Digital Cash | Finn Brunton

Summary of: Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency
By: Finn Brunton

Introduction

Get ready to delve into the intriguing history of cryptocurrency, as told in Finn Brunton’s book, ‘Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency’. You will learn about the evolution of currency, from ancient Mesopotamia to today’s digital realm, and get a glimpse of the social constructs that have influenced its development over time. With powerful examples like Howard Scott’s energy certificates during the Great Depression and David Chaum’s e-cash system, the book offers fascinating insights into the pioneers in the field. This summary will walk you through these exciting examples and the impact they’ve had on our world.

Technocracy and the Quest for an Alternative Monetary System

During the Great Depression in the US, when banks failed, and the circulation of US dollars nearly halted, various municipalities issued their own currencies and stores turned to bartering commodities like eggs and honey. Howard Scott, a New York impresario, offered an alternative monetary system called Technocracy Inc. The system, which referred to itself as the “Technate,” promised to rule the US and Canada. The means of exchange would be “energy certificates,” more reliable than US dollars, which would be regulated by master engineers that banned all nonessential activities. Although traditional currencies have a basis in physical items like precious metals, Technocracy’s energy certificates centered on a specific vision of the future, cataloged all goods and services available for purchase in the Technate by a Dewey Decimal System and had an expiration date of two years. The energy certificates and similar creative currencies are part of a long history of monetary systems that reflect human biases and beliefs at unique points in history.

The Evolution of Money

Throughout history, money has evolved from an art form of paper markings and quality checks to electronic transactions that can control and govern personal data. With the rise of credit cards and electronic value exchange systems, the government and corporations have gained control over spending data, leading to dystopian fears of monetary coercion. Margaret Atwood’s novel, “The Handmaid’s Tale,” showcases this dystopian concept of governments freezing women’s credit accounts. Similarly, food stamps have transformed into electronic benefit transfer cards, usable only for specific items. The evolution of money reflects society’s changing control over personal information.

Introducing E-Cash

In the mid-1990s, David Chaum, the currency entrepreneur, created a new virtual currency called “e-cash” through his Dutch company DigiCash. Chaum believed that existing credit card systems were too closely monitored and turned people into “electronically tagged animals in feedlots”. With e-cash, a certificate issued by DigiCash would guarantee that the spender has the requisite currency and a unique serial number verified for legitimacy. The certificate would then be multiplied by a random number known only to the customer, ensuring anonymity for the spender. However, the recipient of the e-cash would not be anonymous, making it difficult for money laundering to occur. Despite its innovative technology, e-cash failed to gain widespread adoption due to the lack of dissatisfaction with the existing currency system. Chaum’s revolutionary concept highlights the importance of challenging the status quo for the widespread adoption of a new currency system.

Rise of Virtual Currency Evangelists

In the 1990s, a group of libertarians with a love for technology and healthy living embraced the idea of virtual currency. They aimed to extend life through biostasis and saw income inequality as a desirable outcome. These virtual currency evangelists subscribed to a hard-edged school of economics, which held that the markets were infallible. They believed that humans were incapable of guiding markets and were foolish to meddle in them in any way. The rise of the Internet allowed them to rethink traditional money and digital bits replaced physical atoms in their imaginations. This group tested new technologies long before they were made available to the rest. The idea of a currency issued by the Virtual Bank of Extropolis featuring Friedrich Hayek in the oval circle on the front of the bill was proposed by the Extropians, and many considered Hayek a hero. However, building digital cash was both technically complex and semantically confusing, and there were concerns about the prevention of a digital money token from being spent twice or many times over by the same person.

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