Brian Armstrong - Co-Founder and CEO at @Coinbase. Building an open financial system for the world.
How Digital Currency Will Change The World
Digital currency may be the most effective way the world has ever seen to increase economic freedom. If this happens, the implications are profound. It could lift many countries out of poverty, improve the lives of billions of people, and accelerate the pace of innovation in the world.
This is why I co-founded a digital currency company. I believe it is the highest leverage activity I can be doing right now to improve the world.
In this post, I’ll attempt to explain what economic freedom is, why it is important, and how digital currency can change it.
What is economic freedom?
Economic freedom is a measure of how easy it is for members of a society to participate in the economy. It has a number of factors, such as:
By looking at the names on the two lists you can start to get a sense of why economic freedom may be important, but here is another way to look at it.
Why is economic freedom important?
Economic freedom correlates with a number of positive outcomes in society.
Some you might expect, like higher per-capita income, life expectancy, and literacy. But economic freedom also correlates with some things you may not expect, like:
When I first read this I was surprised more people didn’t know about it.
Correlation, of course, does not prove causation, so we must be careful not to jump to too many conclusions. Societies are very complex, and what works in one place may not necessarily work in another. Still, it raises an important question: if the world had more economic freedom would we all be better off?
Digital currency’s impact on economic freedom
In the past, if you wanted to change economic freedom you had to run for office, lobby the government, or give speeches. If you spent one year in every country of the world working toward this, it would take you 196 years (and you probably wouldn’t move the needle much in each country).
But with the proliferation of smartphones, there is now a way to rapidly bring digital currency into almost every country in the world.
And what digital currency enables matches up very well with the properties of economic freedom.
Digital currency has a number of applications emerging today (prediction markets, micro-payments, smart contracts, remittance, games, etc). But I think digital currency could “tip” in at least one developing country by 2020, where it accounts for the majority of transactions in that economy.
Over the past 20 years, the global average economic freedom has gone up by only 3 points (from 57% to about 60%). Things are moving in the right direction, but far too slowly.
With the invention of digital currency, I believe we can dramatically increase the economic freedom of the world, perhaps raising it as high as 75% in the next 10 years.
Economic freedom is one of the great meta-problems of our time (right up there with A.I., quantum computing, and cheap renewable energy). If we can create more economic freedom in the world, it will serve as a giant economic stimulus package for the world, accelerate innovation, reduce wars, make the poorest 10% better off, overthrow corrupt governments, and raise happiness.
For the first time in history, just a couple hundred people can have a material impact on the economic freedom of the world by making a new technology accessible to the masses. If this mission is of interest to you, please drop us a line.
Thank you to Rose Broome, D. Scott Phoenix, John Yi, Erin Coppin, Adam White, Dave Farmer, Dan Romero, Fred Ehrsam, and Nathalie McGrath for reviewing drafts of this post.