Can Crypto Serve a Public Purpose?
By Sam Gilbert, author of Good Data: An Optimist’s Guide to Our Digital Future, and Advisor at StateUp
“I’ve made it my mission to make Britain love crypto”, said Matt Hancock MP in a recent speech at City AM’s crypto conference.
Hancock is something of a perma-bull when it comes to financial technology trends. In a keynote at the 2016 Fintech Innovation Awards, he drew attention to the presence of the UK CEOs of Barclays and Santander, precipitating a sycophantic round of applause from the audience.
That perturbed me at the time, because it indicated that most of the assembled entrepreneurs were hoping the big banks would soon be clients of their trading systems or treasury management platforms.
They thought fintech was about making the financial sector’s incumbents more profitable. The alternative possibility – that fintech might help ordinary people gain more power over their personal finances – barely featured.
In the same way, comments by UK political leaders on the opportunity presented by crypto – not just Hancock, but also Rishi Sunak and John Glen – emphasise the benefits for the City, rather than for citizens.
Ironically, this is in stark contrast to advocates of web3, who often argue that decentralised financial services are integral to building a more equitable web. Their idea is that crypto tokens will enable creators of digital content including video, music, art, memes, games, and code to be financially rewarded for their efforts, and to have say in the governance of the platforms they use. Instead of being dominated by powerful intermediaries like banks and big tech companies, they claim, the web of the future will be truly democratic.
Such claims are, of course, contested. In a brief on web3 for the Bennett Institute for Public Policy, I wrote about their libertarian origins and the way in which they are undermined by the prevalence of fraud, misleading advertising, technical flaws, and climate externalities in the crypto space.
But there is still potential for crypto to serve a public purpose. Iulian Circo recently spoke at a StateUp Lunch&Learn event about his decade of experience with crypto in the context of international development and post-conflict aid. From his perspective, web3 technologies can incentivise and reward sustainable farming or renewable energy generation in the Global South just as effectively as content creation in Europe or North America. Similarly, they can enable direct cash transfers to refugees, obviating the need for intermediation by large humanitarian organisations, which he sees as costly and inefficient. Meanwhile, the transparency and immutability of the blockchain means it may be suited to tracking ESG and impact data in real-time.
Supported by a stronger regulatory framework, tokenomics could also prove to be an important innovation for public-purpose tech. With the social investment field still at an early stage of development, it can be difficult for public-purpose ventures to access capital markets. In this context, issuing tokens could offer a scalable alternative to grant funding or crowdfunding. Policymakers might consider extending tax incentives like the Seed Enterprise Investment Scheme (SEIS) to public-purpose web3 projects as a means of increasing the supply of capital to the sector.
“Supported by a stronger regulatory framework, tokenomics could also prove to be an important innovation for public-purpose tech.”
This is not an exhaustive list. For those of us who believe technology can play a positive role in society, the takeaway is simply that possible applications of crypto extend far beyond the financial sector, and are worth exploring.
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