The Importance of Place
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“The City” is Europe’s version of “Wall Street” — a phrase that connotes a place, an industry, and even a type of person.Â
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In the case of the City, however, the place is a political entity with a 2,000-year history: It’s the square mile of central London settled by Romans around the year AD 43 and incorporated by royal charter from William the Conqueror around 1067.
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The City remains to this day a self-governing entity, distinct from greater London, with a titular head, the Lord Mayor of London, who reports only to the King.
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The first Lord Mayor was appointed in 1189 and the 695th Lord Mayor, Professor Michael Manelli, took office this week — an occasion marked with pomp and pageantry in a days-long celebration of the history of the City.
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It was a big celebration (most of which I had the pleasure and privilege of attending) because there's a lot to celebrate — especially for financial history nerds like myself:
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The first joint-stock company, the City’s Company of Merchant Adventurers to New Lands, was incorporated in 1553.
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Fractional reserve banking is said to have been invented in the 17th century by City of London goldsmiths.
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The Bank of England, founded in the heart of the City in 1694, was not the first central bank, but perhaps the most influential.
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The London Metal Exchange was founded in 1877, but the futures market traces its origins back to the 1571 opening of the City’s Royal Exchange.
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The London Stock Exchange got its start in a City coffeehouse in 1698 (because stockbrokers were considered too uncouth to be admitted to the Royal Exchange).
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Lloyd's of London, the world’s first marketplace for insurance, started in a nearby coffeehouse around the same time.
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The London Clearing-House, established around 1750, was the first to settle accounts between bankers, and the LSE Clearing House, established in 1874, was the first to settle stocks and bonds.
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It’s no coincidence that all of this financial innovation happened within the square mile of the City.
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Instead, it’s a testament to the importance of place.
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Connect and Prosper
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The new Lord Mayor refers to the City as “the world's coffeehouse” and the motto for his time in office is “connect and prosper.”
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These are more than just slogans because even in today's work-from-home world of Zoom calls, place matters.
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In Scale, physicist Geoffrey West applies the principles of physics and biology to urban planning and finds that, quantifiably, what makes cities prosper is personal connections.
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“Fractal-like social networks, anchored to the physicality of a city,” he writes, “create ideas and wealth … enhance innovative thinking and encourage entrepreneurship.”
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Showing his work with a lot of inscrutable math, West concludes that it’s personal connections that make cities “the engine for social change and increasing well-being.”
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Less scientifically, it's also why Blockwork’s Digital Assets Summit is being held in London early next year, instead of Washington DC, as originally planned.
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For crypto to scale, it, too, will need personal connections.
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A third place
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In a fun melding of tradition and modernity, the newly elected Lord Mayor of London is a polymath technologist who built distributed ledgers as early as 1995 and has written extensively on blockchain tech from at least 2015. (He’s also been presciently skeptical of crypto’s more grandiose promises.)
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UK Prime Minister Rishi Sunak is equally keen on technology and perhaps less skeptical of crypto: He has a stated ambition “to make the UK a global hub for cryptoasset technology.”
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Importantly, UK regulators appear to share that ambition.
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The UK’s “highly sophisticated, world-class regulators” (per a16z) have been proactively working on how to bring crypto assets and stablecoins into the fold of financial supervision without unduly hampering innovation.
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The UK Law Commission, for example, has proposed classifying digital assets as a third category of asset — neither a “thing in action” nor a “thing in possession,” (the two current categories of asset) but something new that should be allowed to develop without “hard boundaries.”
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That compares favorably to US regulators who insist on shoehorning crypto into existing law, no matter how ill-fitting.
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It takes a village
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Crypto is a work-from-home industry. But for crypto to prosper, people will need to connect.
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Conferences — the coffeehouses of crypto — are the place to do that.
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Crypto is a permissionless technology, but for the crypto industry to prosper, it will need to be regulated sensibly.
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UK regulation is looking unusually sensible, so London may therefore turn out to be the place for crypto.
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Is it too much to say that moving Blockworks’ Digital Asset Summit to London will guarantee that crypto takes its place in financial history?
Yes, far too much.
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But if crypto is to achieve its ambitions, it will take a lot of personal connections in places like London to help it along.
