There are two sides to every financial product. One is the purpose it serves for the users, and it has to be a very good solution to a problem. For example a credit card is a solution to not carrying cash and getting robbed. Travelers’ Checks are the same. Then there are Letters Of Credit. Bank Guarantees, Mortgages etc. They all serve a particular problem and provide a solution. Or for example a plain simple currency note. It also serves a purpose. It does not matter to a common person about the technology that goes behind creating and printing that note. It matters to the Governments more than it matters to the users. Keep this point about “Technology Behind The Note” concept in mind for later.
The other side to the financial product is the regulation of the product by the governmental agencies. Now keep in mind that this is more important than the product itself. A government does not care in any manner what purpose it serves, how great the technology behind the product is. What ease it creates for the users. How famous it is getting amongst the common people. It does not because if it cannot be regulated then it is an absolute danger to the entire financial system of that country or for that matter the entire world. Wars have been fought to keep currencies alive. Commodities have been linked like petroleum for decades to currencies, Petro-Dollar. World financial lending institutions have been created to keep nations funded, The IMF. The World Bank. Federal Monetary Authorities have been created to keep the value of a particular currency from falling or from increasing rapidly, like The Federal Reserve Bank, The ECB, The Bank Of England, The Bank Of Japan and The State Bank Of Pakistan in our own country. These institutions keep a check and balance on all the monetary transactions, may be it be as simple as a person using a single currency note, the government knows how many of those notes, how many of those coins are in circulation and what is the value of it in comparison to other currencies for national financial stability reasons and for the reasons of exports and imports.
Now let’s come to a point which everyone seems to forget in this entire equation. That is, the compliance and monitoring of a financial product. If these two points are not under the control of a government, the entire financial system can collapse. And this is where we come to the point of “Technology Behind The Product” concept which becomes useless for the governments. Nobody is questioning the great use of Bitcoin or other currencies based on Block Chain. What is not workable is the fact that none of these currencies can be brought under the monitoring of the governmental agencies. NOT AS OF NOW.
You can kidnap someone and take the ransom money in Crypto Currency. You deal in drugs and transfer the proceeds without leaving a trace. You can deal in commodities by setting your own price while disturbing the entire world price stabilization concept. You can fund wars, fund the terrorists, buy ammunition, tanks or even atomic components from rogue nations without leaving a single trace. And if all this is possible then there is no need for the FBI, MI6, FIA, CIA, NSA, Police, Army Intelligence, anything. And if all these institutions can be made redundant by a single currency, then this world will lead to an absolute financial and law & order collapse.
Until the day comes when these currencies can be monitored, regulated, come under the gamut of the regulatory authorities, it cannot work. May it be Block Chain based or based on some technology given to us by the aliens from Mars themselves. So for the ones running after this new concept, minus how great the technology or the concept is, please run in the other direction. It will collapse, if not today then tomorrow and if not tomorrow then the day after.
This is guest article by Mir Muhammad Ali Khan.
Mir Mohammad Alikhan is internationally renowned Investment Banker, Entrepreneur & Capital Markets Advisor. At the age of 29, he became the youngest Chairman and Founder of a Full service Investment Bank in America and the first Muslim to have owned an investment bank on Wall Street. He has had a successful career as Founder & Chairman The Financial Group, Inc., Federal Advisor to Govt. of Pakistan, a Member of New Jersey Governors Council, a Senior Advisor to New Jersey State Mayors and US State Senators. He introduced Islamic Banking Research into mainstream America by co-sponsoring and advising Harvard University to launch Harvard Islamic Finance and Information Program (HIFIP).
He also developed “THE WORD’S FIRST ISLAMIC BANKING BENCHMARK INDEX on WALL STREET Named:KMS-SAMI: (Socially Aware Muslin Index) Which Is Now A Functional Index Run By The Dow Jones Indices. He has also been featured in “Who’s Who of Top Executives in the World”. Featured in “Humans Of Pakistan” and in 2015 he became the first Pakistani ever to have a movie produced on his life through a first time co-production of Hollywood and Pakistani production house Sermad Films, The Producers of the movie “JALAIBEE”.WWW.MIRMAK.NET/Biography