Fintech and Practical Utopianism

It is an honest critique of crypto skepticism that sometimes errs on the side of being non-constructive and precludes utopian visions of a better world. While that might be true in some cases, I don’t think it is necessarily true. Many of us that critique the worst excesses of crypto assets would likely identify as practical utopians. We genuinely want to see a world where there’s a more egalitarian, transparent, and fair economic process; we simply don’t see a mechanism by which any crypto assets advance those goals. My vision of the far future that my children live in looks like a post-scarcity socialist society; however, I fully accept that capitalism may be the bootloader for such a society and the messy process by which we bootstrap such a future society.

Meanwhile, the near future has an inevitable dependence on markets and money as a medium of exchange and as a metric for value. Money is a social technology and a platform, and like any platform, it is highly contingent on network effects for its utility. These platforms can theoretically be built by any entity capable of sustaining them, but there is only one natural issuer of money—the state. Nation-states derive their legitimacy through various mechanisms but primarily through the efficacy of their institutions to provide for human needs, among those being the need for security, arbitration, and justice. And by virtue of their monopoly on these three functions, they essentially become the only realistic issuer of money. Public money has a significant advantage over private issuance. Anytime we’ve tried private money in the past, it has quickly ended in rampant widespread fraud and disaster.

However, the arc of history bends towards more digitization and streamlining of financial services. Public money will become digitized like everything else in our lives, and digital national currencies will live on your phone right alongside bank deposits and credit products. In the not too distant future will have digital bearer instruments that can be transferred peer to peer alongside and integrated with your everyday banking applications—effectively the digital equivalent of physical cash. This money will be as natural as cash and allow a limited form of a dark peer-to-peer economy that society inevitably requires for its realistic functioning.

In the future, lending activities will be massively diversified across a vast amount non-bank financial institutions. Single dimensional credit scores will be a thing of the past. Instead, different aspects of one’s individual public record and credit history will be represented as higher-dimensional factor models which give creditors deeper insights into the creditworthiness of individuals. This model will provide institutions with greater assurance on managing risk, covering loans, and giving people from previously marginalized groups greater access to credit.

The crypto bubble will pop and will indeed hurt a lot of individuals who had staked their future on dog coins. However, on the other side of the catastrophe, the public will get a hard object lesson about the underlying hard truths of value and risk. However, markets will reconfigure themselves on the backside of the catastrophe, and people will begin investing in productive assets again, leading to an influx of capital back into research and development into clean energy, biotech, renewables, and non-financial technical innovation. The days of hype-chasing the latest commodified meme token were widely recognized as an event similar to our generation’s South Sea Bubble. On the backside of the mania, GenZ becomes inoculated against this form of the madness of crowds because they see their part in perpetuating it, and we become wiser as a civilization.

Instead, people go back to entrusting their portfolios to increasingly advanced roboadvising solutions and to humans whose interests are better aligned with the interests of their clients. Mobile-based advising solutions give investors real-time and increasingly sophisticated insights into the underlying factors and events that influence their portfolios and present the aggregate risk in a digestible and humanized form. Thus allowing investors to focus on macro events instead of short-time price movements. The new retail investing paradigm leads to deeper and more prosperous public capital markets that are more robust and resilient against the manias of the manias and tech bubbles we saw in the 2020s. The days of fundamental-less narrative-driven asset bubbles are gone and are replaced by a golden era of rapid tech innovation and better-aligned financial interests between both shareholders and end-users.

Individual identity becomes an increasingly digitized concept that comingles with both our online and personal lives, but with the law enshrining the right of persons to control their data across all private platforms. Increasingly advanced cryptography and privacy-preserving protocols allow the seamless data interchange between private and public entities. Financial compliance frameworks of the past, like KYC, became as ubiquitous and seamless as FaceID is to your mobile phone. Data sharing and migration become a purely consensual and mutually beneficial arrangement between the public and private sectors and are enforced by a well-understood international framework that respects privacy as a universal human right.

Nation-states still maintain their role as guarantors of citizenship and borders, but as the world coalesces towards a more peaceful and universally democratic planet, such things become primarily symbolic. While still lightly regulated, capital and talent flow freely between regions, and culture becomes more internet-based and homogenized as the values of liberal democracy become a universal philosophical foundation for all human thought. The era of lunatic strongmen like Trump, Zuckerberg, Xi Jinping, and Putin fades, and their names become a warning left to the history books alongside the other intellectual dead ends.

It becomes a universally recognized truism that the institutions of liberal democracy, however presently flawed, can and will be perfected. The arc of human history bends towards more freedom and flourishing through incremental reform. The progressive trend of the last 300 years continues, and humanity flourishes into a more global, wise, and prosperous civilization that eventually turns its eyes toward the stars and beyond.