By J. Christopher Giancarlo /// March 19, 2024
Keynote Speech: Values in the Coming Future of Digital Currency
Hello, Everyone. It’s great to be with you in London at the 2024 Digital Asset Summit.
Five years ago, in a colorful ceremony at the twelfth-century Guildhall about seven tube stops from here, I received a wonderful honor: the Freedom of the City of London. It is a very ancient tradition, believed to have been first bestowed in 1237. The honor arises from the medieval practice of granting worthy persons freedom from serfdom through the liberty to conduct trade in the City of London.
Fittingly, I am now entitled to drive sheep (if I had any) across London Bridge. I am also entitled to have a silken rope around my neck should I ever end up on the gallows. That is one privilege that I intend to put off for as long as I can!
Kidding aside, the Freedom of the City of London is really a reflection of the development of economic liberty here in England, a crucible of the Enlightenment—the intellectual movement that sought to improve society through fact-based reason and inquiry. The Enlightenment reshaped the ways people understood issues such as liberty, equality, and individual rights, including economic freedom.
The Enlightenment recognized that individual freedom is inexorably linked to economic liberty.
Centuries later, we are well into new and profound global societal changes, headlong into an information-based and digital network world.
In short, the Internet is doing to finance, banking, and money what it has already done to information gathering (Wikipedia), retail shopping (Amazon), entertainment (YouTube), social networking (Facebook & Twitter), photography (TicTok), journalism and so much more. That is: increase speed, efficiency and automation, lower costs, further inclusion, unlock new business models, challenge traditional market structures and displace intermediaries and, perhaps, create new ones.
It is also raising the question of whether this new Internet of Value will truly enhance our economic liberty and financial freedom. Or, will it rob us of liberty in a similar way to how the second generation Internet centralized information and speech in the hands of a few BigTech giants?
So, what I’d like to do in the next 15 minutes is issue a challenge and, indeed, a call to action. That is, to make the future of digital finance one that is worthy of a free society and true to the Enlightenment values of human liberty and financial freedom.
To do this, we must first accept the reality that modern money is changing and changing rapidly. It is expanding from fungible cash bills and electronic notations on the balance sheets of central and commercial banks to unique digital notations on new digital infrastructure operated by global decentralized collectives, national sovereign governments and private sector entities.
The Atlantic Council is just out with new information on the global adoption of various forms of central bank digital currency or “CBDC”. The headline number is that 134 countries and currency unions, representing 98% of global GDP, are now exploring CBDCs. Four years ago, that number was only 35.
In fact, 68 countries are now in an advanced phase of exploration—development, pilot, or launch. That includes 19 of the G-20, with China placing its digital Yuan – the eCNY- in over 260 million digital wallets and the E.U. planning to roll out a digital Euro by 2025.
At the same time, global stablecoin usage continues to increase dramatically. Stablecoins settled over $11 trillion in on-chain transactions in 2022, almost surpassing the payment volume of Visa and reaching 14% of the volume settled by ACH. The supply of stablecoins has grown from less than $3 billion five years ago to over $138 billion as of January 2023.
And, of course, decentralized cryptocurrency, like Bitcoin and Ethereum, continue to grow in notional value, computing power and distributed ownership. Bitcoin has now surpassed the Swiss Franc to become the 13th largest currency in the world.
Thus, whether or not any one country deploys central bank digital currencies, our fellow men and women will be dealing with: CBDCs, stablecoins and crypto in the century to come.
The sometimes fashionable debate between CBDCs, stablecoins, and crypto is a false choice.
The future is all of the above.
The backdrop to the quickening advance of digital currency networks is an increasingly multipolar, complex and fragmented world, one riven by war, global conflict and political and social division. The later 20th century financial system, dominated by multinational banks and the US Dollar and Pax Americana, is gradually yielding to a 21st century worldwide kaleidoscope of overlapping and partially interoperable, digital networks of value. Some are decentralized like Bitcoin. Others will be variously centralized and operated by global banks and Big Tech companies. And others will be deployed by national governments and, even, exported for sale as white label, “CBDCs in a box” for the developing world.
Here’s the danger:
Those centralized digital currencies that emerge – both sovereign and non-sovereign – will be gathering points for massive amounts of data about the economic and financial activities of users, citizens and voters.
Many thoughtful people across the political spectrum and across the globe are appropriately concerned about misuse of such “honeypots” of private financial information. They are concerned about direct access by central governments, global banks and Big Tech to such troves of personal data. They anticipate political and commercial pressure on private-sector actors to conduct surveillance, gather information, report on activity and, even, disable financial transactions with disfavored groups and activities in a similar fashion to the now increasingly evident and deplorable censorship of speech on social media by both government and BigTech firms.
Just yesterday, the U.S. Supreme Court heard arguments on whether the Federal government can coerce social media platforms to censor speech it doesn’t like. Unsurprisingly, the government argued that may rightly coerce censorship of internet speech.
That is why, regardless of the form of digital currency – sovereign or non-sovereign, it is imperative that free society thoughtfully consider privacy implications and insist that the emergence of digital networks of value be consistent with key laws, norms and civil rights.
Designed right, a Digital Dollar or, indeed, a Digital Euro, Digital Pound and any digital currency system – both CBDCs and stablecoins – should run on systems that are operationally and objectively transparent, providing the public with independent assurance about technical function, security and resistance to impermissible monitoring, data mining and other exploitation.
Citizens should not have to rely on a government or a stablecoin operator to say, “trust us, we’re not invading your privacy and we’re not influencing your economic choices.” Digital Currency users should be able to see for themselves that they are not being surveilled and manipulated.
In fact, individual economic privacy and censorship resistance should be affirmative design features and competitive advantages of digital systems of value worthy of free societies and open economies. By encoding individual economic privacy into its very architecture, CBDCs and stablecoins should serve as a desired instruments for people the world over who aspire to financial autonomy and inclusion consistent with basic human rights and civic values.
As an American, I feel anything less is a betrayal of the American Dream and the U.S Constitution.
# # #
As I start to close, I want to reference a terrific book just published by Frank McCourt, founder of Project Liberty, and my good friend, the digital journalist, Michael Casey. In “Our Biggest Fight – reclaiming Liberty, Humanity and Dignity in the Digital Age,” they explain how in the second-generation phase of the Internet, information has become centralized and controlled by BigTech. In this Web2 world, we have lost control over our lives in what McCourt calls “digital feudalism.”
“It’s as if we are marching back toward the Middle Ages. Our sense of agency has been seized from us by a clutch of corporate behemoths. By scraping and stealing our data, hiding the influence of their proprietary algorithms and persistently surveilling our online activity, they have stripped us of our agency, of our capacity to set the course of our lives.”
McCourt and Casey have it exactly right about the state of Web2.
But what about Web3 and the coming Internet of Value? Will Web3 live up to its promise if the BigTech and/or Big Government behemoths centralize the coming Internet of Value with control over our everyday economic choices, and our economic liberty?
In free market economies, what is liberty after all but how we are make a living, invest for the future and support the people, causes and institutions we believe in? Are we willing to compromise those financial decisions to the priorities of BigTech, BigBanks and BigGovernment?
Thirty years ago, the first wave of the Internet rolled across the globe. Then, the US, England and other leading democratic nations – the heirs to the Age of Enlightenment – made sure that the Internet of Information reflected the values of open and free societies, rather than closed and repressive ones.
Today, the free world and free people must again work together to make sure that the coming Internet of Value reflects similar values of financial freedom and economic liberty. Together, we must drive global standards for digital value networks suitable for human worth and dignity.
So, here is my plea to you this afternoon. Let’s work together as our enlightened predecessors did…to ensure that the future of digital currency networks is one that enhances the free world. Let’s set standards for digital currencies – sovereign and non-sovereign – that are worthy of human liberty and people everywhere who aspire to it.
Let’s get to the task at hand. Let’s not be intimidated by this innovation, but seize it to enhance the dignity of our fellow men and women. Let’s shape the future of finance, banking and money itself in accordance with our finest and noblest human values.
Thank you.
