Vladimir Okhotnikov: Blockchain as the basis for the image of the future

Vladimir Okhotnikov is an investor, publicist, consistent critic of the modern financial system, researcher-philosopher, considering actual problems of our civilization.

Vladimir Okhotnikov: an image of the future and the reality of the present

We live in interesting times. Interesting that the future has become unpredictable. This is one of the crisis signs: we cannot look to the future from a past experience.

The image of the future is not a beautiful imaginary picture, but the goal we set for ourselves, we do it not necessarily consciously, and not necessarily, that this goal will be positive. In many ways, errors in shaping the future are based on a misperception of reality.

Let’s see - could anyone imagine the modern world 30 years ago? Thirty years by historical standards is an instant, and the changes are enormous.

An excellent example of the illusions that Western society has had is Francis Fukuyama with his manifesto book "The End of History and the Last Man". He proclaimed liberal democracy as the ideal social order, with nothing better. Ideal found, social development stopped, only the promotion of liberal democracy remained. After the last country will swear an oath to its postulates, history will stop – then there will be only a bright future that goes into eternity...

And this is not theoretical research, such a world-view really occupied a serious place in society, especially the elite, close to the tops of business and public administration. Now, after three decades, it is certainly possible to criticize Fukuyama, but that would be unfair, he accurately conveyed the mood of Western society.

"When we look to the future, we represent it from the realities of the present. The problem is that we perceive the present based on the available flows of information. We already have world-view and behavioral patterns. It is very difficult to disable stereotypical thinking, to put aside the pattern and try to see the world as it is. If we do not, we will simply transfer our perception problems to the future. We will set false goals and waste valuable time to achieve them..."

Vladimir Okhotnikov

In fact, Fukuyama presented an illusory vision of the future based on a distorted image of the present. Very little time has passed, and it turned out that "liberal democracy" is not really democracy, and can be called "liberal" only on formal grounds. We live in a system focused on elitist groups. 

Currently, Western society was offered personal freedoms and relative prosperity in exchange for the illusion of democracy.

We see the option of a social contract: you have comfortable life and a sense of freedom, meanwhile elites have real political power, independent of the personalities at the head of the state. It must be said that this is not the worst option, perhaps even the best that mankind has known. However, it is presumptuous to consider it perfect.

The illusion of self-greatness is a dangerous delusion. How many rulers and states have become its victims? What seemed immutable could collapse in a matter of days. In 1991, the Soviet Union collapsed, and that was unexpected for everyone. He fell, crushed by inner problems. So why does history teach nothing? 

We owe to anyone...

The unique dominance of the United States has allowed public debt to grow almost indefinitely. It is not difficult if your currency has the status of reserve. There is such an insurmountable temptation: to borrow money and spend it on budget expenses. The payback came quickly by historical standards: the growth of public debt exceeded the growth of GDP. At the same time, debt reduction is not even projected, on the contrary, each year its ceiling increases.

It was believed that America could absorb any amount of borrowing. However, it turned out that in this case "any" means a finite value that has already been exceeded. The astronomical size of the debt means that it will never be repaid. It can be maintained, increased, but can be restored only if costs will be drastically reduced, which in the foreseeable future is almost impossible.

The debt crisis is not just about finance, it is an existential problem of modern civilization, and the problem is not the only one. All this can be overlooked, vehemently denied, but reality doesn’t care what we think of it.

«The modern economy is built on the concept of credit. And this is as in medicine: a drug treats in small doses but it becomes poison in large doses. The problem of modern political and economic systems is in their centralization. Some make decisions on which the fate of the world depends. What will happen if the decision is wrong? The decision to increase the debt was subjective, aimed at fixing the current financial needs. At some point, society fell into a credit trap: refusal to build up debt threatened to stop the economy. We need a tool that can remove subjectivity in decision-making...»

Vladimir Okhotnikov

The answer was unavoidable, and it has appeared. On October 31, 2008, a person (or group of authors) with the pseudonym "Satoshi Nakamoto" has presented to the world an article "Bitcoin: A Peer-to-Peer Electronic Cash System". 

So began the crypto-revolution and the transition to a new financial reality.

Blockchain: awaiting an outcome

Blockchain and bitcoin can be considered the reaction of the body (financial system) to a bouquet of chronic diseases. Could our beloved Bitcoin have appeared in a healthy economy? It is very doubtful - there was simply no need for it, and even having appeared, Satoshi Nakamoto’s article would remain abstract theoretical research.

There are many theories making assumptions about Nakamoto’s personality. Who is he - programmer, mathematician, scientific team? It was even assumed that Nakamoto was a disguised state. In fact, right now we don’t really care who invented Bitcoin, the consequences of the invention matter.

The article-manifesto played the role of the rock that caused the avalanche. Sixteen years later, a theoretical article transforms into a trillion-capitalized business. A rare case in world history - a valuable asset was born out of nothing.

Satoshi Nakamoto’s stated motivation was quite practical, he created a system that would combat fraud in payment. You needed a solution that would rule out even the theoretical possibility of withdrawing the payment, and that was the blockchain solution.

«It is unlikely that Satoshi Nakamoto himself represented all the consequences of his invention, and his followers even less. Everyone focused on almost the only blockchain application which are cryptocurrencies. However, this is just one of its possible applications. Other apps seemed less interesting. However, now the cryptocurrency market is crowded, developers have turned their attention to alternative blockchain projects. This is NFT, a variety of registries, metaverses...»

Vladimir Okhotnikov

At first, blockchains and bitcoins were perceived as fun, entertainment for IT freaks. At that time, the authorities arrogantly ignored the emerging crypto business, considering it another fashion trend. Over the period of freedom from regulation, a specialized infrastructure that allows to carry out a variety of transactions with cryptocurrencies has been developed.

Infringement of financial freedoms

Financial authorities did not immediately notice the emergence of cryptocurrencies, although there were serious reasons for concern. Ideologically, blockchains and crypts are completely at odds with the modern financial system.

The world’s financial infrastructure is based on banks. We are so used to them that we do not notice their special position in the economy. The fact is that we have to work with them. The only way to receive cashless payment is to open a bank account. Your account will be absolutely transparent for the bank, and through it to the state. 

That is, banks accumulate all the finances of the world. By the way, this fact should not be considered a complete negative. In a certain period, the concentration of capital played a positive role in industrial development. However, monopolization cannot be an absolute good. It always leads to inadequate consumer costs and monopoly abuse. 

The consumer should always have a choice. The consumer was offered a choice between different banks, which suited both banks and most elite groups.

And suddenly there’s an alternative technology that doesn’t require an intermediary between the sender and the payee. The account, like a physical wallet, belongs only to the user, and only he has access to his account. Decentralized governance is devoid of subjectivity, and all actions of the system are predictable and transparent.

Such technology was bound to irritate the fiat elite. And so it happened. However, the opposition was not aimed at destroying cryptocurrencies. It is technologically difficult and will necessarily cause opposition by the elites who have invested in the crypto. Why destroy it when you can lead it? 

This strategy was clearly manifested in the epic of Binance crypto exchange. It was the most successful cryptocurrency company, almost controlling the market. It took about a year and a half to get Binance under control.

The start of Bitcoin-ETF operation helps to strengthen the control. Disloyal and unpredictable Bitcoin is deposited in serious proven companies, and instead it is issued respectable securities that are placed on no less respectable "traditional" exchanges.

Steablecoins also came under control, the largest Tether Stablecoin Issuer (USDT) announced full cooperation with the authorities and willingness to block the wallets of sanctioned customers.

Control has traditionally been driven by the protection of users' interests. 

Crypto business is gradually drifting towards the existing financial system, losing its freedom of action. What does this mean?

"The system is trying to tame the blockchain and use it to its advantage. In fact, the fight is not with cryptocurrencies themselves, but with two of their properties: decentralization and anonymity. This is quite a natural reaction, but it contains risks for the System itself. Imagine, everything worked out, and cryptocurrencies integrated into the fiat. Can they celebrate? I don’t think so! The System’s problems will not go away, but the alternative capable of providing a "soft landing" to the centers of the world crisis will disappear. The system tries to find a compromise - preparing for the release of digital government currencies CBDC. However, they cannot be called full-fledged cryptocurrency due to the lack of the same decentralization and anonymity..." 

Vladimir Okhotnikov

Decentralization of the future

Let’s try to see our future. Is it possible to avoid a global crisis? Unfortunately, it’s unlikely. In the fiat economy and the centralized system of governance, so many contradictions have accumulated that only a miracle can solve them without shocks.

Decentralization can and should be a one-size-fits-all solution, and blockchain is a tool for decentralization. However, the new decentralized finance and management system can be fully implemented only after the crisis. The elites are not now ready to share power and access to almost unlimited resources. But what do they do when the fiat is seen to lose its value?

It will not happen tomorrow or the day after, but sooner or later mankind will come to "decentralized civilization" simply because, from the point of view of society, it is advantageous!

We just have to wait.

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