I am a director who have made documentaries in Korea. Over the last five years, I was too busy in making a documentary and not interested in how the world was going. Sometimes I have just heard of bitcoins in the news. However, I was very surprised at the cryptocurrency boom in Korea that started in the last fall. At that time, the price of one bitcoin soared to 25 million wons, and cryptocurrency exchanges in Korea led the world cryptocurrency market with the highest daily trading value.
In fact, I have been interested in money since 2005 and tried to make a documentary about money. However, I could not make it because the production costs were not supported. Then, the documentary about money was distracted from my interest when I began to make another documentary about illegal election since 2013.
However, owing to the cryptocurrency boom that took place in Korea, the documentary about money was reminded again. And since December of last year, I have been actively investigating on the blockchain and cryptocurrencies. I joined cryptocurrency exchanges, bought and sold several cryptocurrencies, and was fascinated by their convenience and novelty while trading and transferring cryptocurrencies.
•Global Economic Crisis in 2008 and Bitcoin
In 2005, when I was trying to make the documentary about money, the world economy had shown signs of instability, and some economists predicted a great economic depression. That's why I tried to make the documentary by which the critical problems on money and economy might reveal. Indeed, a few years later, the subprime mortgage crisis occurred in the United States and Lehman Brothers went bankrupt. It drove the world economy into a tremendous shock. Its aftermath has not yet come to an end, and the world economy is still far from stable.
At that time, it is estimated that the United States have issued more than $ 6 trillion in the name of quantitative easing to solve the economic crisis. The huge amount of dollars had been released around the world that was close to the sum of US national debts in 2007. This has led to a series of quantitative easing dominoes in many countries including Japan and the EU, and the worldwide money supply has rapidly increased. But unexpectedly, inflation did not happen, and the world economy did not get out of depression. Excessive volumes of money flowed into the stock markets and speculative capital. As a result, the real economy is still stagnant, but the liquidity market continues to hit new highs in the stock market.
The world economy doesn’t certainly recovered yet, even though money has been released more than several times before the economic crisis. The excess money is only circulating around the world in the form of speculative capital. According to 2011 statistics, global GDP amounted to $ 60 trillion, while financial assets were $ 180 trillion. Global speculative capital, which is more than three times the size of the real economy, is circulating all over the world, repeatedly causing bubbles and collapses in the global economy.
As a result, the middle class has rapidly fallen all over the world, and the polarization of wealth has become worse. Now, in countries such as Germany, the United States, Japan, and France, homeless people are flooding on the streets. While money has tremendously released, but the domestic economy has been frozen in most countries. Even though people below the middle-class are desperately needing money for their living, but there is only little money for them. Although money should be actively circulated as a means to activate the economy, but it is actually concentrated on the rich and the speculative capital. Money has not played its right role. In the wake of the global economic crisis in 2008, Bitcoin was born and has emerged as an alternative to the existing fiat currencies.
•Blockchain, its possibilities and shortages
Blockchain, a distributed ledger system on which bitcoins are based, can provide confidence in its recorded data even without certification of any third party. The blockchain is a decentralized system, which is different from the conventional centralized system of banks. It shows the possibility of overcoming the major problems such as concentration of money and monopoly of large capitals. Therefore, the blockchain can be applied to various fields including money and commerce. Moreover, it is expected to be a blockchain revolution that will change the global economic and political paradigm.
The blockchain and cryptocurrencies based on it now offer huge hopes to replace the existing monetary and economic systems, but they also have many problems. The critical fault of the currently issued cryptocurrencies is that they are concentrated in a very small number of persons, though they should be widely distributed to the markets by utilizing the decentralized characteristic of the blockchain. In particular, bitcoins show a biased tendency that only 1,000 early investors own 40% of all the issued bitcoins.
The critical problem of the current fiat currencies is also the concentration of their possession, not the centralization of banking systems. Most problems of the economy arise from the concentration of money. It occurs because currencies, the blood circulating the economy, are overcrowded in some large capital, stiffening economic circulation. Therefore, if we want to create cryptocurrencies that solves the problem of existing currencies and economy, we should decentralize the possession of the cryptocurrencies to distribute them to people by utilizing the decentralized characteristic of the blockchain.
In addition, there are many perspectives that cryptocurrencies can’t be available as currencies in real transactions, due to many problems such as slow approval of transactions and too high fees. If cryptocurrencies can not overcome these problems, they can not be a practical alternative to fiat currencies. Then, the cryptocurrencies are also likely to end up with temporary speculation like the dot-com bubble burst in 2000. These problems may be the reasons why the cryptocurrencies are now plunged below the half of the highest value recorded in the beginning of this year.
Fundamentally, all currencies are merely means of the economy. Modern currencies have any real value. All the problems of currencies are only a matter of those who abuse it. If people who use cryptocurrencies suppress their shortages and take advantage of them, cryptocurrencies become, of course, excellent means to overcome the tyranny of capitalism and revitalize the unstable economy even in the current neoliberal economy.
•Blockchain and cryptocurrencies for direct democracy
Moreover, the blockchain is probable to be a good tool for direct democracy. The blockchain itself is a p2p transaction system that records transactions in a distributed book for individuals. Therefore, it can be used to issue local currencies of local governments in direct democracy. Local governments can utilize the local currencies to revitalize their local economy and to achieve economic independence. Such attempts have already been made in Korea by trying to issue local cryptocurrencies in Seoul. In particular, Nowon-gu is now trying to give cryptocurrency to people who volunteer in public affairs.
The modern currencies are basically credit money because they have no real value and are based on the credit of members in the society. Of course, the currencies must be issued and owned by every member of the society who has credit. However, members in the society have been excluded from the currencies because the current fiat currencies have been issued from the central bank of the country, or by loans from commercial banks. It is only acceptable to issue currencies from the central bank. But, it isn’t acceptable that commercial banks issue currencies for commercial purposes by loans because they have no basis of credit and actually violates the issuing right of central banks. Why do commercial banks take advantage of others’ credit to make money for their own profit?
Fundamentally, money is not a private property because it is a public means of economic circulation. Therefore, money as a public property should be issued publicly on the basis of law, and should be freely distributed to people so that they can participate in the economy. Therefore, if cryptocurrencies is to play its right role as money, it should be the money that is freely distributed to the members of the society.
Since every person has basic human rights and economic support is essential to guarantee this human rights, the society must provide its members with economic support according to their basic human rights. This is linked to the basis of basic income. The money distributed to the members can be made regularly in the name of basic income. In addition, it needs to provide the opportunity to activate the economy with more money for members who have increased their credit by actively participating in the market.
And cryptocurrencies can be paid as compensation for public activities that have not been recognized as economic activities until now.
Although money is a public means for the economy of the society, it has sacrificed those who have contributed to the society through public activities. As an extreme example, the noble sacrifice of independence activists during the Japanese occupation in Korea have benefited much more people than private commercial activities. Nevertheless, it is very unreasonable that the society has not acknowledged their patriotic activities and paid almost no compensation. This is a decisive factor to make the society pursue private interests and bring it into an infinite competitive society, falling into corruption and eventually collapsing.
Therefore, a lot of public activities can be compensated with local cryptocurrencies issued by local governments. Participants in public activities are actually public servants. This is an excellent way to reform the current civil service system, thus activating local administration and autonomy. And, by providing cryptocurrencies to those who participate in local politics under direct democracy, it can be a driving force for increasing participation in local politics and driving direct democracy.
It is also a very good idea to pay a cryptocurrencies to good articles on SNS, just like Steemit here. This makes it possible to compensate for the activity of disseminating high-quality information. In this way, cryptocurrencies can activate many parts of the society. The economy can be magnificently expanded by incorporating many beneficial activities that have not been recognized in the existing economy. It is necessary to search for a method of distributing cryptocurrencies, replacing the proof of work or the proof of stake which are the consensus algorithms of the current cryptocurrencies.
On the other hand, it is possible to regulate activities that had previously harmed the economy.Cryptocurrencies should not be treated as private property or commodities, thus prohibiting the selling and buying them. They also should not be loaned for interest, thus preventing loaning at high interest. For these purposes, cryptocurrencies can be designed to be annihilated after a certain period of time by imposing negative interest. Then, it is possible to prevent the money from accumulating in some parts and stiffening the economy. This can achieve indolence and sustainability in the local economy through cryptocurrencies, solving major problems of the existing economy such as severe polarization of wealth and the monopoly of the national economy by some conglomerates.
Now, most authorities of countries in the world are trying to regulate cryptocurrencies. But, considering the speculative and violent harm of casino capitalism under the neoliberal economy, their regulation is hardly right. However, the industry using blockchain is growing rapidly, and most authorities are showing a remarkable tendency to accept blockchain in their systems. Anyway, the global wave to the information age is a trend that can not be overtaken. The heart of the problem is not always the means, but the one who uses it.