Money is Broken (And How to Fix It)
Money is broken.
That may seem like an odd thing to say, since it works pretty well for most of us. But as a business owner, moving money around is a real headache. It’s not making money — we’re doing plenty of that — it’s moving money.
Paying full-time employees is such a hassle that we hire a payroll company to do it for us. We also work with about 2,500 freelance contractors, which requires a full-time person (my wife Jade Hargrave) to pay them. To cover everyone, we need three payment options: direct deposit, PayPal, or check.
Getting paid by clients is even worse. We ask for credit card payment, even though we end up paying hefty fees for the privilege. Some clients insist on paying with old-fashioned paper checks, which have to be manually deposited at banks, if they don’t get lost in the mail or accidentally set ablaze.
It gets worse still. If you want to send money internationally, as with our international clients, it’s a complicated process of wire transfers, which carry obscene charges and take several days to go through. And fuhgeddabout trying to figure out current exchange rates between currencies.
The famous Cat Stevens once sang, “Morning has broken.” Today he’d sing, “Money is broken.”
Cash is Also Broken
And let me tell you about one of the most dangerous things on the planet: cash.
Right now, you are probably carrying cash on your person, making you an instant target of theft, robbery, and crime. If you live in a big city like me, you probably glance around when you pull out your wallet, because who knows who could be watching?
Cash is used by criminals and the underworld because it’s so hard to trace. The famous payoff scene in every heist movie is done in a darkened parking garage, using what? Cash. When they’re holding someone ransom, what do they ask for? Unmarked $20 bills.
Cash is a pain in the ass — quite literally, if you store it in your back pocket. At home, I’ve got an enormous jar of loose change, as we all do. What am I ever going to do with that loose change? Why do loose coins, which were used by the ancient Romans, still exist?
There’s got to be a better way.
Checks and Credit Cards Are Broken
You know that moment when you’re at the supermarket, and the person in front of you wants to pay with a check? Here it comes: a procedure involving multiple forms of IDs, a store manager, and a local constable. Meanwhile, your ice cream is melting.
It is crazy that we still trust checks at all, which are in some ways the least reliable of any money exchange. A piece of paper, with some handwriting, is actually worth money. Our credit cards now have holograms and security chips, but we trust checks, which are basically fancy IOUs featuring kittens.
And credit cards are hardly secure. A million years ago, I wrote a piece called The Credit Card Prank, where I pointed out how everyone asks you to sign for credit card purchases, but no one checks the signature. A million years later, this is still true.
Somehow we completely accept all this craziness, because we’re used to it. Why can’t we instantly send money to each other, as easily as we send email?
Money as a Basic Human Right
The value of a single bitcoin has risen from just pennies to about $2,000 in an incredibly short period of time. The reason? It represents the future of money.
Whether bitcoin will actually be the future of money is anyone’s guess, but something like bitcoin will take over the world, because:
- People need a cheap and easy way to send money to each other.
- People need a cheap and easy way to get and receive payments within businesses.
- People need a cheap and easy way to send money around the world.
We may come to look upon these money not just as nice-to-have, but as a basic human right. Many of us already believe the internet is a basic human right, so why not easy access to reliable money systems?
Many great minds are working on getting internet access to everyone in the world. Getting everyone access to reliable systems of money is the next challenge. Maybe everyone can’t have an equal amount, but everyone should at least have access to an equal system.
If you live in a terrible economy, where your government is manipulating the money supply, you should be able to opt in to a trusted global market, converting your worthless local currency into something that’s trusted worldwide. And, it should be as simple as converting cash to a gift card.
Bitcoin isn’t there yet, but it holds the potential. A new morning is dawning.
This week we launched our new site, Bitcoin Market Journal, to explain bitcoin to ordinary investors who are ready to get started. Check out the site, and let us know what you think.