The Social Currency
What I have written is not technical or all-encompassing. I am proposing in layman’s terms the initial conceptual piece of a future system. One which was not possible before due to technological constraints but now necessary due to capacitated possibilities.
Decentralized currencies, such as Bitcoin, have properties that cannot be exploited by fiat money. The block-chain technology behind the system is a profound innovation, and I think there is a real opportunity here to make a difference. Many people are creating alternative coins using the same or similar technology as bitcoin; this is what we would do. In other words, this new currency will function almost exactly like Bitcoin, but we are creating an entirely new currency. Before explaining the specifics of this concept, let me explain the problem it’s going to solve.
The world is progressing in ways that cannot be enumerated or predicted. Computers and networks are providing better solutions to complex issues, and it seems as though the next obstacle is money. How can a more stable and global currency be created? One that is pervasive, decentralized, and stable. The answer is [some sort of] decentralized currency, but I have two questions and comments:
Fiat money is not going away, so virtual decentralized currencies will need to adapt and work alongside.
Will this new decentralized currency create more difficulty for poor and emerging nations?
I think the answer to # 2 is yes, and since # 1 seems to be the case, creating a system to assist is imperative. Generally speaking, our society is moving away from centralized powers. Startups are taking over the scene instead of big business, crowdfunding is exploding, Bitcoin is picking up momentum, and this general ethos of decentralization is pervasive. Virtual currencies are not a fad, and they will likely all use block-chain technology. With a future of seemingly pure decentralized capitalism, it is important to have a structure to assist those born into unfortunate circumstances. The question is then: How can this be done in a decentralized manner. Here is my initial attempt at the answer:
The system would work using a decentralized currency like Bitcoin, a network of registered miners, and an exchange.
Explanation: A currency like Bitcoin means similar block-chain technology (expanding, all-inclusive, secure ledger). This network will be open for anyone to register and gain a key. Miners are people who improve the system’s security and gain currency compensation in return. An exchange is needed for value.
The key serves primarily as a means to register miner location in the system. Accuracy of miner location is important.
In this proposed concept, local governments and residents will have the ability to earn currency by acting as system security (miners). The process will involve electricity and cpu power to help validate the legitimacy of transactions and entries in the block-chain.
This new currency will have different parameters when it comes to awarding currency. In today’s decentralized currencies, the most currency is awarded to those that expend the most cpu power and electricity to solve, for lack of a better term, math problems. So naturally, those who can initially afford the means of production will make all the money. The yield from inflation by means of security protocol will be awarded to those who already have a lot. Using this current system as a truly pervasive currency, in effect, will promote a harsh inequality. The way to fix this is by having a decentralized voting system using similar block-chain technology. In this system everyone in the world will have the right to vote for areas that need more assistance. A higher amount of votes in/for an area will generate easier “math problems” for that area. This will make it possible for that area to benefit from the currency’s natural inflation by providing work to improve the system’s security. The system can possibly take into account factors from cpu potential to electricity potential and adjust accordingly.
What is being produced here is a decentralized system to more appropriately distribute wealth.
People will likely be inclined to buy and use such a currency because of the social implications. Progress is largely driven by merchants, and as more merchants accept this currency, it’s value will naturally increase. A positive cyclical effect is created with phantom value generated. The end/overall goal is to create a valuable, pervasive, and secure currency with low volatility. While a single global currency with these features makes sense, this currency will likely work in tandem with other currencies. In this case it should act as a buffer against the imminent runaway train of decentralized capitalism.
In addition to the inflation model, a secondary donation-incentive model is possible. Due to the nature of this currency, people may want to donate. Donation would likely be placed into a smart contract of sorts and released over time based on the currency/market meeting certain criteria. This extra pool of cash can be used for liquidity and subsidized incentives for miners. Both of these features improves overall system stability and security. It is also possible that instead of a market there is a growing fund from donations, this growing fund from donations can keep the price of the currency stable as it grows in number. This method would include fiat money, so I recommend the pool is comprised of a weighted even amount of every currency. Also, this method would require a hefty initial fund outlay. Nevertheless, I do think this method can make a lot of sense.
With regard to how areas are selected, a simplified way of thinking about it is: Amount of people “voting” for an area divided by the amount of people inhabiting that area. A high percentage increases the probability of earning money from inflation and/or donation incentives through mining. Of course, a runaway train effect will be avoided, amounts will not be so substantial as to completely take away from the rest of the miners. This systems algorithms must be robust, and while I have covered some of the factors that should come into play, there are many more I have not discussed.
This document serves as a starting point for the social currency. I hope the importance of this innovation is apparent, people begin brainstorming ideas to improve the concept, and a team of the right people can bring this to fruition.
Please direct any questions to:
Rspeier@fordham.edu
