As the demand for decentralisation grows and its adoption spreads, we are approaching a new era of autonomy. This shift will impact nearly every aspect of our lives, particularly in how we store, manage, and share our data.
As institutions and businesses interact with this data in more transparent and decentralised ways, individuals will demand greater control over their personal information.
This age of decentralisation will usher in unprecedented levels of autonomy for future generations, making data custodianship a core skill, much like the digital literacy we now take for granted.
This transition also signals a change in our monetary systems. As any “armchair economist” will tell you, monetary systems rise and fall with trust. When a system fails to align with the principles that shape how we manage our finances, it challenges the existing order. Over time, this can lead to a shift in monetary policy, as future generations’ trust in and relationship with money evolves.
The Trajectory of Evolving Monetary Systems
Trading Chickens Has Its Problems: In the early days of commerce, trade was often conducted through barter—exchanging goods directly. For instance, a farmer might trade eggs for wheat or ale. While this worked in small, local communities, it quickly became impractical as societies grew. The problem was simple: value transfer wasn’t precise. One party might feel their goods were worth more, leading to dissatisfaction or unequal exchanges. Additionally, it was challenging to find a trade partner who had exactly what you wanted and was also willing to accept what you had to offer. To solve this, humans needed a system that provided universal value—something that everyone could agree on as having worth. Enter shiny rocks—or, more specifically, gold.
Gold Is Heavy: Once upon a time, people carried gold around to make purchases. This was not ideal—it was heavy, took up space, and was impractical for smaller transactions. While other, less valuable precious metal coins were available, such as silver and copper, the inconvenience of carrying heavy precious metals led to a natural progression towards more practical solutions.
IOUs (Promissory Notes): The next step was the use of promissory notes, or IOUs. These notes acted as “tokens” for the gold held in bank safes, allowing people to travel lighter while still holding value. The bank would keep the gold, and the note entitled the bearer to withdraw the equivalent value. This shift allowed for smaller denominations and greater utility in how gold could be divided.
Fiat: The next innovation was fiat currency, which in Latin means “let it be done”. Fiat money centralised the messy IOU system into a more structured, inter-bank solution. The government held the gold reserves, and the banks issued IOUs backed by government guarantees, adding security and organisation to the process. This led to the establishment of central Reserve Banks to hold gold reserves and become custodians of fiat value.
Then It Turned to Debt: As governments and banks began to recognise that not all gold needed to be held in reserve because it was unlikely everyone would demand their gold at once, and so the gold standard was abandoned in August 1971 under President Richard Nixon. This led to the rise of money printing, a system in which value is not backed by a tangible asset. Over time, this led to inflation as fiat currency began to lose value. Around the same time, the petrodollar system was established in the 1970s, with the U.S. dollar becoming the global standard for pricing oil and other commodities, further cementing its dominance in international trade and finance, allowing the U.S. to print money.
Enter Bitcoin: This shift toward fiat currency created a natural opening for the crypto boom. In 2008, an individual or group of individuals under the pseudonym Satoshi Nakamoto published the Bitcoin whitepaper, introducing a decentralised currency that was independent of government control. Bitcoin and its decentralised blockchain, with a limited supply, are immune to inflation. The inherent digital nature of Bitcoin, combined with its scarcity, has led to its adoption as the next iteration of money—offering individuals greater autonomy over their assets and pushing government control out of their wallets. While cryptocurrency is still finding its footing, it represents a natural evolution of monetary systems, returning to the idea of carrying “gold” in a digital, weightless format.
The state of any monetary system depends on the widespread consensus of those who use it. A new system can only succeed if it is trusted, secure, and meets the needs of society. Without such trust and security, economies stagnate. Decentralisation, by returning power to the individual and removing the central authority, has the potential to rejuvenate economic growth, provided that its systems are reliable and adaptable.”
Friedrich Hayek
For a new monetary system to succeed, it must inspire trust and reliability. Is the new system more reliable than its predecessors? Is it secure enough? These are the questions that may explain why decentralisation and DeFi (Decentralised Finance) apps didn’t gain widespread momentum until there was a consensus on the security and robustness of the Ethereum network.
Its blockchain has provided the solid foundation required for legitimacy. Now, all that remains is the pivotal age of featherweight regulation (as observed in history, when a government is pro-feather regulation, it bolsters the economy as it unlocks innovation) and for generational adoption to take its course, paving the way for a more decentralised monetary system and fostering trust in it. Decentralisation, in many respects, is a return to a more basic approach, albeit with the benefits of a more modern system.