Introduction

"Dreams I had just yesterday

Seem to all have passed away in time

And, once again, I have a memory

Another treasure in this life of mine,

This life of mine.

"Fate shows no mercy to love

And so, I pack my wheels once more

'cause there's so many

Backroads in life yet to explore

Yet to explore

"I know I can't ever change

My lone person or my mind

And so, I have to be on my way

And leave those realities behind

Yeah, leave 'em behind

"And now, the sun is shining down

Upon a road

Twisting and unwinding

For this, I gave my all

I gave my all.

"I'm lookin' for a road

I'm lookin' for a road

I'm lookin' for a road

Again."1

Thank you for opening the pages to this book. I'll tell you why I wrote it.

The future of the US economy-and, indeed, the world's-will be determined at the dynamic intersection of markets, technology, and politics. The interplay of these determines the cost and availability of the food we eat, the energy that heats our homes, the electricity that powers our smartphones, our mortgages and auto loans, and, ultimately, the money we use to pay for all of these. It determines the continued affordability of the vaunted "American way of life."

I have spent a 37-year career in that economic intersection, first as a Wall Street lawyer and later as a finance executive. I then served for 5 years at its center at one of the world's least understood yet most important market regulators, the US Commodity Futures Trading Commission, known as the CFTC. It was there that, quite unexpectedly, I glimpsed the most profound change in generations: The rise of the Internet of Value, Bitcoin, and cryptocurrencies.

So this book is, in part, a personal one about how I have navigated my professional path in a radically changing world. But I hope it is much more than that. It is also a call to arms. Based on what I have seen, I believe democratic society faces an urgent need to courageously confront the extraordinary transformations wrought by the Internet of Value that will intimately affect the daily lives of each and every one of us. They must be shaped by a free people.

Here's why I say that. Let me begin with three key observations about financial markets.

Antiquated Infrastructure

First, consider that America's physical infrastructure-its bridges, tunnels, airports, and mass transit systems-that were cutting edge in the last century but have been allowed to age and deteriorate in the current one.

Sadly, the same is true about much of our financial infrastructure, both in the United States and in many developed Western economies. Systems for check payment and settlement; shareholder and proxy voting; investor access and disclosure; and financial system regulatory oversight-once state-of-the-art and global models in the twentieth century-have fallen behind the times in the twenty-first century. In some cases, embarrassingly so.

This aging financial system puts developed economies like the United States at a competitive disadvantage to the likes of China that are building new financial infrastructure from scratch with twenty-first century digital technology. Here's a good example: it typically takes days in the United States to settle and clear retail bank transfers. In many other countries it takes mere minutes, if not seconds. It also takes days to settle securities transactions and weeks to obtain land title insurance. It is still often faster to move money around the globe by stuffing cash in a suitcase and carrying it on a plane than it is to send a wire transfer.

Nothing better reveals the limits of our existing financial system than the US government's initial financial response to the COVID-19 pandemic in the spring of 2020. Tens of millions of Americans had to wait a month or more to receive relief payments by paper check. More than a million payments were made to people who were dead.

Internet of Value

A second observation is that these aging financial and regulatory systems are struggling to adapt to the next wave of digitization that I and some others call the "Internet of Value."2

The first wave was the Internet of Information. Wikipedia is an example and emblem of that first wave: a massive decentralized, online reference authority composed collaboratively by volunteers. That initial wave took information written, owned, and controlled by elite publishers like Encyclopedia Britannica and democratized it, rendering it easily accessible at a keystroke, anytime, anywhere, and for free.

That first Internet wave was superseded by another: the "Internet of Things." Thanks to this wave, seemingly every place we shop and dwell, everything we wear and drive, and every device we engage with is connected to the Internet.

We are now on the cusp of the Internet's next wave: the Internet of Value.

As remarkable as were the earlier waves, the Internet of Value will be an even deeper transformation of our economic selves than the earlier waves combined. This wave will do to currency, financial instruments, and economic activity what the Internet of Information did to knowledge: reduce costs, increase speed, transcend barriers, improve accessibility, enhance certainty, and decrease bottlenecks to instantaneous transactions across the globe.

In this wave, things of value-such as contracts for energy, agricultural, and mineral commodities; stock certificates, land records, and property titles; cultural assets like music and art; and personal assets like birth records and drivers licenses-will be stored, managed, transacted, and moved about in a secure, private way from person to person, without third-party intermediaries. This next wave of the Internet will shift the medium of trust from large centrally managed institutions to person-to-person digital handshakes powered and secured by cryptography, tokenization, and shared ledgers carried across a network of personal computers and smartphones. Think of the ability to send money or confer ownership over property by mere text message without having to go through an intermediary-a powerful bank or a credit card company-to authenticate who you are and the person you are sending it to. The opportunities will be no less transformative than what Uber did to mobility, Airbnb did to lodging, and Amazon did to commerce. We are only in the middle innings of what will be a decades-long digital revolution.

Ask yourself: When was the last time you mailed a stamped letter rather than sent an email? When was the last time you pasted photos into an album instead of stored them on your mobile phone? When was the last time you played a CD, cassette tape, or vinyl LP rather than listened to Pandora or Spotify? If the Internet could transform letter writing, photography, and music in one generation, it is naïve to think the Internet will not do the same to financial services and money. In a few years' time, writing a paper check will be as archaic as sending film to Kodak to be developed. So will sending money by wire transfer-or even via mobile apps like Venmo or Square Cash-since all these ostensibly "digital" methods still rely on costly intermediaries, such as banks and credit-card companies. Just over the horizon is a world in which we will soon send things of value directly to the recipient, mobile device to mobile device, without any third-party needing to assist-or take a cut.

Nowhere will the Internet have a more dramatic impact than in the realm of money. Sir Jon Cunliffe, the widely respected deputy governor of the Bank of England, once commented to me that, every several generations, society re-asks the question: "What is money?" He thinks this latest Internet wave is prompting society to ask that question once again.

He's right. Society has been questioning the nature of money for over a decade now. Bitcoin3-rising from the ashes of the last financial crisis in 2008-was the first digital asset. Since its advent, the private sector has launched thousands of budding, non-sovereign cryptocurrencies of lesser or greater promise.

Clearly, the private sector is way ahead of governments and central banks in exploring digital money. But lately, governments are starting to react. Most of the world's central banks are now taking a serious look at a sovereign form of cryptocurrency, called central bank digital currency.

The world as we know it today is one of competing currency zones in which monetary systems, banking, and foreign accounts are generally oriented to one reserve currency or another. Think of the US dollar zone and the "Eurozone." As I will explain in this book, those old currency zones may well be replaced tomorrow by widely networked and integrated national digital currency zones. There likely will be a Chinese digital currency zone and perhaps a Digital Euro zone. In these zones, central bank digital currencies will be networked through...