Money

Don’t tell Roger Waters, but there is not a Dark Side of the Moon.  Instead, the satellite’s rotation happens to synchronize with its orbit around the earth.  It takes the same time for it to spin around its axis as is required for it to travel around our planet: 27.32 days.  The result, we only see one side of the moon, but sunlight hits the rest of its surface on a regular basis.

Economists from the Federal Reserve Bank of New York are trying to shed light on cryptocurrencies, potential demonstrating their dark side.  In short, they argue here that these are not a new type of Money.   Instead, they suggest monies with properties similar to cryptocurrencies have existed for…centuries.  From their vantage point, these mediums of exchange offer little difference from America’s existing fiat currency (i.e., worthless objects that have value on the belief that they will be accepted as payment for goods and services in the future).  

But they concede that there is a major difference in the electronic exchange of the two fiat currencies.  Payments like the ones with which most readers are familiar happen with a trusted third party who is responsible to make sure transfers are valid (e.g., wire transfers sent through the Federal Reserve System).  Cryptocurrencies use electronic transfers which are validated by a decentralized network instead of a trusted third party.

Despite an album title that is not scientifically factual, Pink Floyd’s Dark Side of the Moon went on to be a success.  Time will tell whether Bitcoin still gets play nearly 50 years from now.  In the meantime, the Federal Reserve isn’t sharing control of money freely, making sure others don’t take a slice of their pie.  Instead they seem to be creating a line in the sand, separating Us and Them.