A golden op­por­tu­nity

Let’s take the lead in dig­i­tal cur­ren­cies

Executive Magazine - - Contents -

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

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