By now we all heard the news: Russia is cut off from the SWIFT network.
This is no surprise. It is something the US-led coalition often does. When a country operates outside the bounds of the majority view, mostly the West, that country is to suffer financially. One of the ways this is accomplished is to isolate its banking system.
Hence, the situation with Russia is no surprise. It does highlight, however, one of the fundamental flaws with our existing system: how arbitrary it is. Cryptocurrency is seeking to replace this.
Many call the crypto world the Wild West yet it is really the existing system that operates without many rules. Russia was here today, gone the next. A decision was made that it cannot play anymore.
Unfortunately, we will see how this is present throughout much of our monetary and banking system.
Source
Arbitrary
The larges currencies in use are not "printed" by their governments but, rather, are created by the commercial banking systems. Here is where we see the first set of problems arise.
Money is created in a credit based system through lending. When banks lend, the money supply is expanded and new currency is created. Most are aware of fractional reserve lending. This gives the commercial banks the authority to expand the money supply as it sees fit. Of course, through the altering of its policies, it can also contract them.
The challenge is how does this work? What are the standards? How do we know what will take place?
Naturally, we cannot know these answers since it is arbitrary. The banks decided what their policies are and, as we know, they are subject to change. When things get tight economically, what happens? Rejections increase. Banks suddenly raise their standards. It can happen in an instance.
A larger down payment is required. Interest rates are increased since the credit score is not high enough as of now. The term is shortened to decrease the risk. Whatever the parameters, it is like hitting a moving target.
If the rules are constantly changing, do we truly have rules?
In an organic, ever changing system, obviously we need flexibility. That is paramount. However, if the entire system is arbitrary, what can we really count on?
Cryptocurrency Changes This
The foundation of cryptocurrency can be summed up by the phrase Code is Law. By design, there is the intention to have some of the process that is slow to change. A core element of the trust factor is the base layer is hard coded and requires a lot to later.
This is radically different from the present system. It removes some of the arbitrary nature when it comes to money.
Take Bitcoin as an example. It is what it is. Some feels this is a problem yet this is why it stands out. Bitcoin does not change a great deal. Over the last decade, I believe it had 2 or 3 updates. Sure, this means the code is old and outdated. However, that is Bitcoin's value. One can depend upon it for exactly what it delivers. The fact it is unchanging means that it stands out.
The token creation schedule is set. When a halving takes place, nobody is surprised. Even though the miners will ebb and flow, the number of Bitcoin's issued from block-to-block is not altered.
Here we see where trust comes in. When approaching Bitcoin, we know what to expect. If the money is in a wallet, the transaction will go through. Since it is permissionless, anyone can join in. There is no ambiguity there. It is a characteristic that also does not change.
These rules provide a very strong foundation throughout cryptocurrency.
The End Of The Golden Rule
We all heard of this one before.
The Golden Rule states: the one with the gold rules.
In other words, if money is power, the system can be controlled. It is fairly evident when we see what takes place in our financial system. The average person has little recourse since most of what is taking place is "legal". When rules are arbitrary in nature and ever changing, they can be massaged to fit whatever situation is desired. This is what we operate under.
Code is Law changes this. Since it makes things static, people understand what is taking place. The entire cryptocurrency world can expand and change yet individual projects have stability built into the base. From here, other applications built on top can tap into that reliability.
Those who seek to change the rules to fit their agenda are not able to. Certainly, those people can set up their own network with whatever rules they desire. However, nobody is forced to use what they create.
Of course, we can see why this is unsettling to those who are in charge and have power. We can also see why there is so much discussion about how Russia might use cryptocurrency to evade what the West is employing. The Golden Rule is faltering.
Cryptocurrency is a system that is basically anti-tyranny. It can grow and adapt as needed. That said, the baseline that is established, which allows anyone to participate, can be trusted to the degree that was determined in the code. As long as that is not changed, things proceed forward as always.
From this perspective we see how there is consistency with cryptocurrency. Each day, 24 hours at a time, blocks are created based upon the code. Whatever transactions are contained in those blocks are processed. It is like the bunny, it just keeps going.
The result is a financial system that is being built on a monetary system that has rules at the foundation. These are not arbitrary and are slow to change. Collectively, there is great flexibility but within any single network, things are fairly rigid. This is a complete reversal of our existing monetary system which is very "haphazard" based upon who is in control.
What we are seeing taking place in the world now is bringing this to light.
Once again, cryptocurrency solves this.
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This whole war situation is very sad and unwanted but one positive side effect is that it's helping to highlight the flaws of the current system.
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War is always sad. Never a good situation. Politicians are too quick to turn to it.
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It definitely have so many things in place to fix and at the same time change things in the nearest future and I believe the presence of cryptocurrency is awesome and I appreciate that.
I like the idea of things not being quite so arbitrary. Especially when it comes to the topic of money. That seems like it is something that should be fixed and follow a specific set of rules. That's my thinking anyway. I think all that crypto has to offer is a welcome change.
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With crypto we can move if we do not like the rules that are in operation. That is something that is basent from the existing system.
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Very true!
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Sadly so many Russian citizens facing the heat due to this ban for no reason. They simply have no say in this. Crypto fixes this. It's a call to move to Decentralized systems eventually.
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They are trying to stop crypto from fixing this.
It is really bringing things to the forefront.
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Another great article, as always!
A very underrated statement imo. People keep forgetting that true power lies in the hands of the few that can decide who gets to play and who is deemed unworthy of the game.
Will this stay true forever though? If they do opt for their own versions of centralized systems I am sure they will introduce laws that force you to use them in one way or another.
While the path forward seems clear for crypto I am 100% sure that the true fight against the establishment is yet to come.
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This article really nails it! 🤠
Because this is such an awesome post, here is a BBH Tip for you.
. Keep up the fantastic work
Yup, I agree.
Another thing to mention is that we are all participating in Crypto voluntarily unlike the current banking system. We are kind of forced to use the fiat currency by our government.
None of us voted to kick Russia out of SWIFT. A competitive banking system that we can voluntarily participate in is a healthy competition to which was the Norm until this decade.
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Most definitely there will be areas Russia can use and crypto is the one that really stands out. You cannot prevent this as crypto is that powerful in what it provides and that is a payment solution that works.
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Code is Law!
Love that line.
cryptocurrency solves this
Love that line.
Hive fixes this.
Once again I get educated.
I am going to thank you everyday you post.
Thank you.
Bradley
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One thing I will say is that all of these dramatic world events are putting crypto in the spotlight over and over again. As little as a year ago many people had no idea what Bitcoin was. Some had never even heard of it. I don't think that's the case anymore. It's becoming a household name, even if people still don't understand it.
But as more and more of these types of things occur, they're going to start figuring it out pretty quickly as the world starts to realize they could be next in the crosshairs of these governments.
I wrote another long response to this article but I turned it into a post of its own. lol
https://leofinance.io/@dagger212/code-is-law
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Now that they are cut off, what happens to anything using Russian collateral as the underlying debt? I guess they might be able to cover it using Russian assets that they have frozen but it's getting a little complicated.
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What an irony, the impact of the present situation happening between Russia and Ukraine had to bring cryptocurrency to the spot light and identify flaws in a system.