The Age of the Dragon Ball
Still to this day I remember vividly the time my 11-year-old brother was finally forced to admit to my mother he had spent over £200 of his savings on dragon balls. Virtual dragon balls. Things went nuclear pretty fast especially when he tried to explain dragon balls were basically the same as money. He continued to explain that his life would be ‘over’ if he failed to come up with these desperately needed dragon balls. Without this ‘investment’ in his on-line game he wouldn’t be able to fund his share of a quest him and his friends were going on. He would be left behind and would never get the opportunity to get these kind of experience points for his gaming character again.
Despite his pleading the bottom line for my mother was that dragon balls were not real money. He had wasted £200 of real money he had spent years saving, on nothing. They were just numbers on a computer screen that had no meaning beyond the virtual word that had generated them. For my mother the dragon ball concept was disconnected from reality and had no worth or use in the real world.
At the time this happened I remember thinking that my brother was an idiot. That he had been fooled into thinking this was a good idea by his friends and in the not so distant future he was going to seriously regret it. My brother however was so determined to buy into this world that he ended up trading food from his packet lunch and some of this other toys with his friends just so he could get the required number of dragon balls to join the quest. At one point he even traded his brand new skateboard just so he could get the remaining 3 dragon balls he needed. Up until the very end my brother remained convinced that dragon balls really weren’t any different than paper money. For him they both could be used to achieve the same thing, and as far as him and his group of friends were concerns dragon balls were worth a lot more than any mere fiat currency.
A recent discussion with my brother about this incident got me thinking about our relationship as a society with money. Where does is come from, what gives it it’s worth and what role does is play in the current debt crisis?
With the election coming up the biggest point of contention among all the political parties is the failure of our economy and the resulting crippling national debt crisis. For the last five years the Conservatives have claimed that they have reduced the deficit and the economy is growing. They claim that for continued economic recovery as a country we need to carry on making more cuts to services because we are spending too much money on things that we can’t afford. In order to kick-start the economy we need to increase the money supply through the policy of quantitative easing (printing more money) thereby reducing the countries debt.
However the reality is that the velocity of money, how fast money is circulating through our economy, has been crashing for the last 7 years. There has been no activity or real economic growth. £375 Billion has been printed increasing the wealth of the richest 5% by an average of £125,000 per head since 2010. It hasn’t resulted in increased economic productivity, increased investment or an increase in wages for the people. While some very clever accounting tricks make it seem that the deficit, the difference between what we spend and what we have, is going down the reality is that the countries debt is increasing faster that it ever has before.
From the current picture it’s clear that there is a strong link between money and debt but it doesn’t seem as if the politicians have a strong grasp on what that link is, and with only 1 in 10 MPs actually knowing how money is created it’s not exactly hard to see why. Having never run a country before I’m having to make an educated guess, but I would have thought that the least you would hope for from the people making economic policies was that they knew the basics such as how money was made and it’s relationship to debt.
Einstein was quoted as saying “The only reason for time is so that everything doesn’t happen at once” The principle also applies to debt. The purpose of debt is because everything cannot happen in our economy at once.
In order to function within the system we have created some of our future wealth has to be brought back to the present. In order to accomplish this we take money that doesn’t exist yet in the form of debt with the hope that at some point in the future through our economic activities we will be able to repay it. But this simple idea has been distorted by the profiteering bankers and the strange reality is that debt is no longer a way to stop everything happening in our economy at once but is fact the way in which money is created. Debt and money are not just linked but they are in fact different sides of the same coin.
Most of the money in our economy is just numbers on a screen, we think of it as being cold hard cash but really it’s just electronic. The money we are using in our economy comes from commercial banks and they create that money every time someone takes out a loan. They create this money out of nothing, it is not someone’s savings, it is not backed up by gold. The only difference between a £20 note and any other piece of paper is our belief that it has value.
All the money that is used in our economy is created through debt. For every £1 in your pocket someone somewhere is £1 in debt. The entire monetary system is on loan from the banks, meaning we have to pay interest on all the money that has been created. In the UK this adds up to approximately £200 Billion a year. £200 Billion a year that is transferred from the public to the financial sector.
We have been forced between a rock and a hard place. As individuals we are forced to work and contribute to servicing this debt. Debt that we will never be able to repay, because simply put if there is no debt there is no money, and with no money there is no economy. It’s financial slavery.
While there are plenty of suggestions from the politicians about how we can improve our economic situation and get rid of the debt, the bottom line remains that as a system the way we create money is seriously flawed. It’s a system were by wealth is actively taken from the poorest 90% and given through debt creation to the richest. It’s a major contributing factor to the growing inequality we all witness. As well as one of the most significant factors in asset price inflation such as the housing bubble. In fact our financial system is so corrupt and rotten to the core we included money from prostitution and illegal drug sales to boost our GDP figures, figures which the politicians then use to prove the success of their financial policies.
Reading all this I can’t help but think maybe we would really be better off if we adopted an alternative currency such as the virtual dragon ball? It’s certainly was what Satoshi Nakamoto thought when he created a type of cryptocurrency called BitCoin. We all know the saying ‘money is power’ well cryptocurrencies are a way to give back power to the people. Cryptocurrencies’ recognise that there needs to be a political purpose for money creation, that we desperately need to democratise money so that it works for the people not against the people.
Bitcoin is essentially a type of digital currency in which encryption techniques are used to regulate the generation of units of the currency. This means that there is a cost to mining these coins, similar to the process of mining other minerals such as gold. There is a finite number that can be mined unlike our fiat money that can be created infinitely at whim.
Bitcoin is being used all over the world in very much the same way any other currency is being used. It is completely decentralised and allows money to be transferred between individuals without a middleman. The Bitcoin technology allows for the freedom to pay anyone at anytime with no fees or extremely low fees. It allows a higher level of security and control as payments are made without transferring personal information offering strong protection against identity theft. But most importantly all information concerning Bitcoin is transparent and neutral, readily available on the blockchain to use in real-time. No individual or organisation can control or manipulate the Bitcoin protocol unlike our fiat currency model where we must trust the bankers and financial institutions will not abuse there control to make profit for themselves at the expense of everyone else.
The potential uses of this technology have yet to be fully realised but already the cryptocurrency community is starting a financial and political revolution. Using the Bitcoin protocol other currencies have been developed for specific purposes such as StartCoin. This is a specific currency that is used on the crowd funding platform StartJoin. The idea being that the people get to democratically decided on which projects get deserve funding. Some politicians such as Gular Hasnain (Green Party) and George Galloway (The Respect Party) have already begun using cryptocurrencies to fund there election campaigns. And while there remains teething issue which this new technology as people get to grips with it’s potential uses it really does have transformative potential at all levels of society.
And just in case you were wondering, my brother managed to get enough dragon balls to go on the quest, and the experience points his gaming character got by completing the quest meant that 6 months later he was able to sell the character for £250. Yeah, who knew!