The Weird Way Crypto Could Boost the Economy (and Make Life Better)
One of the really cool things about crypto is… the really cool stuff hasn’t happened yet. I mean, there’s a lot to look forward to.
I’m talking about investor upside – profits, of course, but I’m also talking about the ways large and small that cryptocurrency and the blockchain will change our world. There are all kinds of really interesting new use cases for this stuff, some of which do hint at big money or, at the very least, positive changes in the way we live, work, and play.
Thinking about those new use cases just so happens to be part of my job, so I can bring you in on a couple of trends I see big potential for out there right now. Something that could become a new, better fact of life for Americans.
It’s about the government. Now, I know a lot of you will hear the “g-word” and run screaming the other way – I get it. But you’re going to want to see this because it could very well be about your tax dollars, or even your quality of life.
When Government Turns on the Money-Hose
One of the age-old problems with the government is, it doesn’t exactly turn on a dime. When a new policy, or regulation, or intervention – whatever – comes down, it’s kind of “blasted” out there like a firehose in hopes that whoever needs to get wet will get wet.
I’ll illustrate what I mean by that – and no, we won’t be getting into the old arguments about whether governments should intervene, or how much. We’re thinking big here – we’re “futurizing” – and after what I said about him last month, I don’t want Paul Krugman gunning for me.
So, we’ll “futurize” by stepping back in time two-and-a-half years…
…to the start of the COVID-19 pandemic.
Pretty much the entire government was scrambling to find a way to contain the severe economic fallout, so very quickly, particularly by D.C. standards, the idea of a stimulus emerged – and it was a big one: The Coronavirus Aid, Relieve, and Economic Security (CARES) Act mandated around $2.2 trillion worth of spending.
The stimulus was aimed up and down the economy. There was a lot going on, but most of us remember the Paycheck Protection Program, which ultimately cost nearly $670 billion, and there was a $300 billion “thick burger” of money set aside for making cash payments to virtually every American who filed a tax return.
Keep that in mind, because it’s key in where I’m going with this.
Now, plenty of that stimulus cash went to people who badly needed it to remain clothed, fed, and housed during the acute crisis.
Others have since come forward saying, “Eh, we didn’t need it, but it was nice anyway.” The government had no real way of drawing a distinction between people who really needed funds and those who didn’t. They had no real way of compelling anyone to put that money back into the economy, either, particularly the sectors of the economy that really needed it.
Then there was the Paycheck Protection Program – same deal. Some of those forgivable loans went to business owners who tried and even succeeded in keeping payrolls steady while society rolled up the sidewalks. Others didn’t.
Worse, experts now think that as much as 10% of that money, conservatively, was lost to out-and-out fraud – and the truth is no one will ever know for sure. The sheer size of that historic rip-off is having real consequences right now.
But then again, the government had no real choice; if they hadn’t had passed the direct taxpayer payments, or the PPP, we could’ve found ourselves in a not-so-Great Depression all over again.
But there’s another possible alternative, and if you’re a passionate crypto user like me, it’s pretty exciting to think about…
This Could Change (Just About) Everything
And, as I’m sure you know, the COVID stimulus is just the low-hanging fruit; you could probably make a list of inefficient or not-particularly-effective government spending as long as your arm.
Here’s where cryptocurrency and the blockchain could not only make an “impact,” but could actually make all the difference.
Imagine a United States government that did its business on the blockchain, with government-backed stablecoin – digital dollars.
The next time the Man needs to pump giga-wads of cash into the economy, these digital dollars could be coded to expire at a certain time, and coded to be used only in very specific ways.
“Coded how?“you ask. Very easily – with smart contract functionality. Most of which you could pull “off the shelf” today and have it been sophisticated enough.
Say the U.S. car market is in bad trouble. Some committee determines the industry needs $500 billion (a nice modest number) to get back on its feet and preserve nearly 11 million jobs – about 8% of the private-sector workforce.
Congress could pass the Save America’s Underwater Carmakers Act, which would be sent to the President. The President signs it – and simultaneously encodes it on the federal government’s blockchain.
Automatically, this action triggers the disbursal of the $500 billon in the form of digital dollars – again, to every U.S. taxpayer.
The difference is, thanks to its unique encoding, these digital dollars can only be put toward the purchase of a new, American car. They’d simply be no good anywhere else or for anything else because, well, that’s what the smart contract says.
You could even go one better and “wire in” a smart contract stipulation with an expiration date: “You must spend this money on a new American car by the end of October of this year.” If a taxpayer doesn’t want to participate, for whatever reason, they don’t have to – but they don’t get to save the cash, either.
Come the end of October, the dealerships and the carmakers take those funds, and convert them into regular old U.S. dollars and 11 million American jobs are saved. The blockchain takes a well-deserved victory lap.
And so, with this one-use case, you can begin to get a sense of what’s possible with this technology. If I had a Bitcoin for every President, candidate, congressperson, or pundit who vowed to crack down on “waste,” well… then… I’d have a ton of Bitcoins.
Think about it: An entity as huge as the United States government – or it could be any government, rally – having the ability to affect a massive intervention with laser-like precision.
Exactly the right policy, targeting exactly the right industry, with exactly enough money, at exactly the right time.
I think it sounds incredible, because as of right now, whether you’re on the right or left, when it comes to policy, there’s just a big old firehose with an ON and OFF valve.
Blockchain technology could make it all happen – and it’s got me fired up. I mean, this is a tech that’s virtually tailor-made to slash waste and inefficiency – whether that’s on the part of governments, or the legacy financial sector, or restaurants, or wherever. Middlemen and chiselers all over should feel like they’re on notice, because, essentially, they are.
Just super ! Congratulations
You are definitely correct on the efficiency of governments controlling the flow of digital dollars with the blockchain! The key is to make sure the people still have sovereignty over THEIR monetary units! This can’t be a tool used by illegal government to control or dictate the correct actions of the people!
Very cool ideas, but expect government to abuse that power by targeting only those politically friendly to party in power.
This sounds so good it helps me understand after im gone say 8 to 10 yrs my kids arent left holding a huge mistake bag of excuse me BULLSHIT!!! Sooo. Were seeing right before our eyes many brand new technologies introduced as needed for precisely the right things in the correct ways. Wahh. Lahhh !!! Nice!!!
Right on Nick
I LOVE this idea! Would this be a closed loop coin that would be tagged against the dollar if I hear you correctly? My only concern would be an incredible drop in value near expiration— or would big mama govt simply reclaim the credit to re-purpose later?