We live in very interesting times to say the least. Financial innovation using new technology has been percolating for years. The advent and rising popularity of Bitcoin, and more importantly its underlying blockchain technology, has thrust the question of our world’s financial future into the spotlight.
Between 2014 and mid-2016 an increasing number of people questioned how FinTech would impact the global economy as the trend toward globalism marched ahead unabated. What a difference nine months makes. Brexit. President Trump. Looming elections in France and Italy that could swing those two nations into a posture of leaving the European Union.
All of these have given pause to the idea that we were destined to a world with a more centrally controlled and consolidated monetary system. Suddenly national sovereignty is popular again. National sovereignty has historically brought with it sovereign currencies.
Over the last 45 years or so (post-Bretton Woods) one recurring problem has been that of creating an effective mechanism to manage both the exchange rates between sovereign currencies, and the actual exchange of those currencies between entities. One of the answers was to consolidate currencies to simplify the number of variables in the global monetary system equation.
Is FinTech a Better Answer?
What is just now entering the conscience of the world’s citizens is that money is more an idea than a thing. We have seen it in a static fashion for decades. US dollars. Canadian dollars. Euros. Yuan. Yen. We identify these as things. But money as an idea is making a comeback. Bitcoin was created on a set of ideas and principles. The coin itself is the product of those ideas. It’s use has become widespread enough that in some areas, you can actually live on it – at least for awhile.
This is just the beginning. Exchange rate platforms for alternative and crypto currencies will be developed using technology and the blockchain. This will give much needed liquidity and stability to this emerging monetary ecosystem. Silver and gold bullion can and will play a part in this world. They could be money. They might back a currency fully or partially.
Or, gold and silver may play another yet undefined role. But their 5000 year history as being an intimate part of the world monetary system will not vanish due to technology. Rather, technology will only enhance their role as it makes access to these time-tested assets easier, whether as part a currency, accumulated as savings, or as a means to insure your retirement.