The Copernican Revolution in Finance

Putting the substantial legacy of Nicolaus Copernicus in perspective, it is worth noting he was already a student at the University of Krakow by the time Columbus discovered America. Yet when Bitcoin came along, I found myself in the economic faculty of UMK (Nicolaus Copernicus University), in his birthplace Torun nearly a decade ago, discussing Bitcoin and what it meant for the world… (of which more in a moment).

The legacy of Copernicus came at a time when the world population was barely half a billion but a lot of people from the 16th century have made a significant impact on our lives half a millennium later. Over 20 years after Copernicus’ death — several decades before the Dutch first populated New Amsterdam (later New York) — Malta’s GrandMaster, the Knight Jean Parisot de Valette, fresh from seeing off the Ottoman siege, undertook the creation of a new capital for the Maltese archipelago which would bear his name: Valletta.

Those were just a few of the many things which shaped our modern world from the Renaissance era but they made a perfect link recently as a result of events and COVID-19.

While Copernicus is best known for his astronomical observations, he was a dedicated polymath who also wrote several treatises on economics, including theorising how “bad money drives out good” when coinage is debased — a theory later expounded by the London merchant Sir Thomas Gresham and eponymized as Gresham’s Law.

Thus when preparing my presentation for an early conference on the new-fangled Bitcoin, one spot of lateral thinking later and I could see the ideal speech which elegantly explained what Bitcoin meant for society. Thus for the first time, in 2012 I discussed my perception: Satoshi’s vision was effectively “the Copernican Revolution in Finance.”

The notion is simple in micro-distillation. During the analogue age, we became used to currency as a construct of government — specifically issued by the Central Banks chartered under the suzerainty. Bitcoin, however, was different.

Copernicus had charted the notion of the earth moving around the sun: heliocentricity. The church posited the establishment view that the sun moved around the earth.

The Classic Copernican Diagram of Heliocentricity.
Copernican Heliocentricity

In essence fiat money was fixed in the orbit of the established church of money: the central bankers. Thus the universe of, say the US dollar looks rather like this:

Copernican Heliocentricity for money as viewed through the prism of Federal Reserve Chairman, Powell.
The Central Banker’s Belief of Their omni-centricity to money.

In other words, Chairman Powell of the Fed (feel free to substitute your own local currency central banker as appropriate) sits at the epicentre of the US dollar universe.

However, the advent of Bitcoin threatens the central bank money derived hegemony. The net result in one image could be represented as follows:

Cryptocurrency Heliocentricity — the central banker is replaced at the epicentre of the universe by Bitcoin.
A new money era: Bitcoin at the epicentre of the Heliocentric model.

In other words, Bitcoin represents the “Copernican Revolution in Finance” precisely because it helps enable the somewhat seismic shift of economic power away from the central banker. Where before the money universe orbited around the central banker, Bitcoin delivered the tantalising prospect of the sovereign consumer in full control of their own money.

Naturally the first Polish Bitcoin conference saw a mixture of reactions — the true believers saluted the “Copernican Revolution in Finance” while most of the audience scoffed at my daft impudence.

Way back in 1999, my first book, itself the first bestselling book in the realm of financial technology (“fintech,”) “Capital Market Revolution!” was published at a reception in the British Library, London. This year my latest book on the topic: “Victory or Death” emerged blinking onto the shelves of leading retailers across the globe…just in time for COVID-19 to lock down the bookstores and much more.

Fast forward to spring 2020 and at its peak of inactivity, lockdown had left the streets of New York bearing a similar paucity of traffic as broadly pedestrianised Valletta, the small but perfectly planned capital of Malta.

Thus with staff already operating the world’s most famous stock market in a radically distributed “off site” pattern, the good folks of NYSE pivoted and started talking to guests in the comfort of their lockdown locales. Following guests in New York and NYSE Chairman Jeffrey Sprecher from Atlanta as well as shark tank’s Kevin O’Leary, a virtual bridge across the Atlantic enabled my appearance. Thus the NYSE podcast pivot amounted to TOIP: “Travel Over Internet Protocol!”

However, our financial future will be dictated by interaction with global economics more than ever before in the digital age and nowhere is this more true than in finance.The legacy financial entities have used but often struggled to fully embrace technology — and as the COVID lockdown has demonstrated, living digital is now vital for all business to thrive.

That said having been a ’digital nomad’ over 25 years ago during the early years of the wonderful interweb, cobbling together a suitable spot for the interview from a bedroom didn’t strike me as anything out of the ordinary.

The ability to chat virtually across the interweb spanning the Atlantic amounted to a simple demonstration of modern digital interaction — or extreme social distancing! The NYSE podcast showed how during lockdown, Malta is equidistant to the rest of the world’s commercial centres — at the end of a digital node.

However, our financial future will be dictated by interaction with global economics more than ever before in the digital age and nowhere is this more true than in finance.The legacy financial entities have used but often struggled to fully embrace technology — and as the COVID lockdown has demonstrated, living digital is now vital for all business to thrive.

That said banks have peaked in their 500 year supercycle meaning their future will be an intriguing one to watch as they come to terms with gradually losing much of their financial influence.

These topics and more were amidst a myriad of subjects touched upon during a wide ranging NYSE podcast when I stepped virtually “Inside the ICE House.” From Bitcoin and the Blockchain through fintech to historic motorsport and the supercycle of banking and much more, it was a fun discussion across a myriad of topics inter-linked to life, the universe and markets both within the pages of my latest book “Victory or Death — Blockchain, Cryptocurrency and the future of fintech” …and beyond.

Then again as a digital nomad over a quarter century ago, perhaps lockdown was not that hard to adopt to. Nevertheless for all the things which worked well in the COVID-19, the lockdown has exposed the extent that our life is not so much locked down but certainly, “locked in” to the analogue world…

Patrick L Young

Former stock exchange CEO and lifelong entrepreneur Patrick L Young wrote the original fintech bestseller “Capital Market Revolution!” whose sequel “Victory or Death” (ISBN 978–83–62627–05–9) is in stores now.

“Inside the ICE House” is available via major podcast directories:

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Patrick L Young

Patrick L Young

Entrepreneur, Investor, Author. #Exchanges #Fintech #Startups #Motorsport Emerging Markets. CoFounder @Exchange_Invest @HanzaTrade @MissionToRun @YMarkets