What is supposedly the value of Financial Freedom? And, how does this value manifest itself at the most basic level of our daily lives?
Questions of this nature, in present times, can bring suffering to our thinking neurons, day by day, minute by minute. This is the kind of questions that good cryptocurrencies try to answer. It is crucial to understand that Crypto does not constitute primarily speculative gambling. It’s not just a game of investing in assets at a given price just to sell them later at much higher prices. Crypto is about Freedom!
It would be an unfortunate and terrible mistake to conclude that Blockchain and Cryptocurrency technologies are just a gambling game of the buy-low-and-sell-high type. Cryptocurrencies such as Bitcoin and Ethereum, as well as tokens with useful innovative utilities, or any other genuine technological development on top of the Blockchain, has one critical objective: to be part of the positive forces building a better future. Good cryptos have it clear: they want to build a new open and decentralized economic system where power is diluted among users: “Open Finance”.
Since ancient times, humans have spent thousands of years trying to understand this complex motor of social life called “Freedom”. Humans long for Freedom. In every century, we discover that, although we seem to conquer new historical bits of Freedom gradually, there still exist many higher levels of deserved Freedom that look socially unconquerable. We enjoy Liberty in this century. Perhaps one should be optimistic in these days, shouldn’t we? Let’s just think of the Middle Ages when most human beings had to live in vassalage, that is, practically as servants of others. We ought to admit that it is a possibility that our present Freedom could even be luxurious.
DO WE HAVE MORE OR LESS Freedom IN OUR MODERN WORLD?
Nowadays, in many countries, we have the right to own private property and to elect our rulers. This is Freedom. And this Freedom provides to us some degree of basic control over our own financial future. Step by step, in each century, we tend to gain more and more control of our own lives and our own destiny. However, some narratives point to the fact that this process is extremely and unjustifiably slow too, probably because of the selfishness of a few. These voices turn stronger and plagued of reasonable arguments everyday. Social justice seems to be a distant dream yet.
One, as a citizen of any country in the world at this time, realizes that things are not going very well. The general sentiment is very pessimistic apparently! A clear and forceful way to corroborate the facts that demonstrate a collapse at a socio-economic level, is simply to conduct close observations at how the purchasing power of money falls precipitously and how national currencies’ purchasing power decreases. Negative feelings take over our planet earth. One is no longer surprised by movements like the yellow vests in France, for example.
There are many kinds of yellow vests all over the modern world, because in the so called “developed countries”, as well as in “developing nations”, a lot of people who used to have some decent economic solvency one or two decades ago, are now starting to feel that financial position is weakening. The middle classes claim that they feel that the floor under their feet melts down. As a matter of fact, they must be right, because the two concise financial variables they point at are irrefutable: 1. now they have less money and 2. the value of that money keeps falling. An additional visible factor makes all this mess even more chaotic: the rich are becoming much richer in the new 21st century.
This are reflections one finds in the worldwide Open Finance movement (OF) when one studies Financial Freedom. OF, however, is not a protest movement. Rather, it is a silent movement in action. OF moves. This is why it is said to be a “movement”: OF is about talking less and acting more. OF is focusing on its favorite activity: building solutions. OF activists – if we can call them so – are business designers, social entrepreneurs, researchers, software developers and, in general, game changers. They disagree with our present unfair financial condition and have decided to face it analytically and revolutionarily.
WHAT IS OPEN FINANCE?
OF is a world-class borderless socio-economic movement in search of knowledge and solutions that allow a greater degree of Freedom at the financial level. This means Freedom from the traditional monetary systems based on official currencies issued and controlled by States and by public and private banks starting with central banks. According to some of the ideas that OF proposes, these financial entities extract the wealth from the majority of the people in order to transfer it – subtly – to astronomically privileged minorities. OF studies and experiments with new currency models and novel types of stores of value, like gold and cryptocurrencies – free assets whose issuance, distribution and evolution cannot fall under the domination of States or of hegemonic financial institutions -.
BEING CAREFUL ABOUT THE “FALSE OPEN FINANCE”!
Care should be taken when we listen to the term Open Finance in some instances. Unfortunately, a sector of traditional banking, as well as of financial organizations based on central banks, have begun to appropriate the concept of “Open Finance”, and to take advantage of the fact that millions of people sympathize with it. Now common banks use the term OF to refer to the possibility that companies and businesses offer to clients, to use the bank’s services through special online connections – that is, through the Internet – for example, using the famous APIs.
For the movement that seeks Financial Freedom as well as the construction of a disruptive economic system where bank’s domination implodes, this use of the term OF is incorrect and perhaps even malicious. If you are enabled to establish connection through a special software to your usual bank and to make transactions with dollars or euros in an easier way; this does not represent any new dimension of Freedom. It is just one more service from your bank that serves to make your banker richer and richer. So, when your banker offers “OF” to you, take it as when politicians offer “Democracy” to you! When politicians want to abolish your natural right to make decisions, they will offer “Democracy”!
WHAT DOES OPEN FINANCE WANT TO IMPROVE?
Any individual or organization with a deep economic awareness cultivated in the values of the OF, can answer this question easily and with a long list of solid arguments. If your government or your central bank controls the creation of money, then, there you have the absolute captain of your ship. Period! Whoever controls the origin of money controls your life and your country! Governments and banks dominate the empire of money-printing (paper or digital money). Through the issuance of national currencies, the State and the institutions that handle the issuance and the circulation of money, can determine the destiny and fate of most little mortals of our societies. Whoever prints the official money is in charge.
If public and private banks keep their right to create money at will – which is actually the case around the world right now -, then, the privileged elites who own and manage these banking businesses, will remain being the ones with seize absolute power to decide the direction towards which the whole economy is heading to (a very biased direction naturally). Few people in the world, even while they touch money every day with their own hands, take a minute to think and to research on the topic of who makes these paper bills, or electronic coins, and why do these special people would have the right to create such currency?
Few people know, for example, that modern money, or “fiduciary money” – FIAT money -, like dollars or euros, has absolutely nothing backing its value. Fiat’s value is backed only by the word and by the image of some politicians. Since 1971, money’s relative purchasing power ceased to be backed by some valuable natural resource. It is well known that, in old times, each bill and each coin was solidly backed by gold, for example. The Gold Standard was canceled in 1971. Right now, in most countries, national currencies are backed by hot discurses or by the word of politicians, or, in other words, not backed at all.
The OF movement believes that this is the most important reason for all the socio-economic injustice we observe in the human planet, for the global economic crisis, for the immense inequality, and for the exaggerated enrichment of a few humans. OF proposes that the citizens of the many countries of the world, without hesitation, exit our current economic systems and move to a totally new monetary order not controlled by elites. This implies that hundreds of millions or billions of humans, should abandon money issued by national States, such as the Dollar, the Euro or the Yen, the Rupee, the Peso or any other official currency; and that alternative systems, such as decentralized cryptocurrencies, are massively adopted.
DOES MONEY DEPEND ON BEING ISSUED BY POLITICAL POWERS OR STATES?
Money must be built in the form of units of accounting. These units should be sub-divisible. We can call the sub-divisible units “Dollars”, “Euros”, “Yens” or any other name we wish to use. The level – high or low – of value that these sub-divisible units would have, will be the result of an open and free cultural movement or of an explicit or implicit social contract. That is, the value of each unit of accounting must happen as the result of a collective perception – or collective decision – of an entire society, not as an imposition or as manipulation by institutions. In other words, money must occur as a result of a free will.
Society – not politicians or bankers -, based on real benefits, can decide how valuable a currency should be. The value of a real currency occurs as public expression through the degree of utility of the currency itself, or through the sentiments associated to how much value people feel for this currency. The value perceived by society can be high or low. This is a social decision resulting from the exercise of the right to Freedom: people can designate the value of an asset. This type of Freedom, according to which the value of a currency depends entirely on its users, has existed for centuries until recently, for example, when gold was freely a unit of exchange. People, in exercise of their Liberty, used gold. It was not an imposition as Fiat is now.
Economy, nonetheless, has had to survive a constant struggle against political powers throughout history. For these political powers, it is often easy to take control of the economic dimension of society, through laws and weapons: unification of Economics and Politics. However, when the State and public or private banks seize the intrinsic right to print currency at their sole will – as they do in our 21st century -, all the natural rights and the Freedom that regular individuals deserve in order to decide the value of all sorts of products and services and in order to be the motors of free markets, extinguish almost entirely. If privileged elites monopolize the creation and distribution of money, then, the entire society loses its economic Freedom. If we do not have the right to decide about value, then, we are not free!
Money is a system of value units. The units of value that are called “money,” in their socio-cognitive and cultural-emotional dimensions, are equal to any other object that has value. Value is a very natural phenomenon. It is intuitive understood almost by any person. A plot of land can be valuable. A means of transportation can be seen as very valuable as well. Likewise, there are things usually seen as valuable like jewelry and precious metals. Some things have much less value, however, they do have some value, such as “cheap things.” Value is a social, cultural and psychological “experience” attach to any product of service. The same is true for value attached to money.
Money is simply one more valuable thing, as a desired object. However, money – to be efficiently funcional as such – requires a high level of technological development. Money is a tool that serves its purpose in a better way if it has certain features. The valuable thing that serves as money cannot be like a house or a poem. A house can be very valuable, but it would be hellishly hard to transport it. A poem can become famous and be considered valuable, but anyone can copy it or memorize it. Money cannot be just any valuable thing. One needs the valuable thing to comply with some specifications in order to adopt it as money.
Commonly, in the majority of modern monetary theories, it is said that money ought to have at minimum the following characteristics in order to be functional: 1. it must be divisible – it must happen as sets of separate equal units -, 2. it must be fungible – each unit requires to be indistinguishable from the others -, 3. it must be transportable – the object used as money has to be very easy to move from one place to another -, 4. it must be a unit of account – one must be able to count the separate units arithmetically: for example, one yen, two yens, three yens, 5. it must serve as a store of value – users should enjoy the benefit of using if for savings -, 6. it must be a medium of exchange – people need to find it be useful to pay for goods and services -, 7. it must be durable – it is not acceptable if the objet deteriorates or corrupts over time easily -, 8. it must be scarce – if there are too many units, the value of each unit would decrease by the laws of supply and demand -, and 9. it must be the product of a social consensus within the group of users – that is, the value of each unit occurs as a function of social appreciation -.
No scientific theory in history has ever demonstrated – or even proposed – that a characteristic such as money must be created and controlled by political powers or by banks, is needed in order for a currency to fulfill its monetary functions. So, in principle, the answer to the question of whether money depends on being issued by political powers in order to serve its purpose, would be a solid “No!”. Regular members of societies can decide if an object is valuable or not depending on how beneficial it is. People can make decisions without governments’ or banks’ impositions. This issue deserves deep reflection and research, according to OF. For this movement, one of the steps that modern humanity has to take to achieve greater Freedom and social justice is, particularly, to separate money from governments (more or less like the separation of religion from government that took place some decades ago).
CAN OPEN FINANCE HELP AND NOT SCAM?
It can. OF is about empowering people and disempowering those who have huge amounts of power. Currently, much of the OF movement in the world lays eyes on a specific solution that is apparently evoking a great deal of hope of deliverance from the trap of Fiat: open, public, decentralized, neutral and censorship-resistant electronic cash running on unstoppable Blockchains. This type of money cannot be controlled or manipulated by any human being, nor by organizations. It is electronic currency that complies with the essential characteristics of money and that is, though, different in nature from Dollars, Euros or Yens issued by political entities.
Legitimate Cryptocurrencies such as Bitcoin, Ethereum and some others, are divisible, fungible and transportable. These are units of accounts that can also be leveraged as store of value. They can be used as medium exchange too. They are durable. They are very scarce. In the case of Bitcoin, for example, scarcity is of a high degree. Only a maximum amount of 21 million Bitcoins can be minted. And, naturally, the most useful cryptocurrencies are created and run by communities or by open organizations in a totally free and decentralized way. This implies that the value of a coin, for each of these currencies, is the product of an open social contract of all holders. Just like for any other valuable object, each one of these currencies, become valuable or none-valuable as a result of the interaction of the natural forces of supply and demand. Governments are out of the equation.
Crypto-centered OF thinks that if we, as the citizens of a new open world, started using cryptocurrencies instead of continuing to passively support the imposition of national currencies such as the Dollar, the Euro or the Yen, with our active opposition, we would be dismantling the system that enriches the powerful elites, and we would be regaining economic power over our own lives. Crypto-centered OF wants us to stop modern humans from depending completely on politicians and bankers, and from expecting in ignorance that these elites will give us a better financial future for our families and our children. OF thinks that Crypto is an ideal solution, because, in public Blockchains, Math and algorithms provide oversight and unhackable protection to the system, not biased humans beings. OF’s solution is, somehow, depicted in the expression “Long Bitcoin, Short Bankers”. OF represents the desperate will of millions and millions of people to recover legitimate Freedom.