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What Does Elon Musk’s Twitter Acquisition Mean for Crypto & How Italian Bankers & the Renaissance Accelerated the Development of Money (and Democratised Mathematics!) (#98 - 9 May 2022)

The Future of Money with Henri Arslanian
What Does Elon Musk’s Twitter Acquisition Mean for Crypto & How Italian Bankers & the Renaissance Accelerated the Development of Money (and Democratised Mathematics!) (#98 - 9 May 2022)
By Henri Arslanian • Issue #92 • View online
Dear Friends, 
Last week’s announcement of Elon Musk buying Twitter may indicate big changes are in store for the social media platform. 
But what does this development mean for the broader crypto and Web3 ecosystem?
The Renaissance was one of the most impactful events in human history. But what were its effects on money and finance? And what did Italian bankers have to do with this? 
I cover it all in my weekly newsletter below.
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What Does Elon Musk’s Twitter Acquisition Mean for Crypto? And Can Twitter Become The Bridge Between Web2 and Web3?
Twitter announced last week that it had entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk in a transaction valued at approximately $44 billion.
Many outside the crypto community are often shocked to learn the outsized role that Twitter plays in the crypto ecosystem.
“Crypto Twitter,” after all, is arguably one of the most important sources of news for any crypto trader or aficionado. 
However, Twitter has had numerous challenges over the years, which include: 
Slow in rolling out new features - Twitter has done a poor job in launching new features that users actually want. For example, there is still no edit button for tweets. This is an issue that Elon Musk has raised numerous times in the past.
Fake accounts and bots - Twitter has become notorious for a large number of fake accounts and bots that plague the platform.
There are numerous Twitter bot farms around the world that allow any bad actor to launch campaigns.
This was visible not only in recent U.S. elections but even in recent military conflicts.
This is something Elon Musk has vowed to address when he mentioned that Twitter should authenticate every human user.
Opacity - The way Twitter operates is incredibly opaque; how its algorithms operate has long been kept a secret. And the decision-making process has been shrouded in mystery, as well.
Although Twitter launched a blue checkmark feature for verified users, the process of how those users are verified is non-transparent and arbitrary, often depending on personal contacts that individuals have at Twitter.
Many of the biggest personalities on Crypto Twitter have yet to see their accounts verified despite having hundreds of thousands of followers. Ryan Selkis with his 250,000+ followers is a good example.
Even I was turned down by Twitter numerous times despite having fraudsters impersonate me each week whilst attempting to scam my followers out of money.
I have never been able to get any answers from Twitter’s support team despite my best efforts.
Not surprisingly Elon Musk has vowed to change this by providing more transparency to the process. 
Censorship - This has become a huge issue, especially in the wake of former U.S. President Donald Trump being banned from the platform. 
Despite one’s political views, banning a U.S. president is no small matter, especially when you consider that groups like the Taliban or other governments with incredibly poor human rights records still have their accounts.
Now, what should we expect moving forward?
Generally, this is a positive move for crypto. Elon Musk understands the space and is well aware of the role that Twitter plays not only in the crypto ecosystem but in society more broadly. 
A couple of changes that I am expecting to see include:
Fixing some of the most immediate problems - These include all the of the aforementioned issues, from lack of transparency to making the algorithm open source.
Adapting to broader social media developments - Twitter should hopefully begin adapting more quickly to broader trends that users want to see. More video functionality is a good example, especially as the broader social media sphere continues to move away from text toward short-form video content. 
Experiment with new ways of delivering content - Whilst the current 280-character limit is generally accepted, the growing popularity of threads indicates that there is strong demand for longer-form content as well.
Becoming more crypto enabled - Twitter already allows a number of crypto features, from Bitcoin and Ethereum tipping to using NFTs as profile pics. I would expect the rollout of additional crypto features to accelerate.
But when you stop and think about Twitter’s true potential, things quickly become very interesting and makes the improvements mentioned above seem trivial compared to the real role that it can play.
For example, the current Web3 and metaverse communities have a serious problem when it comes to identity verification.
Could Twitter be used as a bridge between Web2 and Web3, allowing users to use the platform as an authentication and identify verification mechanism?
Could I connect my Twitter account, either directly or indirectly via zero knowledge proofs mechanisms for example, to one of my decentralized wallets and allow it to perform some form of authentication as I interact with some of the metaverse platforms?
There is no doubt that KYC and broader AML requirements will come to the various metaverse ecosystems and an efficient and user friendly authentication mechanism (better and more reliable than sending a copy of your passport!) will be needed.
And the opportunity is even more pressing when it comes to DeFi including decentralized exchanges. And considering that most, if not all, DeFi users are also active Twitter users, there is a natural fit.
That may very well be one of the biggest opportunity for the platform moving forward and one that Twitter has a chance of winning if it tries. Other platforms like Meta or Discord will undoubtably try as well but I would argue that Twitter, under a Elon Musk leadership, has a good change of winning.
In the same way that Google made Web2 accessible to the broader public and Facebook took things even further mainstream, Twitter could build such a bridge between these two iterations of the web. 
I would be surprised if Elon hasn’t already thought about this.
I don’t know what Twitter will look like over the next one to two years. But I do know that it will certainly look and function better than it does right now. 
Definitely a development and acquisition to follow.
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How Italian Bankers & the Renaissance Accelerated the Development of Money
We recently took a look at the pioneering approach to banking and finance displayed by the Hospitallers and, particularly, the Knights Templar during the Crusades. But after rising to great heights and accruing vast wealth and power, they were ultimately crushed by Pope Clement V and King Phillip of France. 
So who filled the gap left by these groups? 
Italian bankers. The void would be filled between the 13th and 15th centuries by families from the northern Italian states of Pisa, Florence, Venice, Verona, and Genoa.
But these families differed from the Templars in a very important way: they did not operate from well-fortified castles, nor did they travel in heavily armored convoys.
Instead, they operated in the marketplaces catering as much to the needs of small vendors and merchants as government officials and the Church. 
As historian Jack Weatherford explains, this was a big shift compared to the Templars, who typically served only the nobility.
These Italians set up tables and large benches from where they would conduct their activities. The word “bank” actually derives from the old Italian word “banca,” which means bench.
The Italian bankers had the same problem the Templars had in that the Church forbade usury, the charging of interest on loans.
To get around this restriction, the Italian bankers didn’t officially make any loans but rather traded bills of exchange. The Latin for bill of exchange is “cambium per letras,” which means exchange through written documents. The transaction officially consisted of the sale of one form of money for another that would be paid in a different currency at a specified future date.  
Italian bankers boosted commerce by making it much faster.
In 1338, a shipment of coins required three weeks to go from Rouen in northern France to Avignon in southern France; the shipment faced many perils from being stopped by robbers to being stolen from those transporting it directly.
By contrast, a bill of exchange would only take eight days, and if it was stolen, it could not be redeemed by the thief. For these reasons, merchants were happy to pay the 8 to 12% fee involved. 
The Italian bankers would continue their dominance for some time. But, similar to the Templars before them, they were undone due to their dealings with the government.
Some of the major Italian banking families backed Edward III at the start of the Hundred Years’ War between England and France. When Edward II defaulted on his loans in 1343, many Italian banks went bankrupt and these great losses were catastrophic for the Italian bankers, taking a century for them to regain their vigor with the rise of the Medici family.
While the Medicis didn’t do anything particularly novel when it came to banking, they used their wealth to acquire political power and aristocratic titles, and most importantly, the Medicis helped finance a great revival in art and architecture that still stands to this day in Florence. 
 Augmented Arms of the Medici Family. Source: Wikipedia Commons
Augmented Arms of the Medici Family. Source: Wikipedia Commons
What become known as the Renaissance didn’t begin as a movement in art, but rather as a practical revival of mathematics to help bankers and merchants perform the increasingly difficult tasks of converting money, calculating interest (though technically not allowed), and determining profits and loss. 
In 1202, Leonardo Fibonacci (also known as Leonardo Pisano after his hometown of Pisa), published Liber Abaci, in which he introduced Arabic numerals to Europe (even though the Arabs had themselves borrowed the numerals from India). 
 Source: Mathematical Association of America
Source: Mathematical Association of America
Arabic numerals offered a great advantage over clumsy Roman numerals, which were difficult to add and subtract and which made multiplication and division very difficult.
The introduction of Arabic numerals eliminated the need for an abacus since merchants could calculate the new numbers more easily in their heads or on a piece of paper. 
However, there was much resistance from the old guard, universities, government, and the Church, who were suspicious of these new numbers that came from “infidels.” In stubborn defiance, many European universities continued to use the abacus and teach mathematics using Roman numerals until as late as the 17th century. 
Many governments also refused to accept the use of Arabic numerals for official purposes, claiming they could be easily forged, even by a person with little education.
Soon after, merchants who became quick adopters of these Arab numerals started putting plus or minus signs to note overweight or underweight items. These signs soon became the symbols for addition and subtraction and, eventually, for positive and negative numbers.  
The reality is that Arabic numerals democratised mathematics and made the field more accessible.
In 1478, Treviso Arithmetic, an anonymous textbook, appeared in which the author taught the reader not only addition and subtraction but also multiplication and division.
Source: Mathematical Association of America
Source: Mathematical Association of America
In 1484, Nicolas Chuquet introduced a system to make zeroes more easily understood by grouping them into sets of three with a marker between each set. He gave each set of three zeroes its own name and, thus million, billion, and trillion were born.
In 1487, Luca Pacioli, a Franciscan friar, published the 600-page masterpiece, Summa de aritmetica geometria proportioni et proportionalita, introducing the concept of double-entry accounting, still used to this day. 
Source: Wikipedia Commons
Source: Wikipedia Commons
Arab mathematicians devised algebra (which comes from the Arabic al-jabr), based on the work of 9th-century Arab mathematician Muhammad ibn-Musa al-Khwarizmi.
Al-Khwarizmi worked in Baghdad and borrowed many of his ideas from the Hindu work of Brahmagupta; Al- Khwarizmi’s work, in turn, was translated into Latin and spread throughout Europe by Gerard of Cremona, an Italian translator of scientific texts.
Al-Khwarizmi helped alleviate some of the problems of working with fractions by devising a system of decimals in place of fractions. This use of decimals, called algorism (a corruption of the name Al-Khwarizmi) eventually became the modern word algorithm.
Mathematics was also used to revisit concepts of philosophy and natural sciences. For example, René Descartes published his Discourse on Method in 1637 (where he coined the famous expression, “I think, therefore I am”) and Sir Isaac Newton published Principia Mathematica in 1686, one of the most important works in the history of science. 
Source: Wikipedia Commons
Source: Wikipedia Commons
The development of money during the Renaissance had an indirect impact on many other aspects of society, with these ideas flourishing and spreading across Europe. But it was not only in Europe where change was taking place, as similar developments were spreading throughout Asia, particularly in China.
But that story will have to wait for another time!  
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Henri Arslanian
*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only and none of its content should be construed as investment or financial advice of any kind. 
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Future of Finance and Money - PwC Global Crypto Leader, Best Selling Author, Keynote Speaker, University Professor, Host of Crypto Capsule™ - Views are my own

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