Blockchain values: the medium is a message

If you ever seriously wondered what money really is, you could understand that there are serious flaws in our current system. And they, in turn, are a major obstacle to the spread of Bitcoin. Now both systems are taking their first tentative steps towards each other. They have the intention to extract mutual benefits from the strengths, while avoiding the worst known problems of each of them.

The philosopher Marshall McLuhan is known for his aphorism: "The medium of communication is itself a message."

He meant that the mechanism of content delivery to the addressee has a huge impact on how the content is received and interpreted. By and large, he suggested that the delivery system is even more important than the content itself.
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Take, for example, social networks with different sets of rules that directly affect your communications. Message length up to 140 characters, focus on images, video up to 6 seconds and so on. And do not forget that your social network activity affects the content of the news feed!

McLuhan writes the following:

"In a communicative environment," content "is like a juicy piece of meat that a thief carries to distract your mind's watchdog ..."

Values ​​enclosed in the transmission mechanism are also very powerful. In this case, they remain unnoticed. We rarely think about how the use of smartphones and social networks affects us when we absorb content with their help. The values ​​that they translate, and the impact they have on our lives and relationships, we simply do not notice. It doesn’t matter whether they play a positive or negative role. The main thing - it happens unnoticed in the process of transferring content that we ourselves want to consume.

All that is true for communication technology is true for money. Money has a lot of faces and roles. This is a unit of account, and a medium of exchange, and a store of value. Historically, they possessed all these properties to one degree or another, but there is some generally accepted agreement on the purpose of money. At the same time, we rarely think about the delivery mechanism needed to create and manage money. And this is very important, because the means by which we convey the Value themselves embody certain values. In the same way as posts in social networks, television shows or newspapers are carriers of very specific values.

Blockchain and Fiat

Blockchain is a whole set of technologies. It can be used (and there are organizations that are interested in such use) as a means of giving impetus to the entire existing fiat system. However, there are quite specific properties, and therefore the values ​​inherent in the very nature of the blockchain. The blockchain was originally conceived as something completely different from money in the form in which we know them.

One of the most obvious differences for an outside observer is the blockchain's P2P nature. Users send money to each other directly. And more specifically, the balances in the distributed registry are updated without the participation of any “central agency”. Blockchain solves the problem of trust inherent in ordinary financial online transactions. This radically distinguishes it from the usual online translation systems.

But it is important to recognize both the strengths and weaknesses of the systems. There is no intermediary, there is no trustee through whom all transactions pass. This means that transactions cannot be blocked or canceled unilaterally, but it also means that they cannot be canceled at will. If the hacker gets access to the address and withdraws all the means from there, there is no technical way to return them (refund will be made only through law enforcement agencies).

This means that there are no options for interfering with an open blockchain system: participants actually own their own money and are free to do whatever they want with them (including creating and translating their own forms of value). Naturally, such freedom implies greater individual responsibility. If users blithely treat their personal data, they may be among the victims of hackers and fraudsters. One of the most important challenges for Bitcoin and blockchain business in the coming years is to reconcile the irreconcilable: you need to maintain the freedom that currencies based on the blockchain give, and at the same time ensure a sufficient level of security so that currency users feel protected. Such measures may include insurance and proper regulation, but more importantly, high-quality user interfaces and keystores. Unless users are sure that their funds are 100% protected, they will not switch to a new system.

Money and debt

Almost all the most important thing in the blockchain is based on the P2P nature of transactions. The problem of non-cancellable transactions is perhaps the most significant for new entrants. However, there is another problem that separates blockchain currencies from their fiat counterparts. It is of paramount importance to the values ​​contained in both systems.

Our money is based on debt. Only a small fraction of cash reserves (about 2-3%) is presented in the form of physical media - coins and banknotes. The overwhelming part of them exists in the form of electronic balance in bank accounts.

Contrary to common opinion, banks do not lend funds from deposits received from customers. They do not use the practice of partial reserves, when the debt is given more money than is available. Instead, the money appears directly at the time of the loan: as soon as the bank gives a loan, for example, a mortgage, it creates this money. This means that for the existence of almost all the money necessary debt.

The consequences of this approach are devastating. Debt money requires interest payments, which implies the outflow of a part of money from end users to their creators. When politicians and economists talk about growth, they talk about increasing debt. Inflation is built into the system and becomes an area of ​​government policy, because it is better to inflate public debt than to pay it. A system with a large share of borrowed funds cannot cope with deflation, since with the rise in prices the probability of defaults and catastrophic consequences in the banking sector increases.

Blockchain currencies, on the contrary, can be called “positive money” - money that is not based on debt. The primordial forms of money — gold and silver, cattle, and grain — were positive money, since they had a real form and could not be simply extinguished by their mathematical opposite. We really own this money, because their existence cannot be zeroed out by an equivalent negative balance. And we do not need to pay interest for them. Once they become yours, they are yours. In the same way, a predictable constant supply means that unpredictable or undesirable inflation will not devalue them.

Hybrid systems

And this is the message that fiat money gives us:

“Your money is not really yours. You have to pay for them, and they most likely will not be able to save and will not retain their current value. You use them with the permission of the creators and strictly under certain conditions. "

The message that reaches us through the blockchain is:

“You not only own your money, but also bear full responsibility for it. There is no middleman for your protection, but there is also no one who could cause inflation and reduce the value of your savings. ”

Alas, none of the options in its pure form will be acceptable to most consumers. The protest voices of recent referendums and presidential elections demonstrate the level of outrage and dissatisfaction with the political and economic status quo. But on the other hand, the introduction of the blockchain is complicated by the need to ensure the security of its own funds exclusively on its own. 2017 will be the year when these two diametrically opposed value systems finally start making significant steps towards each other in order to reach mutually attractive and viable compromises. Both systems are not perfect and need each other to function more efficiently.