Tag: reservecurrency

The Pattern Repeats: What 1874 Teaches About the Future of Money

July 4th, 2026

History does not repeat itself. But it rhymes with remarkable structural precision.

In 1874, representatives from twenty-two nations gathered in Bern, Switzerland, and signed a treaty that would transform the movement of information across the world. The Universal Postal Union. A single multilateral agreement that replaced hundreds of bilateral postal treaties and declared the entire world a single postal territory.

One hundred and fifty years later, a distributed ledger running on servers across six continents is attempting to do the same thing for the movement of value.

The structural parallels are not coincidental. They are the signature of a recurring pattern in the history of human coordination — one that has appeared every time a new technology has made the friction of existing systems visible enough to demand replacement.

The Problem That Preceded the Solution

Before the UPU, sending a letter across multiple national borders was an exercise in bureaucratic complexity that most ordinary people simply avoided.

Each country maintained its own postal rates, its own transit agreements, and its own accounting systems. A letter traveling from London to Rome in 1860 might pass through France, Switzerland, and the Papal States — each requiring separate postage calculation, separate handling fees, and separate bilateral accounting between postal administrations. The sender had to prepay for each leg of the journey, often in different currencies, based on rate schedules that changed without notice.

The system worked, technically. But it worked the way a road network works when every bridge charges a different toll in a different currency and closes at different hours. The friction was not incidental. It was structural — built into the architecture of a system designed for a world of sovereign isolation rather than international exchange.

Sound familiar?

Today’s international money transfer system operates on infrastructure built in 1973. SWIFT — the Society for Worldwide Interbank Financial Telecommunication — connects over 11,000 financial institutions across more than 200 countries. It is, by any measure, a remarkable achievement of international financial coordination.

It is also, structurally, the 1860 postal system.

To send money internationally through the SWIFT system, banks maintain bilateral correspondent relationships — Nostro and Vostro accounts, from the Latin for “ours” and “yours” — with counterparties in other countries. An international wire transfer does not move money. It moves a message through a chain of correspondent banks, each of which debits one account and credits another, each of which charges a fee, and each of which introduces a delay. A transfer from a regional bank in one country to a regional bank in another may pass through three or four intermediaries, take three to five business days, and lose three to seven percent of its value in fees and exchange rate spreads along the way.

The system works. But it works the way the 1860 postal system worked. Technically. Expensively. Slowly. And in ways that systematically disadvantage the people who can least afford the friction.

The UPU Solution

The genius of the Universal Postal Union was not technological. The technology — horses, trains, ships — already existed. The genius was organizational.

The UPU replaced hundreds of bilateral agreements with a single multilateral framework. Under its founding treaty, every member nation agreed to treat foreign mail identically to domestic mail. A letter posted in any member country would be delivered in any other member country at a standardized rate, with standardized handling procedures, without the sender needing to understand or navigate the bilateral agreements between the countries involved.

The world became, legally and administratively, a single postal territory.

Three principles made this work. Universality — every member treated every other member equally, regardless of the volume of mail exchanged. Transit freedom — mail in transit through a member country could not be inspected, taxed, or delayed. Standardization — envelopes, weights, rates, and accounting procedures were harmonized across all members.

The result was not just more efficient mail delivery. It was a qualitative transformation in what was possible. Businesses that had never considered international correspondence began to operate internationally. Diaspora communities maintained connections across continents. Scientific and intellectual exchange accelerated. The reduction in friction did not just make existing activity cheaper. It created activity that had not previously existed.

The XRP Parallel

XRP — the digital asset native to the XRP Ledger — is, structurally, a proposal to do for value transfer what the UPU did for information transfer.

The XRP Ledger is a distributed ledger — a system of transaction records maintained simultaneously across thousands of independent servers worldwide, with no central point of control or failure. Transactions on the XRP Ledger settle in three to five seconds. The cost per transaction is a fraction of a cent. The system operates continuously, without banking hours, without weekends, without the concept of a correspondent relationship.

More precisely, XRP functions as a bridge currency. A bank in one country can convert its local currency to XRP, transmit that XRP across the ledger in seconds, and have the recipient institution convert it to their local currency — including, eventually, central bank digital currencies — on the other side. The Nostro and Vostro accounts, the correspondent banking relationships, the three-to-five-day settlement windows — none of them are necessary.

The bilateral correspondent banking web is replaced by a single multilateral settlement network. The hundreds of bilateral agreements are replaced by a shared cryptographic protocol. The structural transformation is identical to what the UPU accomplished in 1874.

This is not a coincidence. It is the same solution applied to the same problem in a different century.

Functionalism and Its Discontents

The UPU succeeded because it was relentlessly functional. Its founders did not argue about sovereignty, ideology, or the political implications of international postal cooperation. They argued about envelope dimensions and transit rates. The treaty worked because it focused exclusively on solving a specific, measurable, practical problem — and because solving that problem was in the clear interest of every participating nation.

This is what political scientists call functionalism: the theory that international cooperation is most durable when it is built on shared practical necessity rather than shared ideology.

XRP is, in its design philosophy, a functionalist instrument. It does not make arguments about monetary sovereignty or the geopolitics of reserve currencies. It proposes to move value from one point to another faster, cheaper, and more reliably than existing systems. The argument is technical and economic, not ideological.

The legal battles that have surrounded XRP — most prominently, the multi-year litigation between Ripple Labs and the US Securities and Exchange Commission — are, viewed through this historical lens, precisely analogous to the resistance that the UPU faced from national postal administrations that stood to lose revenue from standardization. The incumbent system does not yield gracefully to its replacement. It litigates, regulates, and delays. And then, eventually, the functional superiority of the new system becomes undeniable.

The SEC’s partial defeat in the Ripple case — the court’s finding that XRP sold on public exchanges did not constitute an unregistered securities offering — is, in structural terms, the moment when the new postal treaty was ratified. Not the end of the process. The beginning of the regulatory framework that will govern the new system.

The International Law Dimension

The UPU’s deepest legacy was not operational. It was jurisprudential.

The Universal Postal Union was one of the first international organizations to establish what legal scholars now call international administrative law — a body of rules governing the behavior of states not through diplomacy and treaty negotiation, but through the standardized administrative procedures of a shared technical system.

The implications were profound. International law, previously the exclusive domain of foreign ministries and military alliances, began to touch the daily lives of ordinary citizens. The letter carrier became an instrument of international legal order.

XRP and the broader infrastructure of blockchain-based value transfer are forcing an identical jurisprudential evolution. The movement of tokenized capital across borders in real time makes the existing architecture of international financial law — built around correspondent banking relationships, capital controls, and national currency sovereignty — structurally inadequate.

Anti-money laundering frameworks designed for a world of three-to-five-day settlement windows cannot function in a world of three-to-five-second settlement. Tax treaty frameworks built on the assumption that capital moves slowly enough to be tracked and attributed cannot function when value moves like email. The legal system is not broken. It is simply not designed for the infrastructure that is replacing the infrastructure it was designed to govern.

What will emerge — as it emerged from the UPU — is a new body of international administrative law governing digital value transfer. The specific shape of that law is not yet determined. That it will be determined is not in question. The technology is already here. The legal framework will follow, as it always has.

What This Means for a Longer Life

A life that runs to ninety or one hundred years will witness the full arc of this transition.

The person who is forty today will be seventy when the infrastructure of international value transfer has been rebuilt around distributed ledger technology — just as a person who was forty in 1874 lived to see the UPU transform global commerce in ways that were not yet imaginable when the treaty was signed.

The question is not whether this transition will happen. Reserve currency shifts, infrastructure replacement cycles, and the jurisprudential evolution of international law are slow, but they are not uncertain. The direction is visible. The timing is not.

For someone managing wealth across a long life, the relevant question is not “will XRP succeed?” It is: what are the properties of the assets and systems that survive infrastructure transitions? And what does the history of the last transition — 1874 — teach about how to be positioned for the next one?

The UPU did not make every postal company successful. It made the new infrastructure inevitable. The investors who prospered were not necessarily the ones who picked the right postal operator. They were the ones who understood that the infrastructure was changing and allocated accordingly.

The pattern is the same. The century is different.

Frequently Asked Questions

What is the Universal Postal Union?

The Universal Postal Union, founded in 1874 and headquartered in Bern, Switzerland, is one of the oldest international organizations in existence. It established the framework under which member nations treat foreign mail identically to domestic mail, replacing hundreds of bilateral postal treaties with a single multilateral agreement. It effectively declared the world a single postal territory.

What is XRP?

XRP is the native digital asset of the XRP Ledger, a distributed ledger technology designed for fast, low-cost international value transfer. Transactions settle in three to five seconds at a fraction of a cent per transaction. XRP functions as a bridge currency — enabling the conversion of one currency to another across borders without the correspondent banking infrastructure that underpins the current SWIFT system.

What is correspondent banking and why is it inefficient?

Correspondent banking is the system by which banks in different countries maintain bilateral account relationships — Nostro and Vostro accounts — to facilitate international transfers. A wire transfer through the SWIFT system moves not money but messages through a chain of correspondent banks, each charging fees and introducing delays. International transfers can take three to five business days and lose three to seven percent of value in fees and exchange rate spreads.

What was the SEC vs Ripple case?

The US Securities and Exchange Commission sued Ripple Labs in 2020, alleging that XRP constituted an unregistered securities offering. In 2023, a federal court found that XRP sold on public exchanges did not constitute an investment contract under US securities law — a significant partial victory for Ripple. The case established early legal precedent for how digital assets will be classified under US financial law.

Is XRP a replacement for the dollar?

No. XRP is a proposed replacement for the correspondent banking infrastructure through which value moves between currencies — not a replacement for the currencies themselves. It is agnostic about which currencies it connects, including central bank digital currencies. Its function is analogous to a postal route, not to the content of the letters.

What does the UPU parallel teach about investing in infrastructure transitions?

Historical infrastructure transitions — including the UPU, the telegraph, the railroad, and the internet — share a common pattern: the new infrastructure becomes inevitable before it becomes dominant, and the transition period is long. Investors who prospered in past transitions were typically those who identified the direction of the transition early, allocated to assets with the structural properties to survive it, and maintained patience across the full arc of the transition. The specific timing is unknowable. The direction, once visible, tends to be durable.

The Long Becoming tracks the patterns that repeat across history — for people living long enough to encounter them more than once.

For those who intend to last.
Money Has Always Been a Story — And the Story Is Changing

July 3rd, 2026

Money is not a thing. It never was.

It is an agreement. A shared fiction — the most powerful and durable shared fiction in human history. The cowrie shell was money because enough people agreed it was. The gold coin was money because enough people agreed it was. The paper bill, the digital balance, the number on a screen — all of them money for the same reason. Because enough people, in enough places, at enough times, agreed to treat them as if they were.

Understanding this is not an academic exercise. It is the most important thing a person managing wealth across a long life can know.

The First Money

The story begins not with coins but with credit.

The earliest records of monetary exchange come not from ancient Rome or Greece but from Mesopotamia — present-day Iraq — roughly 5,000 years ago. Clay tablets found at the ruins of Ur record debts, grain obligations, and silver measurements in a system of accounting sophisticated enough to include interest. The Sumerians were not trading objects. They were trading promises.

This is the first thing money has always been: a record of obligation. A way of saying I owe you that could outlast a conversation, survive a season, and be transferred to someone else entirely.

Coins came later. The Lydians — in what is now western Turkey — are credited with minting the first standardized metal coins around 600 BCE. The innovation was not the metal. It was the standardization. A coin stamped with a sovereign’s face carried implicit state backing — a promise that this object would be accepted in exchange for goods across a defined territory.

The story had found its first institutional author.

Gold and the Illusion of Permanence

For most of recorded history, the dominant monetary story was gold.

Gold is rare. Gold does not corrode. Gold is divisible, portable, and universally recognized across cultures that share no other common ground. These properties made it a natural monetary medium — and they made it easy to confuse the medium with the message.

Gold felt permanent. It felt like it had intrinsic value. But even gold was a story. The gold standard — the system in which paper currencies were directly convertible to fixed quantities of gold — was not a natural law. It was a policy choice, adopted by major economies in the nineteenth century and abandoned, one by one, throughout the twentieth.

The final chapter of the gold story ended on August 15, 1971. Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed rate. The Bretton Woods system — which had pegged global currencies to the dollar, which was in turn pegged to gold — collapsed. Every major currency in the world became, overnight, a fiat currency. Backed not by metal but by institutional trust.

The story changed. Most people did not notice.

What Fiat Money Actually Is

The dollar in your wallet is backed by nothing you can hold. No gold in a vault. No commodity in a warehouse. Only the collective agreement of billions of people that it is worth what it says it is — and the institutional machinery of the most powerful government in human history enforcing that agreement.

This sounds fragile. It has proven, so far, remarkably resilient.

But fiat money has one property that gold never had. It can be created. Not found, not mined, not earned — created. Through bond purchases, interest rate manipulation, and direct issuance, governments and central banks can expand the money supply in ways that were structurally impossible when currency was tied to metal.

That single property is the most important fact about modern money. It means that the value of what you hold today is not fixed. It is subject to dilution — slow, steady, and structurally incentivized by the governments that issue it.

The Story Is Changing Now

The next chapter of the monetary story is being written in real time.

The dollar’s share of global foreign exchange reserves has declined from over 70% in 2001 to approximately 57% in 2025. Russia and China now settle roughly 90% of bilateral trade in rubles and yuan. Central banks globally purchased over 1,000 tonnes of gold in 2024 — the third consecutive year above that threshold. BRICS nations, now representing nearly 40% of global GDP by purchasing power parity, are actively building payment infrastructure designed to bypass the dollar-dominated SWIFT system.

None of this means the dollar is collapsing. The dollar remains on one side of 89% of all foreign exchange transactions globally. No alternative currency comes close to matching the depth of US capital markets, the liquidity of US Treasuries, or the legal and institutional infrastructure that underpins dollar-denominated assets.

What it means is that the story is under pressure in ways it has not been since 1971. The weaponization of the dollar through sanctions has accelerated the search for alternatives. The rise of central bank digital currencies — including China’s digital yuan and cross-border systems like mBridge — is creating infrastructure for non-dollar settlement that did not exist a decade ago.

The transition, if it comes, will not be sudden. Reserve currency shifts take generations. Sterling’s decline from global dominance to regional currency took most of the twentieth century. What is happening now is not a collapse. It is the early chapters of a story whose ending has not been written.

For someone managing wealth across a long life, that is precisely the point. The story is changing. The people who know it is a story — and who hold assets with the properties that survive story changes — will be positioned for whatever comes next.

The Inflation Tax

No one votes for inflation. No government announces it as policy. It arrives quietly, through the compounding mathematics of purchasing power erosion — and it is, across a long life, the most reliable threat to accumulated wealth.

A dollar saved in 1971, the year Nixon closed the gold window, would need to be multiplied by seven to match its purchasing power today. That is not a crash. That is not a crisis. That is fifty years of ordinary monetary policy, compounding silently.

For someone whose wealth needs to last thirty or forty years, the arithmetic is unforgiving. A three percent annual inflation rate — modest by historical standards — reduces purchasing power by nearly fifty percent over twenty-five years. The number in the account stays the same. What it can buy does not.

This is the inflation tax. It requires no legislation. It produces no receipt. And it has never stopped collecting.

What 5,000 Years Teaches

The history of money is a history of stories that eventually break down and get replaced by new ones. Commodity money gave way to metal coinage. Metal coinage gave way to paper backed by gold. Gold-backed paper gave way to fiat currency. Fiat currency is now being challenged by digital assets, central bank digital currencies, and decentralized protocols that require no institutional trust at all.

Each transition was chaotic for those who did not see it coming and held the wrong assets at the wrong time. Each transition was generative for those who understood what was changing and why.

The pattern is consistent across five thousand years. The story changes. The people who know it is a story — and who hold assets that survive the transition between stories — preserve their wealth. The people who mistake the current story for permanent reality do not.

What This Means for a Longer Life

A life that runs to ninety or one hundred years will, with high probability, witness at least one major monetary transition. The shift from gold to fiat in 1971 took a generation to fully register. The shift now underway — whatever form it ultimately takes — will take another.

The question is not which assets will win. The question is what properties assets need to have in order to survive a story change.

Scarcity. Utility. Institutional legitimacy. Cross-border portability. These are the properties that have mattered across every monetary transition in history. They are the properties that will matter in the next one.

The specific vehicles change. The underlying logic does not.

Frequently Asked Questions

What is fiat money?
Fiat money is currency that derives its value from government declaration and collective social agreement rather than from a physical commodity like gold. All major world currencies are currently fiat currencies, meaning their value depends on institutional trust rather than intrinsic material worth.

When did the gold standard end?
The gold standard effectively ended on August 15, 1971, when President Nixon announced that the United States would no longer convert dollars to gold at a fixed rate. This decision dismantled the Bretton Woods system and transformed all major world currencies into fiat currencies.

What is de-dollarization?
De-dollarization refers to the gradual reduction in the dollar’s role as the world’s dominant reserve currency and medium of international trade. The dollar’s share of global foreign exchange reserves has declined from over 70% in 2001 to approximately 57% in 2025. While the dollar remains dominant — involved in 89% of all foreign exchange transactions — geopolitical pressure, sanctions weaponization, and the rise of alternative payment systems are accelerating the search for alternatives.

What is inflation and why does it matter for long-term wealth?
Inflation is the gradual erosion of purchasing power — the decline in what a unit of currency can buy over time. For people managing wealth across decades, inflation is the most consistent and structurally incentivized threat to long-term financial security. A three percent annual inflation rate reduces purchasing power by nearly fifty percent over twenty-five years.

What has historically preserved wealth across monetary transitions?
Assets with scarcity, utility, institutional legitimacy, and cross-border portability have historically preserved value across monetary system transitions. The specific vehicles — land, gold, productive businesses, certain currencies — have varied by era. The underlying properties have remained consistent.

Is the dollar losing its reserve currency status?
The dollar’s share of global reserves has declined but it remains the world’s dominant currency by a wide margin. No alternative currency currently matches the depth of US capital markets or the liquidity of dollar-denominated assets. What is changing is the pace of infrastructure being built to reduce dollar dependency — BRICS payment systems, central bank digital currencies, and bilateral local currency settlement agreements. Whether this leads to a fundamental transition or stabilizes at a new equilibrium is uncertain.

Why does the history of money matter for personal finance?
Understanding monetary history provides context that short-term financial advice cannot. It reveals that the rules governing money are not natural laws but policy choices — choices that have changed before and will change again. That understanding is the foundation of any serious long-term wealth strategy.

The Long Becoming.

For those who intend to last.

Tag: reservecurrency

The Pattern Repeats: What 1874 Teaches About the Future of Money

Money Has Always Been a Story — And the Story Is Changing