SocialCoin and the One World “Government”


The existence of a decentralized “real name” system allows for a large number of possibilities that have so far been unexplored in the cryptocurrency world. One attractive possibility is SocialCoin, the cryptocurrency that pays everyone in the world a “world citizen’s dividend” of 1000 units per month; another, similar alternative is to plug the system into a Devcoin-like system, allowing people to come together and vote on projects that the money should be spent on, thereby creating what is essentially a (voluntary) “world government” that funds itself from the revenue from generating new currency units. How much money could such a government get while still maintaining a low inflation rate? Here, there are two factors to keep in mind: people dying and losing their coins forever, and actual inflation.

Currently, when someone dies, their property automatically goes to their children or spouse by default. In a cryptocurrency, however, by default a person’s monetary savings simply become inaccessible since their passwords are lost. This destruction of coins creates a deflationary pressure; given the current death rate of around 8 per 1000 per year, multiplying by a factor of 2 to account for the fact that people tend to be somewhat wealthier than average at the time of their death, and then again dividing by 3 to take into account the fact that many people will have a system set up to ensure their wealth will go somewhere when they die (currently, about half the population has wills, and the divider can be bumped to 3 since people with more money are more likely to have them), we can get an estimate of 0.5% coin loss per year.

This, combined with a low target inflation rate of 1.5%, means that we can “print” 2% of the current money supply every year. Since cryptocurrencies will massively reduce the amount of fractional reserve banking in the world (as the cryptocurrency base unit is online, so individuals no longer “need” to store their money in banks in order to maintain savings accounts and make long-distance transactions), we can expect much of the world’s M2 and M3 money supply (ways of calculating money supply that include bank deposits) to become part of the base money supply of a cryptocurrency. The M2 money supply of the world is estimated at around $40 trillion, giving our world government a budget of $800 billion per year to play with – or, in the case of SocialCoin, a universal dividend of $114 per person per year.

In theory, a world government can do a lot with $800 billion per year; in practice, it remains to be seen how free from corruption such an institution would be, although in this case the fact that it will be controlled by direct democracy, and have no power to tax, can potentially serve as powerful restraints on abuse. It would essentially be a government in the sense of being an entity tasked with maintaining social infrastructure, but would lack the power to coerce and compel that might make it particularly dangerous. Or, we can simply stick with SocialCoin, and leave it up to each individual to improve their lives the best that they can with $114 per year – almost nothing to most people reading this article, but a very substantial amount in many underdeveloped countries. If the system can be made to rely on no centralized institutions and no tax revenue, it can secure a level of political neutrality that would allow it to be trusted by the entire world. Will it happen? Well, either wait and see to find out, or start implementing it yourself.

See also:

http://bitcoinmagazine.com/7050/bootstrapping-a-decentralized-autonomous-corporation-part-i/

http://bitcoinmagazine.com/7119/bootstrapping-an-autonomous-decentralized-corporation-part-2-interacting-with-the-world/

SocialCoin and the One World “Government”


The existence of a decentralized “real name” system allows for a large number of possibilities that have so far been unexplored in the cryptocurrency world. One attractive possibility is SocialCoin, the cryptocurrency that pays everyone in the world a “world citizen’s dividend” of 1000 units per month; another, similar alternative is to plug the system into a Devcoin-like system, allowing people to come together and vote on projects that the money should be spent on, thereby creating what is essentially a (voluntary) “world government” that funds itself from the revenue from generating new currency units. How much money could such a government get while still maintaining a low inflation rate? Here, there are two factors to keep in mind: people dying and losing their coins forever, and actual inflation.

Currently, when someone dies, their property automatically goes to their children or spouse by default. In a cryptocurrency, however, by default a person’s monetary savings simply become inaccessible since their passwords are lost. This destruction of coins creates a deflationary pressure; given the current death rate of around 8 per 1000 per year, multiplying by a factor of 2 to account for the fact that people tend to be somewhat wealthier than average at the time of their death, and then again dividing by 3 to take into account the fact that many people will have a system set up to ensure their wealth will go somewhere when they die (currently, about half the population has wills, and the divider can be bumped to 3 since people with more money are more likely to have them), we can get an estimate of 0.5% coin loss per year.

This, combined with a low target inflation rate of 1.5%, means that we can “print” 2% of the current money supply every year. Since cryptocurrencies will massively reduce the amount of fractional reserve banking in the world (as the cryptocurrency base unit is online, so individuals no longer “need” to store their money in banks in order to maintain savings accounts and make long-distance transactions), we can expect much of the world’s M2 and M3 money supply (ways of calculating money supply that include bank deposits) to become part of the base money supply of a cryptocurrency. The M2 money supply of the world is estimated at around $40 trillion, giving our world government a budget of $800 billion per year to play with – or, in the case of SocialCoin, a universal dividend of $114 per person per year.

In theory, a world government can do a lot with $800 billion per year; in practice, it remains to be seen how free from corruption such an institution would be, although in this case the fact that it will be controlled by direct democracy, and have no power to tax, can potentially serve as powerful restraints on abuse. It would essentially be a government in the sense of being an entity tasked with maintaining social infrastructure, but would lack the power to coerce and compel that might make it particularly dangerous. Or, we can simply stick with SocialCoin, and leave it up to each individual to improve their lives the best that they can with $114 per year – almost nothing to most people reading this article, but a very substantial amount in many underdeveloped countries. If the system can be made to rely on no centralized institutions and no tax revenue, it can secure a level of political neutrality that would allow it to be trusted by the entire world. Will it happen? Well, either wait and see to find out, or start implementing it yourself.

See also:

http://bitcoinmagazine.com/7050/bootstrapping-a-decentralized-autonomous-corporation-part-i/

http://bitcoinmagazine.com/7119/bootstrapping-an-autonomous-decentralized-corporation-part-2-interacting-with-the-world/