An interesting fact: boring times produce boring banknotes. Painful times in human history produce interesting banknotes.
During a time of orchestrated genocide under the rule of the Robert Mugabe, Zimbabwe produced the One Hundred Trillion Dollar note. Inflation ran in the millions of percent, and the Hundred Trillion Dollar note soon itself was worthless. I have one and you can buy one on Ebay for less than one US dollar.
Perhaps the most beautiful banknotes ever printed were those at the end of the Tzarist reign in Russia. These are large, stunningly designed red, blue, and green iridescent notes also made during the most turbulent time in Russia’s history.
Currency produced by sensible, and intelligent governments is mostly far more boring.
In 1971, the gold standard was officially dropped in the US – meaning that the currency became ‘fiat’ or not actually backed by a tangible thing.
As economist Milton Friedman, a Nobel Prize-winning economist puts it, “the pieces of green paper have value because everybody thinks they have value.” But fiat currency was accepted, perhaps, because government was democratic and the economy was stable.
Enter the future of currency with blockchain and its most famous progeny in Bitcoin, created by the shadowy Satoshi Nakomoto.
Blockchain and bitcoin are relatively easy to explain. At its most basic, blockchain is just a ledger of financial transactions stored online. Each transaction is encrypted, time-stamped and linked to the previous ledger entry to become a ‘block’ in the ‘chain’.
Unlike a traditional bank record that is kept in one central place (like a central bank) the blockchain ledger is openly shared – usually among thousands of users. There is strength in numbers – because it is held by so many users, it is hard for one person or a small group to tamper with the ledger.
The complaint is sometimes that Bitcoin is worthless – because it isn’t backed by anything. But then again, since 1971, most currency hasn’t been backed by anything anymore.
And blockchain has vast benefits. It is decentralized, meaning that it can’t be controlled, devalued, or cancelled by a third party. This also means that it can’t be controlled by regulation, has no geographical restrictions, and can’t be blocked or delayed by a bank or a country. What might take days, fees, and red tape to transfer money from one country to another can be accomplished in minutes with Bitcoin.
It is the future. As soon as Google, Apple, or Amazon released their own credible and backed blockchain currency it would have instant uptake and appeal.
It may even allow these companies to release themselves from dealing within the confines of inconsistent national regulation and punitive attacks.
Perhaps that’s why Google recently approached Vitalik Buterin, the founder of the Etherium blockchain currency. They wanted to hire him, but he refused. Does this mean we are likely to see Google-Coins at some stage?
Google is already a major investor into blockchain technology. However, the central ethical problem any major body, like Google, would need to address before rolling out G-Coins is with power consumption.
The method used to generate and authenticate Bitcoin’s blockchain rewards vast banks of computers, usually set up in China and powered by low cost coal burning power plants to solve intentionally difficult but mindless calculation challenges.
Many complain that Bitcoin is often used for unethical purposes. However, there is no technical reason why fiat currency is more ethical in this regard.
What really makes Bitcoin unethical for any major corporation is its vast but mindless use of computing resources.
Bitcoin mining and verification of the blockchain already uses more power than 159 countries in the world.
In 2017 one writer suggested that, by 2020, Bitcoin power consumption could equal the power usage of the rest of the world. That will end up being a significant overstatement – particularly as Bitcoin ‘reward’ will halve in May 2020. However, the fact remains that Bitcoin’s vast use of electricity results in little value to most people and has severe environmental and therefore ethical implications.
Currently, each Bitcoin transaction is so inefficient that it uses about 250kWh, or enough energy to power a home for a week. Or, enough to power around 200,000 Visa Transactions.
Clearly, the environmental implications are unethical and unsustainable for any ethical corporation to back.
There is now some light on the horizon. Etherium is proposing a switch to a far more energy efficient ‘proof of stake’ technology in a fork to be known as ‘Serenity’. Speaking at a recent conference in Prague, Vitalik spoke about the need to reduce unethical power use in blockchain technology – and said that the long promised switch was, “no longer so far away”.
What if energy-efficient blockchain currency is really just around the corner?
That may be more enticing for real players such as Google or Amazon.
Even better, what if one day the blockchain miners could be rewarded by putting their calculating power to use for positive world changing purposes: curing diseases, and solving the greatest mysteries in the universe – rather than mindlessly, unethically, and wastefully solving Bitcoin elliptic curve calculations.
You can already donate your spare computer’s CPU time to good causes, but what if one of the big tech firms would allow you do generate coin by doing good? That would really change the ethical discussion.
Again, perhaps that is why Google wants to speak to Vitalik and take on board his plans for better use of blockchain CPU resources, and not to Satoshi? Unless they already have Mr. Satoshi on board …