How Bitcoin Educates About Finance – Bitcoin Magazine
This is an opinion editorial by Pierre Corbin, producer and director of the documentary “The Great Reset And The Rise of Bitcoin”.
In his book, William N. Goetzmann describes that there have been periods in history where people had greater economic education than the general public has today.1 Such a period was during the great times of ancient Greece, especially in Athens.
Athens in 400 BCE was very special, and is still special to our history, because it is where democracy was invented. However, their democracy was different from our modern democracy. Especially when it comes to the involvement their citizens had in the government’s day-to-day activities. Athens had created a complex system of bankers and insurance companies to facilitate trade in grain and increase the security of investors’ portfolios. Many ships sunk in the Eger Sea during those times, and these financial instruments allowed them to protect one’s investment and share the risk of their business with the industry, through insurance.
Of course, there were often disputes surrounding these topics that had to be settled in court. The legal system in Athens was built to accommodate this particular type of case, and was used for all other subjects as well. Here are some rules for how their legal system worked that Goetzmann shares in his book1 :
- The jury was composed of 500 citizens per trial, chosen at random from the community.
- The maximum length of the trial was one day – the case was settled at the end of the day.
- The jury did not deliberate together, they voted.
- Defendants and plaintiffs represented themselves, but sometimes had their speeches written out by famous speakers.
Athens, at its height around the 4th century BC, had 30,000 adult male citizens entitled to vote in the assembly (there were another 70,000 citizens who were women, children and other men who did not have the vote. There were also 150,000 aliens and slaves living within the city walls who were not counted as citizens and did not participate in the city’s decisions), so 500 people involved in each trial represented 1.6% of the population.
Imagine this in today’s world: 5.3 million Americans must be part of every jury. Otherwise, 22 million Chinese citizens would be involved. Sounds impossible, although we have one technology that did not exist in Athens that could simplify matters: the Internet. Perhaps these types of juries could be re-adapted today? The outcome of trials would not be the source of such a debate because 1.6% of randomly selected individuals can be considered a large enough sample to represent society as a whole for a given trial. As well as leading to a fair trial system, it also leads to more transparency and lowers the influence that sometimes exists for the important trials.
During his lifetime, the average Athenian participated in several legal cases, including the complex ones, facing topics such as finance, risk, long-term investments, compounds, etc. Today we still have records of such legal cases. An example is the story of Demosthenes, an Athenian who had his inheritance stolen by his uncles because he was too young when his father died. As an adult, he took his uncles to court. Here is an excerpt of his description of the situation:
“My father, men on the jury, left two factories, both doing a big business. One was a sword factory employing thirty-two or thirty-three slaves, most of them worth five or six minas each and none worth less than three minas. From these my father received a clear income of thirty mina each year. The other was a sofa factory employing twenty slaves, given to my father as security for a debt of forty minas. These gave him a clear income of twelve mina. In money he left as much as a talent lent at a drachma a month, the interest of which amounted to more than seven minar a year… If you add to this last sum the interest for ten years, calculated only at a drachma you will find that the whole, principal and interest, amounts to eight talents and four thousand drachmas”.1
How many average citizens in our modern world would be able to follow such an argument? It mentions two businesses, loans, interest and their compound effects. Today, most people do not understand what compound interest is, and it is one of the simplest long-term concepts in finance.
Our financial system has been layered with many levels of complexity and is presented as a complex topic, also when it comes to personal finance. I think this has been done over time by people working in the industry for two reasons:
- By making individuals believe that it is a complex topic, they will hire professionals to manage and cover their money.
- Governments can give the impression of being in control of our financial system, forcing citizens to rely on their expertise, thereby reducing their personal involvement.
Today, people are beginning to understand the impact inflation can have on their lives. They don’t necessarily understand where it’s coming from, but they understand that they have to do something about their personal finances or their savings will slowly be crushed by inflation. This inflationary way of thinking has always been there. This is part of the reason why people invest in property and have pushed prices so high. Today, it pushes people towards even riskier investments. This is part of the reason why the cryptocurrency world has seen such a boom and seems so attractive to many – high reward, but also high risk.
People entering the cryptocurrency space will slowly begin to differentiate between bitcoin and altcoins at some point (often due to a shitcoin losing 99% of its value or a hack causing them to lose their money). We will write a follow-up article on this topic in particular: Bitcoin is not crypto.
Because of the way Bitcoin is built, people get their financial independence. You are the sole owner of your assets and no one can take control of your assets unless you provide access to them. This is extremely empowering, but can also be a scary endeavor: it has the potential to open users up to more risk. This means that people must take responsibility for their financial decisions. Every decision is their own and to avoid mistakes people need to educate themselves.
This education starts with understanding bitcoin wallets, but quickly moves on to more complex topics:
- What is the Bitcoin blockchain?
- How does it work?
- What is money?
- What does store of value mean?
- What is modern monetary theory?
- What is quantitative easing?
- Who controls and benefits from our system?
And many more who one by one are opening their minds to the way our financial system works. There are many great thinkers and contributors in the room to help understand these points.
People are now forced to take control of their own funds and take responsibility for their personal finances. The veil that has always hung over the world of finance is slowly being lifted, and what were previously seen as very complex topics are becoming everyday topics for many. This is due to the fact that the trust we once had in centralized financial institutions is now gone due to decades of customer abuse, bailouts and more.
The Athenian system was unable to scale with the growing number of people in cities and in the countryside. But given our current technologies, is a similar system so hard to imagine today? Perhaps bitcoin could be the asset that leads the way in this direction, thanks to its cryptographic properties, but also thanks to the added benefit of its passive properties, including the fact that users need to educate themselves, which can only benefit them and our society.
Sources:
- Money Changes Everything – How Finance Made Civilization Possible | William N Goetzmann
This is a guest post by Pierre Corbin. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
