What comes to mind when you think about Scotland? Is it the image of kilt-clad highlander belting out haunting laments from his bagpipe? Or is it Glencoe with its majestic rugged mountains? In many ways, there is about something for everyone in Scotland.
As I write this, Scotland has voted nay, and chosen to stay. Listening to the Prime Minister’s statement on the result of the plebiscite, one gets the feeling that a rubicon has been crossed. “Our United Kingdom” will not be the same again. What Scotland wanted, England, Wales and Northern Ireland might also get, in the new era of Devomax. It is difficult to predict where the road goes from here, but we can expect that each of the constituent nations of the UK might to assert their identities much more than has been seen before. Will the model follow Scottish lines with first ministers for England, Wales and Northern Ireland? As Westminster and Holyrood debate about what to cede and concede politically, a window of opportunity to try new things has been opened up in the UK. One of those new things is the use of Bitcoin.
Scotland’s history with free banking
Of the four nations, Scotland has experience with the use of multiple currencies, having experimented with free banking in the 18th and 19th centuries. Under the system, three chartered banks, the Bank of Scotland, the Royal Bank of Scotland, the British Linen Company and a host of other smaller banks all had the ability to issue their bank notes.
The period that lasted from 1716 to 1845 saw fierce competition between banks for market share that led to innovation still being used today by the modern banking system. The Royal Bank of Scotland and the Bank of Scotland were involved in a real struggle that made each of them turn the other’s notes for redemption in large quantities. Eventually, they both realized that it was in their interest to accept each other’s currencies. This brought stability to the system and led to the growth of exchanges. Since the two banks did not desire to keep each other’s bank notes for too long, they had to make frequent trips to redeem them. In 1768, an exchange was set up by Aberdeen and Perth United for merchants who did business between the two cities. As a result of this exchange, the notes increased in negotiability which in turn increased the demand for those bank notes. With time, it became prestigious to be a member of the exchange. Banks that desired membership of the exchange had to meet the requirements of the member banks, including that of being financially sound. The growth in the volume of transactions led to further refinements that eventually created the first clearing house.
Bitcoin going forward in Scotland
Bitcoin has spawned the growth of other digital currencies. Scotland has its own, the Scotcoin. Some altcoins are rapidly gaining in value, and others are choosing to merge, such as what happened to Litecoin and Dogecoin. It is quite possible that just like the chartered banks of 18th century Scotland, crypto-currencies may eventually define a set of rules that will govern the use and exchange of crypto-currencies globally. Scotland with its experience in free banking can play host to this emerging crypto-currency environment. Though the ayes lost the referendum, they nonetheless made the point that there are millions of Scots who would love to have an independent country. Perhaps one way of demonstrating that independent identity will be by fostering the growth of an alternate currency to the pound sterling. A return to the free banking of previous centuries may not be practical in the present era, however there is an opportunity in Bitcoin, and Scotland would do well to piggyback its experience in free banking into this bold new world.