Is crypto a security or a currency?
And who makes it so?
In his recent address to the Penn Law Capital Markets Association, SEC Chair Gary Gensler confirmed a growing consensus among government regulators that crypto is “a security under our jurisdiction,” and that only “some, probably only a few, are like digital gold; they may not be securities.”
“Even fewer, if any,” he goes on to say, “are actually operating like money.”
This consensus is in stark contrast to the vision promulgated by the pseudonymous Satoshi Nakamoto, which is quite specifically an “Electronic Cash System.” It is even in the title of the whitepaper he wrote that inaugurated the crypto era. But “operating like money” wasn’t exactly what Nakamoto had in mind, either–because the state of such operation was (and is) broken. He wanted a new kind of money to fix the problem of ownership then, and now, plaguing the money that the world is accustomed to using.
The problem is this: we don’t really own our money, especially when it’s held by banks, which are increasingly incentivised to treat it like casino chips. Regulations removing divisions between banking and investment combined with guaranteed bank bailouts and non-existent consequences for bank executives have made banks extremely reckless with money held in deposit. The great market crashes of history and the past several decades can be traced back to this unique brand of lawful lawlessness. Such removal of consequences for major speculators (at the cost of minor speculators and innocent depositors) may even have roots in Treasury Secretary Alexander Hamilton’s authorization of government purchases in the securities markets to prevent a collapse in 1792. It’s an American example of a pattern that may be observed almost anywhere in the world. Governments step in not just to save their fat cats, but to keep them fat, too. This is the point Nakamoto was making when he indelibly recorded the Jan 3, 2009, bank bailout news headline in the Bitcoin genesis block.
The point is all the more reinforced today by the most well-known axiom of the crypto industry: “not your keys, not your crypto.”
Meanwhile, millions of people who lost their homes and their jobs did not get their homes and jobs back. A significant fraction of the trillion-dollar bailout cash-infusions actually got spent by the banks in the form of renewed speculation, buying up the houses that ordinary people lost. Despite mortgage rates declining to a third of what they once were, an average person’s salary stopped affording to buy a home in the 1980s.
The homeless pandemic, runaway wealth inequality, the “one percent,” and massive protests like “Occupy Wall St” have raised unprecedented public awareness and attention to the massive grift being perpetrated. People are finally getting a sense of the scale and severity of the problem. But what about the solution?
There are significant obstacles to overcome. Regulatory suffocation of the currency function of crypto is a critical obstacle designed to maintain the status quo, in which banks and the ruling elite comprising their executive ranks are free to do whatever they please without consequences.
Really, what are we going to do about it?
A people’s consensus, as opposed to the contrary momentum of government and institutional consensus, continues to grow around cryptocurrency. The movement has come this far without government and institutional help, and despite efforts to undermine it. And it has succeeded so well that some smaller governments are beginning to embrace it rather than fight it after all.
Encentive’s Web3 OS seeks to nurture the people’s consensus. The majority of the people is the ultimate key to government support, with the ultimate goal being to replace the illusory code of “don’t be evil”–famously (if quietly) discarded by Google as its motto–with the never-before-possible code of “can’t be evil”–never before possible until the unique power of blockchain made it possible to write tamper-proof code. (Note! “Tamper-proof code” is not automatically “exploit proof”! Decentralized code that cannot be changed without consensus can still be bad code.)
That’s half the battle though. Coding is hard and coders are a minority, powerful as they may be. So long as blockchain and blockchain technology remains the province of coders and technical experts, the necessary majorities for real progress into the era of cryptocurrency will remain out of reach. This is why Encentive’s DAO is built as an operating system akin to Android or Microsoft Windows, so that business experts rather than technical experts can access and deploy functions as users would on other popular OS systems. Intuitive click-and-deploy functions include payments and airdrops to individuals or groups and regulation-compliant fiat-crypto interchange through Alchemy Pay. Web3 enterprise functions are similarly available for building exchanges, as demonstrated by one of our exchange clients, Bit.store. Bit.Store is a leading pioneer in the SocialFi platform space that aggregates and enables on-chain data analysis, digital currency markets and compliant legal currency deposits. Through functions such as real-time market quotations, asset management DAO, and seamless transactions, users can brainstorm in groups based on real-time price charts and news, gather reliable information from verified sources, and manage assets. Encentive enables Bit.Store liquidity pools, raising TVL and lowering trade slippage.
Encentive’s growing user base will constantly innovate financial systems, as we wholly agree with Gary Gensler’s closing statement in his address to Penn Law: “In conclusion,” he said, “new technologies come along all the time; the question is how we adjust to that new technology.” So, although it is up to the SEC and institutions like it to decide to what degree crypto is like a security or money, or both, that decision is subject to adjustment, necessitated not only by changes in technology, but also by the consensus of large numbers of daily users.
