Banks, Blockchain, and Economic Liberty – A follow up

I wrote a piece last September titled ‘Why Our Economic Liberty Depends on the Blockchain’, providing an analysis on why I am certain distributed ledger technology is important to securing our rights under the law in the digital age.

In an ever-increasing realm of technology that is meant to improve (in positive ways) facets of our lives, the imperfection of humanity still exists while felonious behaviour heavily plagues the banking world.

As a firm advocate for the rule of law, I find revelations by CBC’s Go Public last week, that highlighted rampant fraudulent activity occurring amongst Canada’s largest financial institutions (TD, BMO, RBC, CIBC, and Scotiabank) disturbing to say the least.

‘This is why the only solution really is to have government step in and look after the Canadian people.’ says lobbyist Stan Buell as quoted in the CBC article.

Ultimately directives from above led to not only immoral, but also illegal tactics that chased their bottoms lines.

Blockchain is the answer, not government.

Adding more bureaucracy at a government level will only exacerbate the status quo. In my previous article I had given several broad examples of current institutions that could improve themselves, one being quasi-relevant to the financial fraud currently being exposed in Canada financial sector.

The example involved an auditing scheme for tax purposes. To elaborate further, imagine that all of a company’s financial transactions were logged through an accountable and transparent ledger framework. This framework would allow external entities, shareholders, and government institutions, to maintain an accurate record of accounts and what has occurred historically.

This is achieved by codifying the requirements as ‘law’ into the ledger framework. Furthermore, the framework may include higher levels of control aimed a preventing fraudulent activity and deception by implementing key controls at all levels of the frameworks functionality.

This train of thought is not dissimilar in many respects, to another use case for blockchain tech that applies to last week’s discovery of abuse and corruption by the big banks.

A contract-based ledger framework could prevent bank employees and management from engaging in these types of activities, as pre-determined ‘unacceptable’ or ‘unallowable’ rules are enforced at a programmatic level. The framework of such a ledger essentially has a ‘Constitution’ that enforces the rules, which is pre-determined and mutually agreed upon implementation and development of such a framework.

The ‘Constitution’ is the equivalent of your ‘smart-contract’, best conceptualized and initially implemented in technologies like Ethereum.

Tying back into protecting our economic liberties, I find reactive opines for band-aid solutions will ultimately usher in more government to ‘protect’ us against these types of activities.

The truth is that more government will erode our liberties, not protect us, and the key point here is to leverage these new elegant and robust technologies to solve current problems inherent in an old and outdated system.

These technologies were developed by the private sector and we must avoid submission to increasing the size of the nanny state.

Thus as I have always maintained, our economic liberty depends on the blockchain.

Why Our Economic Liberty Depends on the Blockchain

As featured on CoinDesk.

In this opinion piece, Goldman argues that no economy is free from the risks of human imperfection and that a ‘trustless’ system like the blockchain is needed in a free-market economy.

Milton Friedman once said, “Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.”

So, why is it believed that we should entrust money management to governments?

It seems that as we progress and evolve through the problems inherent in our highly regulated, government-controlled economies, we ignore a simple truth. The truth is that our economies, our institutions, are not just merely created by man, but regulated, maintained, altered, manipulated and changed by man, for better or for worse, whether sought or unsought.

This is to say that no such economy or its participants are immune from human imperfection.

One word that represents an immutable standard in a successful free-market economic system, is trust. But what is it that must be trusted? A proprietor, a merchant, or a bank? The economy itself? The ability to prevent or allow interference?

We place our assets and transact with these “trusted” participants through reputations, relationships and experience. This trust is not to be assumed, for bad fortune may surface for those who do.

What if there was a solution to eliminate trust as a requirement for transacting safely in a free-market economy? One that has an inalienable set of rules, similar to the constitutional rights of American citizens.

We need a “trustless” system.

Enter the blockchain

Ever since bitcoin disrupted many of our lives, its underlying technology, the blockchain has awakened sleeping giants from big finance to governments around the world.

Now, they are racing to develop and evolve their ‘pre-Internet’, ‘pre-mobile’ infrastructure to this new ‘trustless’ standard. Blockchain technology is the database of the future, and the future is now.

How can I make this assertion? Well, a blockchain is a ledger of information that is digitally recorded. These records of information are stored in ‘blocks’ that form a chain. The information in every block is secured using cryptographic hashes, and are added in linear fashion upon the previous block. This prevents information in the ledger (the blockchain) from being altered, ensuring trust and transparency is maintained.

While mainstream outlets continue a negative narrative, they aren’t telling you how important the blockchain is.

Every major bank and stock market operator is currently looking to employ or developing technologies centered around blockchain tech as you read this. But the applications go beyond finance. Bitcoin and ethereum have proven to be the most successful applications of such technology, with the latter being centered around the digitization and execution of agreements through the implementation of smart contracts — the digitization of law.

While brainstorming alternative applications for blockchain technology, the possibilities become endless.

Most if not all ‘pre-Internet’, ‘pre-mobile’ infrastructure providers should adopt such technology, as it is cheaper, faster and more secure than the current technologies that precede it.

Food for thought

Imagine if you could own your own medical record? Your credit history? Have your country’s voting system protected by a blockchain? Or even eliminate the headache of a tax audit by providing the authorities with your unalterable ledger of information in token format?

Imagine a world today, analogous to the pre-9/11 intelligence community, where many redundant operations are going on, resources are wasted and the hoarding of intelligence prevents action, namely due to the lack of information sharing.

Imagine using a system to ‘share info, without sharing info’.

For example, the credit card companies, banks, payment processors, etc, do not share as much information with each other as they should. Such a system would enable them to share certain data without revealing specifics about customers or vendors — essentially metadata, that could assist with many of the challenges currently present in those industries today.

“The combination of economic and political power in the same hands is a sure recipe for tyranny,” said noted economist Milton Friedman.

The blockchain decouples such power and puts it right back where it belongs, with we the people.

[powr-social-media-icons id=da4a8bbe_1490289796]

A message from our founders.

As one of the founders of Bitbuy, we are pleased to offer products and services to help facilitate and grow the bitcoin economy. Our passion goes deeper though, as our true love belongs to blockchain technology and its seemingly unlimited potential to solve problems in the Internet age.

At Bitbuy we want to provide access to the emerging world of crypto-currencies and give people a taste of blockchain technology.

It all started a few years ago with our first startup InstaBT, where we learned how how to make things easier for the end user. As exciting as crypto-currencies and blockchain technology was, it was/is still fairly complex, evolving quickly as disruptive open-source technologies tend to.

We realized that there was an obvious need to share this new technology with our family and friends, and ultimately the masses. We felt that once an individual learned about bitcoin and the blockchain, their question was always “How or where can I get some bitcoin?”

To address this recurring question, we created InstaBT.com, Canada’s first ‘online ATM’ for purchasing bitcoin as well as a featured deposit option for Interac funding on Vault of Satoshi, a now defunct Canadian bitcoin exchange.

As new and old proprietors came and went in Canada, from Vault of Satoshi to CaVirtex, ATMs and Cafes, Meet-ups and Incubators, our product was simple, elegant, easy-to-use, and fairly priced amongst similar competitors. It really wasn’t anything new per se, but it always worked, and worked well.

As the community shifted, were were told that ‘if you weren’t in the exchange business, you won’t be successful’. The same was said about the merchant payments segment, wallet providers, mining hardware manufactures, and the like. Seven years after its invention, in the wild west of blockchain technologies, big finance has finally begun to “get it”, and the sleeping giants are now wide awake.

As a result we made some changes, including upgrading InstaBT — adding the features we had always intended InstaBT to have. We also developed multiple funding options (Interac Online and Interac Email Money Transfer) and provided super low rates and wallets. Today we are proud to offer these services to all Canadians at Bitbuy.ca for instant procurement of Bitcoin and Ether.

Bitbuy is a subsidiary of Monitex Inc. which is aimed at positioning itself in the financial technology software development space. We have several exciting new products and a team with over 35 years of professional payments and banking related business experience.

Adam Goldman

President, Monitex Inc.