What Does Cryptocurrency Mean for the New Economy? 507
monopoly was extended in Victorian times is illuminating. For a couple of hundred years, England had gradually been folding the control of money into the Bank of England monopoly, whereas in Scotland, private banks continued to issue their own money and competed to keep the value of their money up. The result was a period of incredible innovation when the more tightly regulated London and country banks failed more often than the less tightly regulated Scottish banks (Under Threat, 2008). The competition resulted in many of the innovations that we take for granted as part of modern banking. Indeed, it is surprising how many of these innovations (colored banknotes, overdrafts, checkbooks, and so on) date specifically from this competitive period in Scottish banking history. Bank failures in Scotland were fewer and less catastrophic than bank failures in England, supporting a kind of ecological argument that diversity provides strength.
508 Handbook of Digital Currency
write that he looked forward to a time when “the successors to Bill Gates will have put the successors to Alan Greenspan out of business.” Dr. de Bono was arguing that com-panies could raise money just as governments now do—by printing it. He put forward the idea of private currency as a claim on products or services produced by the issuer, rather than the bank credit of Hayek. So IBM might issue “IBM Dollars” that would be not only theoretically redeemable for IBM products and services but also practically tradable for other companies’ moneys or for other assets. To make such a scheme work, IBM would have to learn to manage the supply of money to ensure that (with too many vouchers chasing too few goods) inflation does not destroy the value of their creations. But com-panies should be able to manage that trick at least as easily as governments do, particularly as they don’t have voters to cope with.