Cryptocurrencies and blockchain technology are often associated with a brighter economic future, where big banking institutions would have less control over our daily lives. However, this theory is called into question by some economic experts. If virtual currencies imply a limited field of vision to investors in relation to the management of trade, it is not a guarantee of equity. The experts say that a bright future is not enough to ensure a positive outcome for investors.
During the Middle Ages, there was nothing near an egalitarian society. Everywhere in Europe, there were three distinct social classes: peasants, nobility and the Clergy. The peasants were subject to the other two classes and were forced to pay heavy taxes and work in less than tolerable conditions. It is because of these social divides that democracy has emerged, in hopes of putting everyone on the same level.
Medieval society favored the wealthy minority who quite literally held those who did not have any chance to change as hostages. The influence of the few on the many has even been seen much more recently in history, notable during the age of industrialization. It took nearly two centuries of struggle for workers in factories to enjoy reasonable rights and acceptable working environments.
This kind of society is now almost inconceivable, in as much as we are in an era of capitalism, which was presented as an opportunity for all to start at the same level of equality. This system, however, is still not without flaws. Capitalism includes a free trade market, where everyone initially has the same chance at success. However, in practice, some start out several steps ahead of others. In the end, this system is still a return to square one where a minority controls all the power.
Why Virtual Currencies Carry Risk
One ambition of cryptocurrencies is to remove the authority from the big central banking systems regarding the circulation of money. The reason for this is that too much power in the hands of only a few people can only lead them to use it for their own good. The concern is that a fully self-managed monetary system will always have flaws.
To let these computer algorithms manage our lives in more than just imprudent. This is because they are designed to act without taking nuances into account. The human factor then becomes crucial to managing a partnership properly. Just as democracy is not perfect because it requires the intervention of a few authorized people. To entrust the management of our financial lives into a few lines of code would be giving complete power to an entity without humanity. And this, basically leads to the same system as in the feudal era, if not worse.
Another risk is that these algorithms could be exploited by some to have a better advantage over others. For example, with virtual money, the largest power is not held by the creators, it falls into the hands of whoever holds the larger number of the currency. Typically, this puts the power into the currencies users and gives them a better influence over market prices. This is the same way that Korbit, Coinone and Bithumb, which together possess nearly half of all the existing units of a cryptocurrency known as XRP.
The Power in The Hands of Few
As with, whoever possesses the most will be the mightier ones. And, this will always cause some forms of jealousy, prestige and even possibly conspiracies about who owns the most Bitcoin. However, owning a Bitcoin or other unit cryptocurrency has a higher value.
The decentralization created by cryptocurrencies is working towards weakening the elite at the head of the financial system. These big banking systems have now armed themselves with lobbyists who are trying to propagate theories as credible as cryptocurrencies being a return to the Middles Ages.
The good news is that this is not the case and cryptocurrencies are trying to find to preserve economic power for its users. It is now high time to start asking ourselves about the societal shift of algorithms being integrated into our lives.
After all, cryptocurrencies could be used for more than just investments. In the future, we could see them being used in logistics, medicine, etc.