Political dysfunction constantly makes it impossible for citizens to freely exchange surplus/deficit across borders. Tribalism perpetually breaks apart networks and isolates certain nodes.

Furthermore and regardless of political fragmentation, a network can become imbalanced in and of itself, resulting in catastrophe. John F. Kennedy, at the height of the Cold War was obsessed with this notion, called the “balance of payments,” as he declared in speeches:

“American industry will also be in a better position to compete on the world market — shifting the balance of payments, halting the drain on our gold reserves, and, thus insuring the soundness of the dollar.”

JFK was also concerned that the “balance of payments” of gold across the world could be financially manipulated by a few bad actors:

“For the rise in the price of gold reflected the hope of a small number of speculators operating in a very thin market that the dollar will one day be devalued.”

Back to our tribal metaphor, it was essentially the question of ‘what happens if my tribe runs out of gold reserves before a famine grips?’ Because it was a looming possibility that America’s enemies, reckless financial speculators, or exorbitant spending could cause gold reserves to deplete entirely. Thus threatening the balance of civilization itself.

To make a long story short, soon the dollar was then declared as no longer convertible to fixed ounces of gold — thanks to the ominous “imbalance of payments” question — in addition to other logistical downfalls of the gold standard. Now, the dollar became backed only by a more intangible faith in its value- albeit faith in the most powerful country in the world.

However, this faith-based unit of account can be threatened today, whether by political dysfunction or irresponsible inflation. Even worse, billions of people around the world are restricted from accessing the U.S. dollar, and instead rely on the whims of local, often corrupt central banks. Which brings us to the question:

What happens if we can create a form of money that in many ways operates outside of the realm of geopolitical animosity, red tape, dictatorship, and dysfunction?

Cryptographically secured, globally distributed assets like Bitcoin and Ethereum may present the answer. Or, as in the more eloquent language of the International Monetary Fund’s recent report on the future of finance:

There are ~180 central bank currencies across the world, each subject to endless labyrinths of regulation, corruption, sanctions, and friction. That means if one central bank currency fails, lives of innocent citizens are irreparably destroyed (see: Venezuela, Greece, Zimbabwe, Ukraine, Iran, Turkey, Argentina, etc. today). Further, present day hyperinflation crises serve to compound a very long list of past crises. Some estimates claim that the average lifespan of a fiat currency is only ~27 years, and that nearly every currency in history eventually fails. As for the International Monetary Fund cited above, this is the organization responsible for helping countries recover from such monetary collapse. Which is interesting because today, the front page of the IMF website, shows the following graphic:

Bitcoin, a mathematically metered, distributed, and decentrally governed protocol, could potentially become the digital gold for the future of the world’s “balance of payments.” Whereas the existing exchange of gold or dollars can be broken down, isolated, and restricted by geopolitical meltdown or regulatory red tape, Bitcoin operates in ways that disregard traditional international dysfunctions (although it has political problems of its own).

Still, let’s not get too far ahead of ourselves. Before the final step to the future of money as presented in the graphic above, we see the smartphone with a screen full of apps. In other words, the symbol for the amazing innovation of fintech applications of the present day: Visa, Paypal, Venmo, Apple Pay, LendingClub, GoFundMe, etc.

Yet unfortunately, access to these fintech apps is more heavily restricted by geopolitics than the central bank currencies they transact in. As in, Western fintech apps are firewalled by dictatorships across the world, servers can be censored, and new upstarts have to deal with a labyrinth of international, national, and local financial regulations in order to compete.

A fintech company rolling out in the U.S., for example, has to navigate the rules of fifty different states, on top of federal, in order to comply with a patchwork of strict money transmission laws. And growing even farther across the international sphere is a nearly impossible task, most especially for small startups.

However, many of these tangled webs of money transmission laws restricting the best fintech applications of the world, only apply when dealing with central bank money. Furthermore, additional layers of regulations are necessary whenever there is a trusted third-party acting as a middleman in any kind of financial transaction.

A fintech application that deals only with decentralized currency, can potentially operate in many ways above the global labyrinth of money transmission laws, that would have otherwise made its mission impossible. Similarly, a fintech application that is decentrally operated can operate above the typical legal/logistical threats of trusted third-party custodianship. Sure, exchanges will initially need to compete to provide compliant on-ramps and will suffer from many of the same issues as traditional institutions. But after enough time (& initial onboarding) this parallel system could potentially come to sustain itself.

The on-ramps focus on compliance, and the fintech app teams can focus on what they know best: building.

This is where Ethereum comes in. Whereas Bitcoin is focused on being the digital gold to replace the central banks’ “balance of payments”, the Ethereum community seems to be focused on building the fintech applications for this new frontier of money.

So that if Bitcoin evolves into the global ‘balance of payments’ that is in many ways immune to the typical dangers of geopolitical fragmentation, there can be financial apps that share similar degrees of immunity. Fintech apps that are decentralized, and protected against geopolitical censorship in the same way as Bitcoin’s “digital gold.” Applications for lending, crowdfunding, charity, etc. — all of the necessities of fintech beyond p2p uncensorable money. This new financial system will not entirely replace central banking/traditional finance — or be a panacea for all of the world’s problems. It is likely to grow to become an important “alternative safety net” for global citizens.

Yet unfortunately there are many obstacles -such as scalability- that make cryptocurrency’s viable alternative less likely. Furthermore, teams building on Ethereum are initially restricted by the same regulatory restrictions as their traditional counterparts. The difference is, however, Ethereum teams have long-term sights set on eventually gaining the autonomy of full decentralization. And although this goal is complex and daunting, Bitcoin and Ethereum have proven decentralization (at least in respect to the law) to be achievable.

Because if the decentralization of fintech succeeds, the human network will gain unprecedented degrees of freedom — thereby granting global citizens immunity from the downfalls of geopolitics.

Many thanks to the WeTrust team who helped review and provide feedback on this post, and thanks to Satoshi Nakamoto for creating the series of events leading us to a better future.