Crypto assets: Have faith in your imagination.

Blinded by the physical


How do you describe something valuable that cannot be seen, heard, touched or felt?

Something beyond the senses. A transformative idea that can become an asset?

Thinking about crypto assets bring to mind a conversation I had with my old English teacher who was also the headmaster of the school I attended.

As a kid I remembered him telling us all about his path to teaching and the priesthood. He told a small class of 12 year old boys he never wanted to be a priest or a teacher……

He actually wanted to be a brain surgeon.

Then he raised his ten banana sized fingers saying “…but with these hands”.

The last time I saw him he was asking me about what I did for a living. I was a professional trader at the time.

He peppered me with questions about how I made money.

I told him I bought things and sold them or did so in the opposite order. If the gain was positive I made money. Negative I lost.

He seemed perplexed by the idea of buying and selling something digital. A stock symbol. An abstraction. As a way of creating wealth.

You see to him wealth was generated by taking real things out of the ground.

Like gold. Copper. Oil.

Physical assets.

And he would have been entirely correct during certain times in history.

But the world had changed a lot by that time. And today would be unrecognizable to him.

I cannot imagine what he would think of buying and selling something that is entirely, sort of, imaginary. Like his banana fingers the physical is an impediment to that opportunity beyond.

Crypto currency, blockchain, tokens are all part of this imaginary class of wealth creation.

And I don’t mean that in a negative way.


Let imagination be your eyes


In order for people to understand the basic idea of what crypto and blockchain are they have to be relieved of their existing preconceptions, like those of my old teacher.

In the book: Sapiens, Yuval Noah Harari tells a story about the history of homo Sapiens. Essentially the history of us. Our success against the odds. Our spread across the world and our development.

Our unique capacity to communicate, organize and adapt provided enormous advantages over any rivals.

In one specific area Harari talks about our world in a sort of philosophical way that really hit it home for me.

He did this by saying something so obvious it seems irrelevant until you consider his point in the context of the big picture.

He describes all of our organizing systems. Our government, economy, money. Religion. Everything with this one simple idea……

And it wasn’t the first time I read about this simple idea.

Hernando de Soto explored this simple yet powerful idea in a slightly different way in his book: The Mystery of Capital.

In his book he explores the issue of stranded capital, or property that exists outside the official system.

This means assets that exist in the absence of property rights. In other words you own the property, but in a way you don’t.

He compares the development of property rights in the United States while contrasting it with places in South and Central America where property rights were often absent or mired in red tape.

You might recall that in the pre-2000 period, stranded capital was a huge issue around the world.

Without property rights a property owner lacked many things we take for granted.

  • Without property rights the land they lived on might be theirs but they did not have title to it.
  • Without these rights they could not insure their property or anything on it, making life perilous and very expensive.
  • In many cases they had no access to sewer and water.
  • No power.
  • None of the basic public and private services many of us take for granted today.

But de Soto demonstrates what happens when property rights are conferred and enforced.

All of these services become available.

When you pay taxes you become a part of the system. One that provides many important benefits including insurance.

More importantly, someone with property rights gets one more big benefit. The property they own, enshrined in property rights can be used in any manner they wish.

A business. A home. Or collateral.

In the case of collateral de Soto points out that by using a physical asset as collateral it is transformed into capital.

This transformation is an idea. And like Harari’s description of our government, economy, religion and every other organizing system, it is an idea rooted in a simple concept.

Let me explain.


Transform your thinking


What these two authors are describing is the origin of these ideas. Things we take for granted every day.

They both called these simple transformative ideas: products of human imagination.

For example Harari viewed all of our organizing structures, religion, government and economic systems for example as products of human imagination.

De Soto on the other hand described the very transformation of a physical asset into capital by using it as collateral for a loan, as a product of human imagination.

Products of human imagination. Let that sink in for a moment.

So simple right?

The debate over crypto, blockchain, tokens, currencies and assets comes down to a debate about what people already believe.

Like my old teacher, much of what is written is anchored on what it can or can’t be based on what we already know. Or think we know.

What we can touch, feel, hear and see. Physical assets.

But we can look at these amazing developments as products of human imagination. In doing so we can unshackle ourselves from the anchors of the past for a moment.

By reframing our thinking we can look at a variety of ways that these transformations can be used in conjunction with our existing organizational matrix.

…… these new products of human imagination can be integrated with our existing products of human imagination.

Crypto might be a currency or some kind of medium of exchange. It could be a new type of security. A method of measurement.

The record keeping aspect represented by the blockchain might be a new clearing mechanism. The updated decentralized version of the Dewey Decimal system (for those of you who have used a library in the past).

The transformative power of an idea is only limited by a person’s imagination and willingness to explore the possibilities. Possibilities based on the simple idea that we can understand new innovations as products of human imagination. Not simply physical things.

And an unregulated, messy, chaotic environment in which people are willing to take risks, is the perfect place for this product of imagination to be brought to fruition.


Tristram Waye

Freelance Financial Copywriter