Recently, Simon Dixon, entrepreneur, former investment banker and author of the book Bank to the Future, explained in an interview with Epicenter Bitcoin that our financial problems are derived from money, “simply because money is debt.”
Since the birth of Bitcoin in 2009, many economists have talked about the digital currency, and its potential to disrupt the financial sector and solve most of the financial problems we have today. Dixon explained the concept behind money and banks, and more importantly, what money actually is. He said:
“Positive balance in a bank account simply is somebody else’s debt, which is created into existence by the banks. 97% of the money in the economy is created this way, which means the only way to drive sustainability of an economy is to have more debt.”
In order to have a sustainable and debt free economy Dixon explains, is to use a decentralized currency like bitcoin.
Bank to the Future
Dixon’s book, Bank to the Future states three main problems of today’s financial problems –
- Deposits made with banks are controlled by the banks;
- Banks can spend the deposits at their will. Banks spend the deposits on things which help their shareholders, which aren’t good for the economy;
- Banks are the creators of money; economics assumes that bank is an intermediary between lenders and buyers.
“The reason that we have financial problems today is because we are trapped in a multi-decade Ponzi scheme, where in in order to have an economy, we have to have more debt,” he continued. “The reason for that is simply because money is debt. In order to have a growing and stimulating economy, you have to have governments take on more debt, you have to have individuals take on more debt, you have to have corporations take on more debt.”
‘Hate Bitcoin, Love the Blockchain’
Major banks around the world, including BBVA, JP Morgan, Goldman Sachs, Citi bank, UBS, etc. have announced their plans to experiment with the blockchain technology and to create their own currencies to facilitate transaction settlements quickly, with low costs.
However, Dixon explains, that the reason banks love the blockchain and hate bitcoin is because the banks have thought bitcoin was a Ponzi scheme, and criticized it for such a long time. In other words, if the banks came out today and said that they support bitcoin, they would be admitting that they were wrong about the digital currency.
“I thought the bitcoin was some kind of a crazy Ponzi scheme, I didn’t get involved and I don’t want to lose face. Therefore, if I say I love the blockchain, then I can be involved, is the translation of “I love the blockchain, I hate bitcoin,” said Dixon.
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