A few hundred year ago, the Dutch called Wall Street 'de Waalstraat' for the wall that was built there to protect the flourishing New Amsterdam from the natives and pirates who threatened its prosperity. Though the city's own inevitable growth brought down the wall, today new types of walls protect Wall Street's status as a financial capital from others who threaten it: you and I.
A couple of hundred years before that, banking began to grow exponentially when the Medici family of Italy cleverly utilized letters of credit across borders to circumvent rules against interest-based lending that the omni-powerful Catholic Church imposed. To make banking profitable, the Bank of Medici set up branches all over the known world, each with relative financial and legal independence. In order to successfully disguise interest as foreign exchange commission, the world's first distributed banking network was born out of necessity.
Modern banking was the Bitcoin of the 15th century.
The distributed ledger technologies of Bitcoin and other cryptocurrencies are an evolution of an earlier type of ledger that the Medicis popularized: double-entry accounting. Due to the nature of the Bank of Medici's operations, it was the distributed ledger technology of its day.
Banks that adopted the new technology of double-entry accounting in the 15th century flourished. Those who employed foreign agents or branches to handle their bills of exchange flourished even more.
Modern banking is again at the precipice of a new type of distributed ledger technology that threatens its foundation. But, like the banks of the 15th century, the banks, insurance companies, and similar concerns of today will adapt to survive.
You can be sure that every big financial outfit on the planet is not only paying attention to the delicious profits and cash flow opportunities of the crypto market as a whole but is either already involved in some capacity or is planning to be. We have only to look closely at the long line of elephants in this circus to find out that they are even more prepared for this massive shift than the most astute crypto speculator.
Like the Internet, blockchain wasn't really made for you and I. It is a tool that can be used by anyone and, thus, will be used most by those with the greatest reach of resources. However, it will be used best by those who need it most.
We must be careful that the promise of 'distributed banking' isn't just internet banking 2.0. The potential for every person in the world to act as their own bank probably doesn't make existing banks sweat; they're already a few steps ahead.
When the founder of Goodomy created the world's first ICO in 2014, he soon realized that other cryptocurrency projects would turn the ICO into a business model. However, the ICO was meant to empower anyone to participate in a coin's economy, distributing the bulk of its benefits among users.
These points illustrate that finance, including cryptocurrency, will always be dominated by self-interested parties. Profit motives naturally raise more capital than people motives. But what if the most profitable system of all was actually a method that everyone could reap tremendous benefits from?
Instead of trying to replace fiat currency with crypto – as all 2,000+ cryptos are doing, except Goodomy – why not use crypto as a force multiplier for fiat?
Think of currency itself as a kind of distributed ledger. A ledger simply gathers and communicates economic information. It is comprised of both static data (a registry) and dynamic data (transactions). There's no reason we can't use fiat as the static part of the ledger and crypto as the dynamic part.
Fiat money is, to a great extent, already decentralized and distributed. Although central banks issue fiat currency, each person can 'clear' debits and credits relatively independent of any oversight by the government or banks by simply using dollars, euros, pesos, etc., with others in direct, peer-to-peer transactions,
The way that money is decentralized away from government is capitalism. Capitalism instills discipline on government, allowing society to control itself through the free flow of money. This is a self-serving interest of government, of course, as it is the free flow of social activity that makes for a healthy economy and more tax revenues. But economic growth does not really happen when the government stimulates the economy. It happens when businesses stimulate people to exchange their fiat currency for something they believe to be equally valuable.
If fiat currency is the operating system of societies and their economies, why not use cryptocurrency as an app or layer on top of that to make it more useful to the individual members of society?
That's exactly what we're doing with Goodomy, and we invite other cryptos to do the same. (And it seems like not too long ago that other cryptos were invited to try the ICO model that Goodomy's founder first implemented.) We must realize that banks will most likely always control the money supply, no matter how much we think new technologies give control to the average person. Even cryptos that start out as decentralized will eventually centralize their power and authority, becoming institutions themselves.
Goodomy is starting from the perspective that an Ethereum contract is like a drill to extract crude oil before refining it – in our case – into an off-chain digital currency that increases the utility of the fiat currency it is used in tandem with. The $30 trillion consumer retail market gives us the perfect opportunity to provide businesses with needed liquidity by enabling their customers to 'mine' for fiat currency on their behalf. Businesses on the Goodomy platform can increase their 'hash rate' by giving more discounts to consumers, using the same mechanism they'd use to help control inflation on the network. These and other mechanisms take advantage of the fact that information is the most valuable commodity because it can scale, whereas the physical labour that money represents cannot.
Henry Ford became the richest man in the world by helping people to make better use of the vast horse carriage network that was already in place, not by wasting untold billions in investor funds building better roads. No matter how much better you think your road is, we've all been inching uphill since Bitcoin's genesis block.