Slavery and Bitcoin
Imagine an ancient crime so catastrophic in its damage that we as a modern society still deal with its destruction on a daily basis.
Racism, impeding public policies, school segregation, police brutality, mass incarnation – just to name a few. You don’t need to go far to see it unfolding. In America, most of this story will be on tonight’s news.
When riots of another unarmed young black man gunned down in the street are happening, know that the repercussions of a crime so inequitable more than 500 years ago are unfolding and haunting us in this very hour. The past is never far away, and every action now is a response to an equal action previously. Events are a chain reaction. Nothing is made in a vacuum. It will be like this forever.
Setting the Scene
For many millennia, ancient African empires ruled over the continent of Africa generating great wealth. The empire of Ghana was called the “Land of Gold” for its great gold deposits. Other diverse city-states and kingdoms were rich in terracotta, iron, salt trade, spices, and bronze. Wealth naturally generates opportunities, education, and independence. Anthropology reveals as such, a continent rich with wealth, diversity, art, and influence.
Trade between Europe and Africa was open both ways for thousands of years. Wealthy Africans demanded European steel, even though it was well documented that Africa manufactured a higher-grade steel. It was a novelty none-the-less, like the way I would demand cheap Chinese manufactured products for their same novelties of my dollar going further, being consumable, being of fast innovation, and planned obsolescence. I don’t have to feel guilty throwing it away when I’m done. I know I should buy Made in America, but it’s more fun to buy from China as I go on destroying the planet for my sensibilities.
By the 15th century Dutch and Portuguese, being heavily maritime-centric countries, had rapidly evolving ship-voyaging technology. As their ships improved, trading happened faster and more effectively on the shores of West Africa as opposed to the arduous over-land routes. Songhai, Mali, the Trans-Sahara route and other once-important stops of the ancient trade path were quick to decline.
The Crime
While shipbuilding innovations were booming in Europe, unbeknownst to Africans, another technology was booming in Europe – glassmaking.
Much of Africa’s reserve currency was in what was called Aggry beads, also known as trade or glass beads. They were scarce and required hard work mining deep in the sand to find, thus minimizing inflation in the market due to any sudden increase in quantity. Aggry beads were a store of wealth and a trusted scarce currency for centuries in Africa.
When European merchants brought Aggry bead souvenirs back to Europe, glassmakers generated high-quality replicas of the valuable beads with their state-of-the-art glass-making factories. It wouldn’t be long before a few entrepreneurial merchants realized the crafty con of bringing these manufactured beads back to Africa as counterfeit currency.
And so a great crime would be committed.
Over the next many years, more counterfeit Aggry beads would flood the market in Africa, slowly increasing the supply of this once scarce store of value. Hard-working African craftsmen, farmers, artisans and manufacturers would unknowingly trade their real assets and hard-fought physical goods for the rapidly becoming worthless Aggry bead. How could they know, or possibly imagine, a technology existed to counterfeit such a rare and precious stone that had been a staple for generations?
Over the next few decades, the Aggry bead would become worthless, as the real stones and the counterfeit stones were inseparable and ubiquitous. But even more catastrophic, the wealth of this vast and once great continent and people had been pillaged. A rich people had now become so poor so quickly, that the only transaction left for many was to sell themselves into slavery or face abject poverty and certain death. Far too poor to fight back.
And so a sacked and impoverished people would be forced into free labor as new countries on a newly discovered continent were being born. Make no mistake, America is in part as rich as it is because of the labor it largely didn’t have to pay for (and roads already graded thanks to indigenous populations). Hard work, subsidized by free labor, and established roads is a recipe for a few centuries of being a world superpower.
And ever since a few crafty merchants and glassmakers committed that deception, an entire system of perpetuated inequality and destruction has been in motion. Should reparation be paid? Who is at fault? How do we reconcile? There has been so much pain, suffering, and misunderstanding woven together for so long. I cannot, nor am qualified to answer any of those questions.
But I believe having those discussions is important.
Could this happen again?
We have so many laws and social programs in the USA that can make us feel so safe. Bankruptcy to get your creditors legally off your back? Amazing. Social programs, WIC, food stamps, EDD, churches, homeless shelters, Section 8, yeah America can do better, but we almost have the whole thing buttoned up so that, unlike what happened to Africa, when someone falls through the cracks in America, it is unlikely they may take the next 500 years of their descendants with them.
Or so we think.
Imagine a country or people working tirelessly to crack quantum computers to hack our entire financial system. Imagine food production on the other side of the world degrading their products to compromise our health for their profit. Or fentanyl in drugs coming into the US, used to make the product just as potent while cutting it with filler, but at the expense of killing more youths in American than ever. The truth is, there are crafty merchants in this hour, pulling the same cons, that can one day cause irreparable damage that last us another 500 years or more. Everywhere is war.
In America, we have a hard time understanding this. Maybe we just have had it too good. Maybe America is just really good at marketing… Or maybe it is happening to us now and we can’t see it. Heart disease is the number one killer of processed foods, consumer debt is at an all-time high, and education and tolerance are down. But that is for another day.
What is hard for the most middle-class (and up) Americans to understand, is life without a somewhat stable currency, access to financial tools like a bank account or credit card, mortgages, and the stock market is still commonplace in many countries around the world. Imagine having a job and a salary, but by this time next year, you’re making less than half what you are making now. This is exactly what happened in Venezuela, Sudan, Zimbabwe, and Argentina in 2022 (where inflation rose by more than 100%).
The crypto market faces a “Tech Bro” PR marketing image issue in America, and rightly so. For one of the most affluent countries, with a stable fiat currency, access to capital and financial instruments, a hundred-plus years of pretty stable economic outcomes, and plenty of ways to hedge wealth, crypto becomes a tactic mostly for gambling and making a quick buck during bull runs. Buy high and sell low, this is the way.
But for the parts of the world where their financial stability is bleak at best, crypto, and coins like Bitcoin provide a profound utility and storage of value in the face of eroding institutions and deflation of their other assets.
In unstable countries like Argentina, Sudan, or Venezuela banks and private citizens store their wealth by buying reserve currencies like the US Dollar or Euro, knowing those currencies have a more stable inflationary track record, minimizing their chances of getting burned. Other tactics include buying gold, which has also long tracked its value against inflation. But like the Aggry bead, even those assets contain a risk.
In 2022 the US dollar faced its highest inflation rate in over 40 years, mostly due to the trillions of dollars that were printed and handed out during Covid. And even gold, being estimated to have a global supply of only 90 cubic feet worldwide, is in fact just speculation. Ultimately no one knows where the gold reserves of the world really are, who has it, or how much there actually is of it. Gold has also plummeted twice in value in the past 100 years, it can and will happen again. Maybe in the next century, someone will invent a cost effective way to grow gold in a lab that is scientifically inseparable from real gold and slowly sell it into the market making gold worthless. Much like those glass makers did 500 years ago.
Like the Aggry beads that when successfully inflated (through counterfeit) destroyed a continent, people around the world face those same threats today. Protect your wealth, or be forced into abject poverty with debts so large you’re forced into slavery. Or in the case of Hosseini’s book “The Kite Runner” go from being a Prince of your own country to a gas station attendant in another. The top of the food chain to the bottom in one generation, leaving your next 10 generations of offspring to clamor and fight their way into a better life.
Also, it’s important to note: there are more slaves now in our modern society than there ever were. The slave trade has only been growing. Another topic for another day. Broad access to information, education, and social support is the solution to this. We have our work cut out.
Of course for the sake of clarity, much of the above is oversimplified. But this perspective is what makes Bitcoin so valuable and appealing as a store of value. Even though it is in fact invisible (beyond being numbers in a database) for the first time in the history of the world, humans created something that not only has a fixed supply, but cannot be counterfeited, cannot be copied, cannot be inflated, and can be tracked to ensure it is not too centrally owned by one party. It can be traded peer-to-peer and does not need trust in a central authority to make that exchange. There are (or there will be in a few decades) 21 million bitcoin. No more, no less. And anyone, with an internet connection, can access this asset. This creates more trust, more security, and more stability than faith in any one government or superpower that can undermine a people and expose them to the danger of what pillaged the continent of Africa.