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October 05, 2015, 01:09:52 PM |
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Bitcoin is building momentum, and will soon change finance, ushering out some of the old order, but ushering in some new order as well. Bitcoin is wonderfully democratizing in many ways, but staggeringly autocratic in other ways.
Just like most financial instruments, Bitcoin rewards the rich and the speculative. If someone got it early, and Bitcoin makes it, they're gonna be rich! Also, if you can afford to buy the equipment it takes to mine nowadays, you can scoop up some strong ROI as well.
We can do better.
What if coins were mined when any human did one small piece of digital work? You might think of it as a global minimum wage. This digital work would need to be performable by almost any human at almost the same pace and be verifiable by a computer. CAPTCHA and reCAPTCHA are good examples; Foldit and Eyewire as well.
If this were true then a whole lot of people would get to work playing Eyewire or digitizing books (reCAPTCHA), minting new Bitcoins as they went, pushing the total volume of Bitcoins up and decreasing their value. Eventually, this digital work would not be worth the time. This would be the floor of Bitcoin's value, and the global bottom minimum wage.
To balance this downward force on the value of Bitcoin there would need to be deminting (destroying) going on somewhere. One option would be to redirect part of the transaction fee to deminting, another would be to set some kind of expiration date on coins. The first option would support savers and the second spenders.
Summary:
1. Mint new coins when people do a small piece of digital work.
2. Miners still verify transaction but they only get transaction fees, no new coins.
3. Coins either have a probability to expire, or a fraction is deleted upon transaction.
Why is this better?
The two forces, minting and deminting would push the value of Bitcoin in opposite directions. This would neutralize volatility. Even if someone speculated that Bitcoin were going to take over finance and they tried to secure their position all they would succeed in doing is temporarily raising the global minimum wage. So, no volatility (technically deminting would need to exactly meet minting to get zero volatility; an interesting technical challenge).
Economic policy is possible by adjusting between rewarding savers or spenders. Personally, I wouldn't touch savers, I'd take the full cost of deminting from transactions, but the option is here technically, or you could split it 50/50.
Doing this wouldn't make anyone rich, which is why it isn't likely to happen, but it would mean having far less volatility, and a bluntly fair and equitable system of exchange.
Critiques welcome. Everything else too, would love to hear thoughts.
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