CHAPTER 1 — CENTRALIZED FINANCES
Before discussing a Decentralized Revolution, it is necessary to discuss the centralized revolution that occurred over a century ago. At this point, everyone should be familiar with economies of scale and the existence of central banks, but few people realize how this centralized system came to be in the first place.
This chapter will go over in brief the last 350 years where the centralized revolution occurred on banking and finance and ultimately over the entire world.
This concept is essential in understanding the magnitude of the revolution we are witnessing regarding decentralized systems.
Central Banking
The origins of central banking can be traced back to the seventeenth century in Sweden when a joint-stock bank was established to lend government funds and serve as a clearinghouse for commerce. A few decades later, in 1694, the Bank of England, the most famous central bank of the time, was established as a joint-stock company to purchase government debt. Other central banks have since been established in Europe for similar purposes. Early central banks issued private notes that served as currency, and they frequently held a monopoly on note issuance. This pattern continued for several centuries, resulting in the establishment of central banks in every western country. It was the point at which the centralization of money creation was imposed.
Prior to the centralization of money issuing, each kingdom, principate, small empire, or territory issued its own currency based primarily on precious metals, gold, and silver. Centralized banking began capturing and accumulating this value to issue a centralized banknote.
Lutheranism changed the view about money as a religious matter for reformists in Europe. The new revolution brought new legal entities, technologies, and a new culture. Nowadays, deprived of ethics, transcendental beliefs, and soul search of former Lutherans, money has become the world’s first shared religion among modern citizens.
What are the implications of this centralized revolution in today’s societies?
Why Do The Federal Reserve, International Monetary Fund, and World Bank play a crucial role in traditional finances?
Why is the idea of using Bitcoin as a world currency so resisted?
I’m eager to hear your comments about it, good and bad.
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