A golden opportunity
Let’s take the lead in digital currencies
Welcome to 2018. Executive trusts that you have settled yourself comfortably in this year, which has commenced with a resurgent phenomenon that is always greeted as new and yet is very old: the acceleration and accumulation of political economic momentum, including insanities in the financial world. From record gains on the globally watched NYSE to someone’s unchallenged claims at the World Economic Forum that it is only natural to think of your country first (if you happen to be top dog in the global economy), the month of January went by with flashing global alarm signals. But it seems pointless to moan. We have taken this month to look at, and try to increase our understanding of, digital currency.
There are plenty of reasons to be uncomfortable with the digital world: Some naturally have concerns over consumer privacy as stores analyze your every move to achieve market- ing optimization, over state censorship and snooping, over children spending 10 hours a day on mobile gaming and only 10 minutes on the football pitch, over preteen kids who have seen everything “adult” and more online, or over virtual sex and rising loneliness in affluent societies—the list is just getting longer. Cryptocurrency, another harbinger of this new digital age, is upon us, and its advocates say it is the perfect tool to set us free.
Sadly, intentions and results in the history of civilization rarely align. Examples of this divergence can fill
entire libraries (or several USB sticks). Even Matthew, the evangelist, could not have envisioned that crusading hordes of European militants would stomp in his master’s name around the Eastern Mediterranean when he noted down Jesus’ sermon that the meek will inherit the earth and the peacemakers shall be called children of God.
The non-alignment of outcome and input, and sometimes perversion of the outcome, is certainly on display in the history of money. If one uses the definition that something mindaltering causes marked changes in mood and behavior patterns, then money should reside atop all historic lists for mind-altering substances. Be ye assured, in the history of economic movers, King Croesus did not dream about sound money or the gold standard when he ordered the minting of the first gold coin some 25 centuries ago in what we today call Anatolia; feudal lords around Europe did not contemplate the societal changes that the innovation of allowing peasants to pay their fees in coin would lead to in later centuries.
That human ingenuity tends to result in boundless unexpected and unintended outcomes is also true for the history of economy and technology. Adam Smith could not have imagined the legions of imbecile economists who would waste time speculating about the invisible hand. John Maynard Keynes surely did not set out writing his General Theory of Employment, Interest, and Money in the 1930s with a mind to flood the global economy with statist problems, and the creators of the cameraphone in the 1990s did not think of selfies, or that people would tumble off cliffs or high rise buildings in their pursuit.
The creation of digital money, hard or easy, is indubitably a grand social experiment—perhaps even the greatest of all time, in terms of soci- etal consequences. It is just that we are all, cryptocurrency creators very much included, the rats in this experiment. As inescapable mazes go, the only way forward is to gather our wits and fill what we do with meaning. It is the hope of Executive that this dossier on cryptocurrency issues will inspire our readers to step up their own research into this important issue.
In line with what we learned, we call on Banque du Liban (BDL), Lebanon’s central bank, to support the intensification of the national debate on all things crypto. We further call on BDL to clarify and set standards for this emerging sector, and pioneer pathways for Lebanese entrepreneurs in the ecosystem fostered by Circular 331 to learn more about digital money and collaborate responsibly with the Lebanese banking and financial industry— so that both can shine on the digitalinnovation frontier in our region.
Executive was greatly encouraged to meet with passionate Lebanese entrepreneurs with shared cryptocurrency dreams (see story page 36), professors at Lebanese universities who deeply immerse themselves in the complex topics of Bitcoin and blockchain (see overview page 14 and explainer on page 24) and even a knowledgeable cryptocurrency enthusiast in Beirut during work on this dossier (see comment page 30 and interview page 44 with Stéphane Abichaker). To be fully transparent, Abichaker busted the doors wide open last October by taking the initiative to approach Executive with the idea of collaborating on a cryptocurrency dossier.
We were amazed to see how strongly interested many of Executive’s contacts and interlocutors were when they heard of our humble research. We were enthused to note the latest responses by Governor Riad Salameh to questions about cryptocurrencies, for example at the LIFE/ Endeavor event just before Christmas, and when our collaborators and interviewees told us of possibilities for a regional digital sovereign currency cooperation and general cryptocurrency opportunities they envision for Lebanon. We urge BDL to step up its research in these regards.
The fundamental power of the market society is the power of trust, playing out in the triangle of faith in a trust-worthy system, trust in the trade partner, and confidence in oneself. The celebrated Israeli historian Yuval Harari introduces his take on money and politics on his website with the observation of how exceptional it is that in our era, the “whole of humankind has become a single network of cooperation.”
According to Harari, people do not believe in the same god or obey the same government—one is tempted to comment that they are actually getting farther from it by the day—but they are all willing to use the same money. He sees money as a mental construct and states, “Trust is the raw material from which all types of money are minted.”
One can enter lovely debates about practically anything related to money, and although it sounds good to say, “trust is the only currency of any value,” it does not help in the accumulation of social capital. But let us agree that to increase trust, while making every effort to control the associated risks, is to increase the central currency of human history.
We call on Banque du Liban to support the intensification of the national debate on all things crypto