Here at the RSA, we’re getting very interested in what we call the ‘Power to Create’: the notion that by unleashing the desire of billions to turn their own, unique ideas into reality, we’ll all end up richer, solve some of our biggest problems and feel a lot more fulfilled along the way.
It occurred to me today that the fascinating saga of Bitcoin tells you a lot about the idea and, in particular, why the Power to Create notion can be so exciting, dangerous and bemusing simultaneously. So here’s a rapid fire tour of the idea by way of Bitcoin.
1. Great ideas can come from anyone, anywhere.
By any measure, Bitcoin is an astonishing achievement. To create a new global currency that is engaging increasing numbers across the world every day is a mind-bogglingly original and, so far, effective idea. But it did not come from any of the titanic organisations of the financial world but from an anonymous individual or group of individuals who claim to be from Japan (but probably aren’t). It is one sign that sometimes the people you think should have the best ideas (or who claim to have the best ideas) can be outrun by those thinking in a completely different way. This is why Bitcoin is now far from alone – dozens of crypto-currencies are springing up in its wake such as Namecoin, Litecoin and Peercoin. Like most great ideas, there is soon a long queue of diverse people who can’t wait to develop and build on it all bringing their own unique perspective and added value.
2. Unleashing the Power to Create is just plain good.
Much public debate these days is what philosophers call “consequentialist”. We try to understand proposals for change in terms of whether they have beneficial or damaging consequences. A very great deal of public debate is consequentialist. But sometimes you just have to admit that something is good because it is a fundamental feature of what it is to be human. Turning an idea into reality, using your ‘power to create’ is just such a good. Bitcoin is no different in that regard to the cave paintings of Lascaux.
Once Satoshi Nakamoto had got the idea for Bitcoin, I doubt anything could have stopped her, him or them making a reality of it. The same goes for all the crypto-currency creators around the world.
3. Releasing the Power to Create will help solve our problems.
However, letting thousands or even millions have a crack at solving problems is far more likely to yield results than relying on a select group of bureaucrats, professionals or experts. The huge advances that have been made in living standards and well-being over the last 250 years derive directly from the unleashing of creativity of a much wider group of ‘low-born’ thinkers and innovators associated with the scientific and industrial revolution of the 18th century.
The immediate problem Bitcoin solves is the need to trade anonymously (admittedly not always for the best of intentions) but clearly it also provides a unique store of value for others.
But the Holy Grail that crypto-currencies might one day secure (undoubtedly some time off) is the creation of a global medium of exchange that eliminates the national currency fluctuations that obstruct and slow trade and cause so much economic volatility. In effect, in a century we may have a global Euro but one (or more) chosen voluntarily by the world’s people rather than imposed by governments. Chances are that currency won’t be Bitcoin but it could well be a descendant of it.
4. A lot of people don’t like the Power to Create
Everyone loves creativity, right? Absolutely. That is until it challenges their power, position or privileges. Bitcoin and its cousins are small fry right now but they are growing quickly. Already the supposed guardians of our money – the central banks are getting twitchy. It’s telling that the two countries that have so far proved most hostile to Bitcoin and have taken active steps to suppress it are a one-party oligarchy (China) and an increasingly authoritarian semi-autocracy (Russia).
But across the world, right and left now buy into a policy consensus that says control of a nation’s money is the best way for them to shape an economy in the way they see fit. That consensus justifies the huge power held by Central Banks (and has done no harm to the balance sheets of commercial banks either). Once crypto-currencies place real monetary power in the hands of ordinary businesses and consumers, expect a backlash.
5. The Power to Create is troubling and dangerous
No doubt such a backlash will make much of the damage that could be done by Bitcoin et al. But the problem with letting creativity out of its cage is that outcomes always are deeply unpredictable and often not benign. A few sentences ago I suggested a monetary utopia free of national currency barriers. It’s quite possible, however, that a dystopia awaits: one where poorly regulated monetary institutions ruin investors, criminals trade anonymously and where business is severely damaged because no-one really knows whether the currency they are using will still exist tomorrow. Alternatively, because of these problems, crypto-currencies will remain a marginal affair, of interest only to the risk-takers and the naïve.
6. The problems of the Power to Create can only be solved by unleashing more Power to Create
The solution, however, is not to crush nor attempt to control the power to create. As William Shipley (the RSA’s founder) recognised 250 years ago, the answer is to apply the power to create to the less happy consequences of creativity. This is, in fact, what is happening in the world of crypto-currencies. Namecoin, Litecoin etc. are not simply replicas of Bitcoin. Each one is an experiment trialling different ways to address the weaknesses of Bitcoin and crypto-currencies more generally. The same is true of the different monetary institutions that are springing up around Bitcoin. The fact that a major Bitcoin exchange, which was widely perceived as flawed by experts, collapsed a few days ago without bringing confidence in the whole crypto-currency system down with it suggests the power to create is working just as it should.
7. There has never been a better time to unleash the Power to Create
Bitcoin is not the first attempt to launch currencies free from the control of central banks and governments. But what makes it different is, of course, the internet. Innovations can be shared and used so much more easily and widely now. The web is a huge machine that has enhanced the power to create a hundred fold.
For that reason, what Bitcoin could do to the world of currency is just a hint of what can happen in every area of life as the potential of this new tool inspires billions to turn their ideas into reality across the globe.
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