Blockchain Beneficial, Cryptocurrencies a PEST for Traditional Finance

Blockchain Beneficial, Cryptocurrencies a PEST for Traditional Finance

Chris Skinner, a markets commentator and author of several financial publications including Digital Bank, Value Web, and Digital Human, has concluded that decentralised cryptocurrencies are truly a PEST to the established banking and governmental system. While that may not be in itself original, his development of thought behind the acronym PEST – Political, Economic, Social, Technology change – is concise and relevant at a time when nations are adopting blockchain solutions.

Skinner’s approach is to take a snapshot of our present situation in that “Governments (Political) control Societies (Social) through Money (Economic), which is changing fundamentally thanks to The Internet (Technology)” and correctly identifies that money lies at the heart of controlling populations, with technology acting as the key in either maintaining or breaking that control.

Friction and Harmony

For clarification, Skinner talks about the role of cryptocurrencies in achieving radical change and cites bitcoin (BTC) as “…money (Economic) through the network (Technology) so that anyone (Social) can trade without government (Politics).”

While these sentiments have been recognised for some time, Skinner’s thoughts crystallise how PEST’s “…four elements are in constant friction and harmony” for both governing structures and individuals alike.

An example of a PEST harmony, from a governmental perspective at least, was laid out last week by China President Xi Jingping who according to Xinhua news outlet inferred that the CPC Central Committee must “…clarify the main direction…” as “It is necessary to accelerate the development of blockchain technology and industrial innovation, and actively promote the development of blockchain and economic and social integration.

The presidential endorsement was reportedly quickly followed by a proposal of a law on cryptography being passed by the 13th National Peoples’ Congress designed to keep control of all blockchain development and application within the realms of the Chinese state.

While China’s approach is a timely example of a political response to the inevitable economic and social friction posed by a disruptive technology such as blockchain, Skinner’s PEST analysis is likely to stand the test of time regardless of the geographical area or any predominant ideology.