Below is a video and transcript of one of Andreas Antonopoulos’ most powerful speeches “Money as a System of Control” , unedited, and transcribed in full. This talk took place at the Advanced Digital Innovation Summit on September 12th 2017 in Vancouver, Canada. You can support Andreas at https://antonopoulos.com/
Money as a System of Control -TRANSCRIPT
Andreas: “The topic of today’s talk is an interesting property of money that I want to explore with you, and I’m calling this one inside out. So, who here wants to tell me what the four properties of money are, what the four primary functions of a currency are? Anybody?”
Audience Member: (Inaudible)
Andreas: “Medium of exchange. Yes, that’s one.”
Audience Member: (Inaudible)
Andreas: “Store value, that’s two.”
Audience Member: “Fungibility”
Andreas: “Yeah, that’s not a use case for money, but it’s a property. Two more.”
Audience Member: (inaudible)
Andreas: “Units of account. Very good. What’s the fourth one? System of control. What? I don’t remember reading that. System of control.
It turns out we’ve had money for thousands of years, potentially tens of thousands of years. It’s really hard to tell how far back money goes, but the money we have today is very different from the money we have in the past, because something changed in the last 50 years that has fundamentally altered the course of money, of currency, of this system, of communicating value to other people.
We have the three components: medium of exchange, unit of account, and store of value. Those have been around for millennia. And then something happened. In 1970, Richard Nixon signed the Bank Secrecy Act and turned money into a system of control, the system of control that attempts to use money as a political tool in order to control who is able to send and receive it, who they are able to send money to, and aims ultimately to the complete surveillance of all financial transactions worldwide. Complete, total, totalitarian, financial surveillance.
This change 50 years ago has gradually percolated through every country in the world, every financial service in the world, every bank in the world. In 1970, Richard Nixon deputized the financial services fields to turn them into a branch of law enforcement, law enforcement beyond borders, law enforcement beyond jurisdictions, and most importantly, law enforcement beyond due process, beyond political and democratic control, beyond recourse.
A cop can confiscate your money. A judge can sign a warrant to freeze your accounts. And a bank can do both of those things without any authorization from anyone, and there’s nothing you can do about it. And this applies worldwide.
Money as a system of control supersedes all other functions of money. When money is turned into an enforcement tool, the other functions start getting eroded. It is no longer the best medium of exchange, because its function as a medium of exchange is subordinate to its function as a system of law enforcement, a system of control, and at that point, the system of control aspect starts corrupting everything.
We are now 25 years into the internet revolution. Smartphones, cellphones, dumb phones, data connections have propagated out to more than two and a half billion people who have never had these technologies before.
Where’s finance? Lagging, 15 to 20 years behind. It does not reach. Two and a half billion people completely un-banked, four billion people under-banked. Really, only a billion and a half people have the full, privileged elite form of banking that we enjoy in most western liberal democracies, and even there, there are tiers of access and control.
How many people in this room are accredited investors? What a lovely bunch. That puts you in the one-tenth of one-tenth of one-tenth percentile of the world. There are tiers within the financial system, some people who have better access, some people who have better recourse and some people who have complete immunity.
Some people can commit crimes against millions. Robo foreclosures, libor fraud, rigging the gold markets, and no one will ever go to jail. Why? Because when money becomes a system of control, financial services companies become deputies in this system of enforcement and control, and as deputies they get some perks, and one of the perks is they never go to jail.
Well, with a few exceptions. There are some fundamental rules that always apply to our society. Bernie Madoff went to jail. He made the fundamental mistake of stealing from rich people. Don’t do that. Foreclose on 10 million poor people, no problem. Create three and a half million fake accounts in Wells Fargo. No problem. Lose 143 private records of individuals at Equifax. Let’s see some bets. How many executives are going to jail?
A system of control corrupts the very basis of money until it can no longer function as a medium of exchange, and it breeds economic exclusion. We are now 25 years into the era of the internet and we are reaching fewer people with economic inclusion. We’re actually backtracking historically, because increasingly entire countries are being cut off from the world financial system.
You don’t act in the best interests of the United States, you lose your SWIFT code. You are no longer part of the wire transfer network. You submit to the jurisdiction, the universal jurisdiction of American courts, like Switzerland had to do, or you lose access to international banking. You lose access to the reserve currency. You lose access to the lifeblood.
This devil’s bargain has made financial services unassailable from a point of competition. They are surrounded by a thicket of regulations and these regulations are not about consumer protection. Consumers are most certainly not protected. They are most certainly about the system of control of money. They are about the law enforcement and policy enforcement and sometimes straight up politics enforcement that comes with money. Money does not flow freely.
I have some bad news. Those gold bars surrounding the banks and protecting them from competition are a gilded cage, a cage that keeps them inside a system of regulation that prevents competition from the outside, but also prevents them from acting with innovation in free markets, expanding their business, unless they make all of that subordinate to assist them of political control.
Store of value no longer works. You cannot store value in a currency that can be confiscated at whim, frozen by any banker at any point in time. That is not a stable store of value. You cannot use it as your currency reserve to buy oil with as your foreign exchange reserve if you’re a country, because if you cross the superpowers, they will cut off your access and you will not be able to use oil.
You cannot use money as a medium of exchange if you cannot exchange it freely with whoever you want, and gradually the corruption spreads and spreads and spreads. And now something new arrives on the horizon, a system of money that works on the network that is first and foremost a medium of exchange, a store of value, and one day potentially as unit of account. But will never become a system of control. It refuses to become a system of control.
In fact, its design principle is neutrality, openness, borderless access, censorship resistance, and now the banks can’t play in that space. They’re stuck inside their gilded cage playing cop to the world’s superpowers, offering economic services to a tiny fraction of the human population, sacrificing four billion people on the altar of poverty in order to create a nice, fake, bourgeois sense of security among the middle class by selling them lies.
FDIC: don’t worry. Your money’s insured. Right? How many people here have FDIC or equivalent insurance on their bank accounts? How many Greeks do you think had insurance on their bank accounts? All of them. What happened to that? Poof, in one afternoon. Vanished. 20% haircut. Who’s insurance? Does it insure you or does it insure banks? And what does it insure against? Small failure, not big failure. Big failure, uninsurable.
How many of you have money in banks? None of you have money in banks. I mean, please, you’re lawyers. You understand. Many of you are lawyers here, right? It’s not your money. You have an account which is a legal construct that they give you in exchange for giving them an unsecured loan of your money so that they can finance credit to their customers. You don’t own legally any of the money that’s in your account. You have a legal construct that possibly, maybe, entitles you to withdraw at the pace that they want unless you cross the wrong person, go to the wrong protest, associate with the wrong organization, vote for the wrong party.
Sure. Maybe that’s not happening in Canada, but out of 194 countries, this model of turning money into a system of control has taken off like wildfire, because it’s every dictator’s wet dream, because it ensures that political descent can be snuffed at the bank very effectively.
It is one of the most effective systems of control that exists and now it has to face competition from a system that will not do that, that cannot be made to do that, that will not yield, that will not be co-opted. And what’s the response? Ha, Bitcoin’s a joke. Cryptocurrencies, they’re outside the system. Nobody wants to be outside the system. Guess what? There’s six billion people out there. They don’t want to be outside the system. They’d much rather be inside, but they haven’t been invited and they probably won’t. And many of them can’t do the things that are necessary to be invited into the system.
And guess what? There’s an entire generation that has now discovered the two forms of power that come to people. First form is voice, and the second form is exit. You either speak up with your voice, express your political will and force change, and when that doesn’t work, you get to the second most important power that all humans have and that’s exit.
Now, borders have been erected for millennia to prevent exit, to slow down exit. You can’t easily emigrate, opt out, colonize, depart, exit. But what happens when exit is not a physical act but a virtual act? What happens when people decide to exit from the financial system in a virtual way? Brexit. Bitexit.
You can keep the inside of the gilded cage. It is demographically stagnated, it’s over-leveraged, it’s swimming in debt, it’s out of control and it serves a tiny sliver of the population. You can keep it. An entire generation of millennials no longer believes in that fiction of bank security, of future possibility, of deferred earnings, of interest rates, of mortgages. They will exit. They are exiting in droves, not just here, even more so in the countries where the existing system of inside finance of the system of control is used despotically, is used oppressively.
China is exiting in droves and it’s barely started. Bitcoin’s been around for nine years, and so what does the insider group do? What do the regulators do in response to assist them that cannot be regulated? They regulate the bits they can. They regulate the exchanges, they regulate the bank accounts, they regulate the national currency side of things. They shut down the on-ramps and off-ramps. They say, “We will not let you take your money with you.”
And what do millennials say to that? “Dude, I don’t have any fucking money. All I have is my creative potential, my spirit, my productivity, and I can sell that directly for Bitcoin without an exchange, without an on-ramp, without an off-ramp. And when I need to buy something, I’ll use my digital currency directly without reentering your system to which I was never invited. Shut down the on-ramps, shut down the off-ramps and I will stay on board. I will stay digital. I won’t touch your gilded cage anymore because I don’t need you. I exit.