If you are interested in seeing the idea get implemented, I highly recommend elaborating in as much detail as possible.
If you are looking for someone to work on it with you and want to be secretive because you plan on implementing the idea in a company you’re in and believe that you have what it takes to do this, I recommend thinking about the sort of person you want to work with, and presenting what it is about you that you think would make this person want to work with you.
Here are some more details as to what I am imagining this would be like:
There’s a base “currency” (actually, like bitcoin it is not likely to be legally recognized as a recognized currency but a digital commodity that stores value). For demonstration purposes I will refer to it as “bricks” since it is like a gold brick that serves as backing, not as something to buy and sell things with directly (at least at first).
There’s a mechanism similar to bitcoin where peers (each of which has their own public/private key pair) validate transactions and create hashes of their set of validated transactions. When a hash of a certain minimum difficulty (adjusted to make it take a certain amount of average time) is solved, that is declared as the latest block. To make a long story short, this difficulty is what keeps the peers all playing by the same rules.
The rules the peers go by include rules for converting to different “currencies”. Again these are just digital commodities on a network that can’t be easily spoofed, not legal tender in any particular country. Unlike the bricks, they don’t exist in a fixed supply, they can be generated and destroyed in potentially unlimited supply—however, you have to use bricks to make them, and they can be recycled back into bricks.
What exact rules to use is the tricky part. If it is too easy to create more of a currency, you get inflation relative to the real currency’s value, whereas if it is too difficult you can’t reflect actual inflation. For the system to be useful, the currencies need to track the value of what they represent.
One idea for setting the value would be to implement a trading system where bids and asks are published to the network (just like the transactions are), and currency generation rates are based on successful trades.
To give an idea of how this would work I’ll use “bananas” as an example currency. Basically there are two ways to go from brick to banana—either trade, or convert directly.
If there are a lot of successful trades of bricks to bananas at a relatively higher cost (in bricks), the rule would be to increase the value of bananas by making it cost more bricks to create new bananas. On the other hand if a lot of people are dumping their bananas for lower amounts of bricks that means bananas should cost less in bricks to generate.
The quantity of bricks is conserved, so by recycling bananas you can reclaim the cost of creating them. The amount of bricks you get from recycling is based on how much was expended in creating them, with the most expensive bananas always recycled first. Thus if the price ever drops to generate them, there is likely to be a profit from recycling them. For example, say someone generates 1 banana from 1 brick. That event sits in a queue waiting for someone with a banana to recycle it. Even if the rate changes to 2 bananas per brick and someone else generates 1 banana for .5 brick, the next person to recycle bananas will get back 1 brick. (It doesn’t care which banana—they are fungible with each other.)
This gets interesting when you add other currencies. Suppose we introduce coconuts, which are a worth a lot more than bananas. The system doesn’t automatically know this, but the traders do. If people tend to generate and buy coconuts with their bricks at higher rates, this tells the peers and thus the system to increase the cost in bricks to generate coconuts. The result is that bricks become worth more, and people will dump at least some of their bananas—the entire economy is thus connected.
There may be better ways to do this, but this is just what I have so far. I’d love to hear other ideas of a better way to do it. Can we do away with bids/asks as a rate-setting feature of the system and just base the rate on what people choose to create/recycle over time? I’m having a hard time wrapping my mind around it because of inferrential distance issues, but it seems like there is room for simplification there. Also, there is the question of whether we would want to add more bricks to the system over time as a reward for solving blocks (like bitcoin does with their currency), or perhaps reward block-solving in some other way (make it a requirement for generating and recycling currency, for example).
It seems that the entire idea of currency is to act as a trusted means of recording exchange and debt. Of all the functions of money, which one is being improved by this proposal?
What’s actually different between this and Bitcoin? I don’t understand what the benefit of having two non-legal currencies instead of just one. The idea of wasting electricity to generate unbacked currency doesn’t make sense to me.
Cool. What is your next step for the idea?
If you are interested in seeing the idea get implemented, I highly recommend elaborating in as much detail as possible.
If you are looking for someone to work on it with you and want to be secretive because you plan on implementing the idea in a company you’re in and believe that you have what it takes to do this, I recommend thinking about the sort of person you want to work with, and presenting what it is about you that you think would make this person want to work with you.
Here are some more details as to what I am imagining this would be like:
There’s a base “currency” (actually, like bitcoin it is not likely to be legally recognized as a recognized currency but a digital commodity that stores value). For demonstration purposes I will refer to it as “bricks” since it is like a gold brick that serves as backing, not as something to buy and sell things with directly (at least at first).
There’s a mechanism similar to bitcoin where peers (each of which has their own public/private key pair) validate transactions and create hashes of their set of validated transactions. When a hash of a certain minimum difficulty (adjusted to make it take a certain amount of average time) is solved, that is declared as the latest block. To make a long story short, this difficulty is what keeps the peers all playing by the same rules.
The rules the peers go by include rules for converting to different “currencies”. Again these are just digital commodities on a network that can’t be easily spoofed, not legal tender in any particular country. Unlike the bricks, they don’t exist in a fixed supply, they can be generated and destroyed in potentially unlimited supply—however, you have to use bricks to make them, and they can be recycled back into bricks.
What exact rules to use is the tricky part. If it is too easy to create more of a currency, you get inflation relative to the real currency’s value, whereas if it is too difficult you can’t reflect actual inflation. For the system to be useful, the currencies need to track the value of what they represent.
One idea for setting the value would be to implement a trading system where bids and asks are published to the network (just like the transactions are), and currency generation rates are based on successful trades.
To give an idea of how this would work I’ll use “bananas” as an example currency. Basically there are two ways to go from brick to banana—either trade, or convert directly.
If there are a lot of successful trades of bricks to bananas at a relatively higher cost (in bricks), the rule would be to increase the value of bananas by making it cost more bricks to create new bananas. On the other hand if a lot of people are dumping their bananas for lower amounts of bricks that means bananas should cost less in bricks to generate.
The quantity of bricks is conserved, so by recycling bananas you can reclaim the cost of creating them. The amount of bricks you get from recycling is based on how much was expended in creating them, with the most expensive bananas always recycled first. Thus if the price ever drops to generate them, there is likely to be a profit from recycling them. For example, say someone generates 1 banana from 1 brick. That event sits in a queue waiting for someone with a banana to recycle it. Even if the rate changes to 2 bananas per brick and someone else generates 1 banana for .5 brick, the next person to recycle bananas will get back 1 brick. (It doesn’t care which banana—they are fungible with each other.)
This gets interesting when you add other currencies. Suppose we introduce coconuts, which are a worth a lot more than bananas. The system doesn’t automatically know this, but the traders do. If people tend to generate and buy coconuts with their bricks at higher rates, this tells the peers and thus the system to increase the cost in bricks to generate coconuts. The result is that bricks become worth more, and people will dump at least some of their bananas—the entire economy is thus connected.
There may be better ways to do this, but this is just what I have so far. I’d love to hear other ideas of a better way to do it. Can we do away with bids/asks as a rate-setting feature of the system and just base the rate on what people choose to create/recycle over time? I’m having a hard time wrapping my mind around it because of inferrential distance issues, but it seems like there is room for simplification there. Also, there is the question of whether we would want to add more bricks to the system over time as a reward for solving blocks (like bitcoin does with their currency), or perhaps reward block-solving in some other way (make it a requirement for generating and recycling currency, for example).
It seems that the entire idea of currency is to act as a trusted means of recording exchange and debt. Of all the functions of money, which one is being improved by this proposal?
What’s actually different between this and Bitcoin? I don’t understand what the benefit of having two non-legal currencies instead of just one. The idea of wasting electricity to generate unbacked currency doesn’t make sense to me.