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Does the future of money lie in the cryptosphere?

And what’s coming should terrify national governments.
The problem with all currencies is that their values are unstable. The ‘stable coin’ addresses this by spreading assets over the top currencies in the world and gold. Image: Chris Ratcliffe, Bloomberg

Every generation or so money goes through an evolutionary shift, and 10 years from now the fiat currencies currently in use will be regarded as relics of a bygone age, much like the fax machine.

Cryptocurrencies backed by artificial intelligence (AI) are about to swarm the world of money, bringing with them a level of stability that central banks promised and never delivered. About to come is a whole new architecture for the world financial system, including investment.

In the world of investing, the days of the brilliant stock picker may be numbered. AI and predictive technology will swallow them whole. 

New cryptocurrencies promise everything a unit of money should offer in a technological age: a globally accepted unit of value, instant transfer, anonymity, and security.

All currencies suffer one critical deficiency: their values are unstable. That’s largely a function of central bank control over the issue of new money and the resulting inflation which eats at currency values. This complicates the world of commerce since all trade rests upon a floating barge of variable currency value.

South Africans understand what this means. The rand is the world’s most traded emerging market currency.

Back in the 1970s a US dollar cost 70 cents in the rand. Today one US dollar costs R14.60, which is nearly 21 times more expensive than 50 years ago.

This might be an extreme case, but all currencies in a free-floating system suffer the same problem.

Bitcoin attempted to change all this by removing money issue from the control of any central banks. There will never be more than 21 million bitcoins in issue. Since its launch in 2009, Bitcoin has gone from nothing to more than $12 000, making it the world’s best performing currency in the last decade.


The cryptouniverse has been defined by bitcoin and a few lesser coins powered by speculative interest and wild swings in value.

None so fast as a credit card

But as a payments system, none have been able to replicate the speed and convenience of a Visa card system with payment executed in seconds. That will change as technology and transaction speeds improve.

Lars Holst, founder of London-based crypto exchange GCEX, has studied the future of money for years and believes Africa is ripe for a crypto monetary revolution.

“I don’t think we are far away from replicating Visa and Mastercard payments systems in terms of speed. The whole settlement system in forex is inefficient,” says Holst, who previously worked in forex at Danish-based Saxo Bank.

“Why should it take two days to settle forex payments? And the fees you are charged for this are excessive.

“The fiat money system has been corrupted by central banks printing excessive amounts of money and debasing the currencies.

“Many of the new cryptocurrencies coming to the world take this power out of the hands of central banks. It’s clear that the future is in crypto rather than fiat currencies.”

Bitcoin founder Satoshi Nakamoto and others have applied themselves to the question of a future money system using blockchain technology to verify and validate payments between two people transacting anywhere in the world.

In 2009, Satoshi explained the problem with the current fiat money system that inspired bitcoin: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”

Identity will be central to the future of money

The current monetary system Satoshi complains about is a relatively modern confection. As David Birch points out in his book Identity is the New Money, we entered the world of fiat currency when Richard Nixon ended the convertibility of the US dollar into gold in 1971. As such, fiat is relatively new. The next evolution is now about to sweep it aside.

“Just as the machine-made, uniform, mechanised coinage introduced by Isaac Newton in 1696 better matched the commerce of the industrial revolution, so we can expect some form of digital money will better match the commerce of the information age,” writes Birch.

Holst argues that fiat currencies, if they exist in 10 years, will have a small portion of the market. “We’re in the era of not just data, but information. We upload information to blockchain in encrypted form so it is not seen by other people. By 2030, we’ll see more private use of what people decide to do with their value. They will have simple keys to keep this information private in a global public network where it is logged but cannot be changed.”

What is about to be let loose on the world should terrify national governments and central banks.

Who in Zimbabwe or Venezuela would not ditch their corrupted currencies for something that is stable, internationally recognised, and beyond the reach of their governments?

The impact of cryptocurrencies on developing countries will likely be huge.

Vodacom and Safaricom launched the M-Pesa mobile money service in Kenya and Tanzania in 2007, allowing users to deposit money into an account stored on their cellphones and transfer funds using PIN-secured SMSs to other users – and redeem cash instantly.

Millions of previously unbanked people now have a payment system that bypasses the banks and is being studied around the world. It’s a relatively small step from this to the cryptosphere and monetary independence.

There is plenty of talk about money moving into the digital age, but we’re already there: cash accounts for only about 4% of the total money in the system. The poor – those without bank accounts – rely heavily on cash, but this comes at a cost.

Going fully digital removes the cash register, the ATM and the cash transit vans.

Cash is acceptable to vendors because its value is certain and, while counterfeit notes are known to exist, they are insufficiently plentiful to disrupt commerce.

Enter the stable coin …

Gregor Kozelj is the developer of the X8 stable coin, one of several stable coins offering currency stability by spreading assets over the eight top currencies in the world as well as gold.

Kozelj is a former portfolio manager who spent several years developing a technique for portfolio risk management that did not rely on predicting whether asset prices would go up or down, but on measuring and limiting downside risk. He then translated his system to investments and banking, where treasury systems could be stress-tested in milliseconds rather than the months it previously required.

It was out of this experience that he developed the X8 stable coin. Backed by AI, it is designed to fight inflation through artificially intelligent reweighting of the eight underlying currencies and gold.

As its name implies, the X8 stable coin is not intended to shoot for the stars, as many investing in bitcoin are hoping for. It is designed to hold its value, neither rising nor falling no matter what turbulence befalls the underlying currencies.

Many companies attempt to replicate this by spreading their cash over multiple currencies, but this is both expensive and unwieldy. There are simply too many moving balls to do this efficiently. Each time someone invests in X8, new X8 coins are ‘minted’ and cash is transferred into the eight underlying currencies and held at custodian banks. Once you are part of the stable coin universe, you are able to make payments on the blockchain without using bank transfers.

Global money decentralisation

“Many people say we are entering the age of AI, but we are already there,” says Kozelj.

“I don’t see much future for fiat money 10 years from now. Fiat will probably still be in use, but I see the global monetary system being decentralised and taken out of the hands of central banks, which was the original vision of bitcoin and blockchain. In a decentralised world, anyone will be able to mint their own currencies. Whether they will be accepted by others or not is another question. But there will be many different cryptocurrencies that will achieve broad acceptance.”

There are more than 5 000 cryptocurrencies, and a handful of these are stable coins.

Tether was first to be launched and is a crypto coin that aims to be linked 1:1 with the US dollar. Then came True USD, USD Coin, both linked to the US dollar, and Stasis Euro, backed by the euro.

Investing in this new world

Just as money is going through an evolutionary shift, so too is the world of investment. Advances in AI and quantum computing will connect us based on an intimate profile of each individual’s investment risk tolerances and appetite, and furnish opportunities not presently available, says Kozelj.

“AI will be able to track movements of capital and changes in competitiveness of economies around the world and adjust your stable coin weightings at any given moment to provide money where it is needed, where it is most productive, so it is working for you. It will likewise revolutionise the world of investment by measuring in real time opportunities to maximise returns and growth on a global basis.

“Where Bitcoin has got it wrong, it accused central banks of printing money,” says Kozelj. “But central banks have a mandate to support their economies with whatever it takes.”

He adds: “History shows us that if you are not adapting to the changing economic environment, you need new money to purchase new productivity growth, which includes innovations. If the same amount of currency is in circulation, people cannot buy the new things even if such innovations would change lives and businesses for the better. It blocks progress.

“Every time we went back to the gold standard, which happened a lot in history, it was abandoned. Is gold that bad? No, it only failed because you cannot adjust the volume of gold in synchronicity with the rate of innovative, real productivity growth to keep the economy and prices stable.

“Naturally, runaway money printing isn’t good, yet fixed money supply is just as dangerous and both invariably lead to instability. Bitcoin has and will continue to have the same issue – it will have a fixed supply in the future. AI-driven stable coins are one way to overcome this problem.”



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The article is stimulating and thought-provoking but factually wrong on so many levels.

Firstly – a Central Bank has a monopoly on the issuance of currency and has the power to determine what constitutes legal tender. If the government does not accept crypto as payment for taxes and services, then they are actually making sure that crypto will be sidelined.

Secondly – the government has the authority to govern and regulate cryptocurrencies and will demand FICA and “know your client” to remove all anonymity out of crypto. This is how they will remove the competition in the monetary arena. The IMF has sent out the guidelines already. The FSCA is busy implementing it. Crypto’s days are numbered.

Thirdly – All cryptocurrencies will be debased, not by a central bank, but by those who write the code. The rewards are too tempting to ignore.

Fourthly – gold has intrinsic value. This value is determined by the value of human life. Gold is backed by human lives. An individual weighs his options and decides if his salary as a gold miner is sufficient to compensate for the risk of injury or death. If the value of gold cannot compensate for the risks, then the mineworker will not go underground. He will not mine gold. Anybody can mine crypto though. Cryptominers do not put their lives on the line.

The value of gold compensates for the demand for gold. There is no need to increase the ounces in circulation when the demand rises. The value per ounce reflects demand and supply factors. There is always enough gold to serve as the only form of legal tender in any economy. The world went off the gold standard for the same reason that will cause people to abandon all cryptocurrencies. The incentives to debase are simply irresistible.

1,2: blockchains exist outside of government, by design. Their primary purpose is to govern without a centralized group of people (such as a government). You might see govs crack down on exchanges – but blockchains cannot be stopped. Go check yourself.

3: this just shows no understanding of coding. Do you really think your online bank account is more secure than a blockchain? Besides quantum computing (which is currently a theory) there is nothing more secure. by design.

4: the lives of miners? They wouldn’t mine if they weren’t paid by people who believed gold was worth their salary. gold is only valued/demanded based on the belief it has value. Nothing tangible. Like art. Or a US dollar.

To reiterate my extremely profitable post from a weeks ago, and why crypto best days ahead.

1. Bitcoin hash rate currently at record highs
2. The halving in May
3. Massive quite institutional adoption last quarter, $600 million GBTC alone.

#drop gold, crypto is the fashion now.

My “personal requirements” of a ground-breaking cryptocurrency, which must be an improvment to any Fiat currency, listed below:

If I invest in a certain crypto coin today, I require it to outlive me beyond my retirement (and ultimately death).

I’m looking for a crypto that has (at least) a 50-year “guarantee of existence”. Yes, you read that right! (…this is what I as a customer desire). Let’s go and write some code.

My additional specs for a crypto to be free from central control, i.e. the large whales controlling the price of crypto needs to be watered down (it defeats the purpose when one forgo control away from by a tradition central bank, yet to find yourself with an asset that is subject to even bigger control found under large crypto miners/whales that can manipulate a given crypto coin)

There are 1,600+ cryptos available. Kindly advise WHICH ONE (i) will survive this long, and (ii) being mostly free from manipulation from large groups), (iii) any single crypto to be UNIVERSALLY ACCEPTED anywhere in commerce (…wasn’t that the idea?)…why can’t the world decide on ONE CRYPTO?? (iv) also crypto need to have SAME VALUE/PRICE across borders of countries without any premiums (..again, a founding principle).

This is a tall order, but as they say crypto is the future. There must be a few million people globally in IT, hence my “specs” must surely be all possible? I hope I’m not to be disappointed.

If the above is not possible, are we all busy playing games?

I’m not sure any of you are all right either. There’s a mix up between a store of value and an exchange mechanism. The symbol in an exchange mechanism has to have no intrinsic value – otherwise we wouldn’t exchange our currency for goods – we would store the currency, yet all the crypto-gods are claiming that it is both a good investment (i.e. a store of value) and simultaneously, a medium of exchange. It cannot be both simultaneously. The limited nature of bitcoin suggests it might be a fair store of value but i’d take gold any day because it’s physical, versus bitcoin or any other crypto, which is entirely symbolic.
We need to dig into what that symbol of exchange really means, which seems lost to all economics textbooks. We see it as a symbol of exchange, but that’s not what it really is – that’s just the process in which it expresses itself. In my opinion, what it really is, is better described by the laws of thermodynamics. It represents the conversion of energy (by work done and/or objects produced that is perceived to be exchangeable by other people) from a physical system into a human system. Much like photosynthesis converts light energy into chemical energy and respiration converts many forms of chemically stored energy into a base currency of ATP that can provide energy for many other reactions, work either produces some sort of currency (energy) or allows that currency (energy) to be exchanged between individuals for some sort of product or service. Inherent in this is the amount of trust in the conversion process and the exchange process. I suspect that trust issues, perception, population growth and entropy are at the heart of both currency and economic instability and that cryptocurrencies won’t change this fact. If anything, both algorithms and non-transparent cryptocurrencies create the perfect ground for a runaway disastrous positive feedback event. My own opinion is that they are far more likely to make the system inherently more unstable than central banks do. It is people as a mass that make economic systems unstable, and central banks that do a lot of work trying to maintain stability in an inherently unstable system – our heads, as individuals and particularly as a collective or collection of collectives, and we forget that at our peril.

End of comments.





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