Context:
On the 5th of March 2018, Michael Hudson represented the UK cryptocurrency community at the parliamentary Future of Finance /Blockchain Panel. His speech covered bitcoin’s potential to provide the world with true sovereignty by divorcing the monopoly state from individual wealth. “Money at its core is tokenised time. Having enough money affords us the choice on how we deploy that time — this is what it means to be free, this is what it means to be sovereign. Bitcoin provides this by default.”
About the speaker/author:
Michael Hudson, is the CEO and founder of Bitstocks, the City of London’s first Bitcoin and cryptocurrency investment firm.
Michael Hudson's Address to the Houses of Parliament
I’ve been kindly afforded the opportunity to open today, and I’d thought I’d take this opportunity to establish a philosophical undertone to today's discussions by addressing one of the most important discussions happening within the space: regulation…
From a young age, we’re taught to conform to rules. From Mum’s simple instructions about table manners and sharing our toys, through to school regulations on conventional dress code and complying with our company’s employment policies. We’re raised to have a healthy respect for the parameters laid down by authoritative figures or institutions. Naturally this has its place in civilisation, ensuring we grow up as responsible adults, understanding that there are bounds to – and consequences for – our actions and attitudes. Without restrictions, society would run amok!
This is often the opinion of the central authorities when it comes to Bitcoin. Viewed as the unruly kid that refuses to follow directions. They’re quick to point out the tales of the fallen Mt. Gox to push their own agenda and use them as classic examples of the shortcomings of being an unregulated industry. The problem is that it’s not the full story. Not by a long shot.
When speaking about blockchain technology, is regulation even the right word anymore?
We need to be more specific about what we mean when we say we want to regulate an industry as revolutionary,fluid and dynamic as bitcoin technology. Because the question very quickly fragments and we end up with a jumble of perspectives from actors who are not even answering the same question.
What exactly are we attempting to regulate?
Are we regulating distributed ledger technology?
Are we saying we want to regulate just the trading of the tokens themselves?
What if the tokens do not have monetary value but its value is derived from its utility? Just like unregulated internet protocols such as TCP/IP or SMTP.
Are we saying we want to regulate the 3rd party custody of these tokens?
OR are we attempting a New York BitLicence, one blanket fits all approach?
Naturally, this is the pressing discussion that needs to be had. And one that fortunately NO ONE on this planet including myself is qualified to, or divine enough to dictate or determine.
To assume we can is to completely misunderstand the technology.
This (blockchain) technology is so incredibly new, so incredibly misunderstood. Attempts to cage the bird before it’s even been hatched, will hinder and deny society its gifts, even more revolutionary gifts than the Internet itself.
…..Bold statement, right?
From Permissionless Communication to Permissionless Trading
The Internet affords us power of voice, the ability to cross communicate our ideals, our religious beliefs, political beliefs….access information that was once inaccessible.
It’s permission free cross communication qualities have transformed society over the last 20 years and….arguably, even enabled events such as Brexit and the most recent US election results by allowing the free flow of information, thereby circumventing the corporate agenda driven media.
However, as amazing as it is, the internet has never been all things to all people.
If you live in the favelas of Brazil, you may be able to walk down to a local Internet cafe and get access to this information…. And …while you may be vastly more informed. The wealth gleaned from this information is not directly correlated with your income. As it’s not actionable!
The reason why it’s not actionable is the due to the requirement of permission in order to financially transact outside of your local vicinity.
So what are the prerequisites for participating in and benefiting from the economy and who grants permission?
Banks, merchant companies such as PayPal and Worldpay set the following prerequisites for transacting through their systems:
- Who do you intend to do business with?
- What products / services do you intend to provide?
- Proof of Identification
- Proof of Address
So what's the big deal? That's easy enough to provide, right?
The ugly truth is that of the 7.5 billion people currently on this planet, the ones who can fulfil these prerequisites are less than 2.5 billion, the privileged. The ugly truth is:
- 3 Billion live on less than two and a half dollars per day
- 6 billion live on less than $10 a day
- And more than 80% of the world's population are living in countries where income differentials are widening at an alarming rate.
A New Inclusive World Economy in the Making
We must humble ourselves to the reality of the world we inhabit, we can no longer assume that economic turmoil, collapse, and failure is over there somewhere - it’s in South America, it’s in Africa, it’s in India, Greece, Cyprus”
The reality is, the world, I, and everyone else in this room have inherited will not be the same world our children will inherit.
I have two beautiful kids, my 3-year old princess my 18-month old sumo wrestler.
As a new father I’m humbled and truly excited by the world my kids will inherit. They will not grow up in a society indoctrinated to believe in the forced marriage between money and state.
They will not understand the logic behind geographical borders, isolated monetary systems, and the restrictions imposed by them.
In fact… the very concept of financial inclusion based on location will be completely lost on them.
The ways of our world — having to fend off centralised actors, needing to lay down frameworks and legislation as a barrier between human beings, and the greed that tempts us — is becoming a way of the past. The next chapter has now begun.
And It’s the transition between these chapters we need to aid, therefore it's absolutely imperative we do not waste our efforts by unknowingly stifling its development with aggressive and misdirected cryptocurrency regulation.
The Bitcoin monetary system does not discriminate in any way. The ONLY prerequisite and barrier to entry is downloading an application on your desktop computer / your smartphone.
Blockchain technology allows humanity to exert our free will on a global scale without permission. Like it or not, It’s the VERY reason we are all in this room today speaking about this technology.
Bitcoin and the blockchain technology it has birthed is a tsunami fueled by collectively free will and global cry for sovereignty.
Trying to stop it is about as logical as a standing on the beach in your speedos and a wooden paddle.
Regulate Centralised Financial Institutions, Leave Decentralised Cryptocurrency to Regulate Itself
So, if you can’t stop it, how do you aid its growth. And do so, in a controlled fashion?
By turning our thinking completely on its head. Instead of thinking of ways to fit a square peg in a round hole. We require fresh! thinking.
We must simulate and embrace the decentralised nature of the technology within our own business models. Especially if our businesses themselves are centralised.
My firm, Bitstocks is a perfect example of a business that requires and welcomes regulatory oversight.
We have custodian access of client funds. We centralise bitcoins and crypto assets. Bitstocks, is not Bitcoin, we have provided a service that educates others on qualities of this technology and we simulate it’s qualities where we can, to provide our investors greater clarity and transparency.
One example for instance. At Bitstocks we have a simple feature, called verifiable solvency.
We provide all our clients a link (for bitcoin) on their portfolio that allows them to check at any moment in time, with complete independence from our firm….. the ability to check if we hold, what we say we hold for them. Instant auditing.
We’ve jokingly coined the term “Embezzlement Buster” with our clients. This feature alone provides more financial transparency than even the most regulated stock trading account / bank. And one that is very easy to implement if client funds are being held in the right way.
Embracing the New Economic Order and Resulting Technologies
The truth is, bitcoin gave the world digital immutability. Money (cash) is merely the first killer application.
By embracing this technology, the next 20 years of blockchain will usher in a world of global tokenisation, machine to machine payments, decentralised corporations underpinned by a decentralised monetary system. Tokenised land and property that not only the title could be easily transferred over say…. a game of poker…. but also the access rights to that property.
Blockchain continues and concludes the journey the internet started by combining p2p communication and finalising it with p2p cash.
As scary as that may sound to some, I'm confident we can all collectively come together, and help make the UNITED KINGDOM a key blockchain hub that will help facilitate the safe growth of this financial revolution.