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Freo: A Proposal for a Global Digital CurrencyHugo Stone
hugostone@gmx.comAbstract. Existing monetary systems allow central banks to issue valueless
fiat paper and coin as debt, and permit other institutions to create debt in the
form of digital abstractions with no inherent value. Bitcoin attempted to
address the centralised control of the money supply in a different way, but
ultimately failed to realise its own revolutionary potential. In a world in
which information is currency and currency takes the form of information,
there is no longer any reason to pretend that digital abstractions have any
inherent value. Nor is there any reason to issue them as debt and expect
recipients to expend time and energy in order to pay back or earn what was,
and can be, created with a push of a button. This white paper explores the
nature of modern money and proposes an alternative solution, one which re-
conceptualises money not as a disabling debt created by central sources but
as an enabling force created at the point of need by individuals themselves.
1. Fundamental assumptions1.1 The digital environmentIt is impossible to deny that the electric and electronic revolutions have fundamentally changed the way we live our lives. However, few seem to understand the nature of the world we now inhabit. Since the discovery of electricity and the development of the digital computer, humankind has enveloped the entire globe with a network analogous to the human central nervous system and brain. A new man-made ecological system has been constructed on top of the physical environment, the lifeblood of which is electricity. It is said that information is today's currency, and in point of fact what we call 'currency' has become nothing more than information. If electricity is the lifeblood of this man-made ecological system then currency in the form of information is the oxygen that keeps the organism alive. In effect, we are encased by and 'breathe' a digital atmosphere just as we are encased by and breathe the physical atmosphere.
Today, we are no less reliant on this digital atmosphere than we are its physical counterpart. If the ability to process information with computers were to vanish overnight then the consequences for us individually and as a species would be unthinkable. In such a scenario, the most immediate and obvious problem would be our inability to access the money required to satisfy the physical requirements of life. The result would be a form of digital suffocation directly analogous to sealing our mouths and nostrils with glue. Despite this, how many of us ever question why we are being 'charged' to 'breathe' the digital atmosphere in a way we would not accept if ordered to pay for each and every lungful of air? In short, how many question why we allow banks and institutions to create valueless digital abstractions as 'money' in the form of a 'debt' that must be 'earned' and 'paid back'?
1.2 Gold and silver as a store of valueNeither of the above has any intrinsic value. They are merely inert metals to which we attribute value, because they are scarce and because they have an aesthetic appeal and 1useful function. In and of themselves, however, they are inherently valueless. Ultimately, such value as they have arises from a belief that they have value and this value varies over time depending on which way the financial wind is blowing. Still, many people maintain that 'sound money' is money backed by an inherently valueless inert substance. Yet these metals are not sponges that soak up a mysterious quality called 'value' and release the same mysterious quality when squeezed.
Some may wish to take issue with this and declare that 'precious metals' do indeed have an intrinsic value, in which case they presumably had value even in the days when dinosaurs ruled the earth. The absurdity of this statement serves to demonstrate that things have 'value' only because human beings exist to attribute 'value' to them, and the 'value' that we attribute to things is not fixed – it can and does change over time depending on the current perception of how useful and scarce a thing is. At times, the 'value' of a precious metal will have little relation to any real-world phenomenon, i.e. a scare story in the media is often sufficient to cause a spike in the value of gold and silver.
1.3 Fiat money and valueThe virtualisation of fiat money in the form of valueless digital abstractions (information) has finally made it clear to all that the emperor has no clothes. This being the case, why do we persist with a system that creates valueless digital tokens with a push of a button and maintains that these tokens represent a 'debt' that must be paid back? Those familiar with the work of Marshall McLuhan will no doubt already recognise that bankers are living in a rear-view mirror reality. They function as if they inhabit an 18th century world in which gold sovereigns must be pushed from one side of the ledger to the other in order to balance the financial Scales of Justice. In point of fact, the 'value' of these metallic tokens was as illusory as our digital tokens are today. The creation of money and the need to 'balance the books' is just a numbers game and there is no need to treat it as anything but.
The truth behind money is revealed when we visit an ATM or go online to check the quantity of digital abstractions stored for us in another digital abstraction called a 'bank account'. Open a spreadsheet and type the same amount into a cell. What is the difference between the two? There is no difference at all. Enter double the amount in the cell immediately underneath. Congratulations! You have just created 'money'. Why then do we allow institutions called 'banks' and 'governments' (or bitcoin miners for that matter) to create digital abstractions as a 'debt' or 'negative charge'? What is the true cost of creating one digital abstraction? If money is information then does it really cost more to produce ten trillion digital abstractions than it costs to produce one digital abstraction?
Assume for a moment that I enter the number 250,000 into a spreadsheet cell, then save the spreadsheet and email it to you. This is what we call a 'transaction'. Nothing real has changed hands, only information in the form of a representation of an electromagnetic charge (i.e. light through fibre optic cables, microwaves, etc.) and reconstituted as light in order to be displayed on a monitor. If I were to call myself HSBC or Bank of America and tell you that the 'money' I transmitted to you represents a mortgage created as debt and that you must spend 20 years working to pay off that debt then what would you say?
A 'virtual' currency is in fact no different than the 'money' offered by an online casino as an incentive for opening an account. No actual money or 'value' is transferred, only a digital abstraction that appears to have value because it is prefixed with a currency sign. Money creation is a game, albeit one that serves particular interests. It is time to stop pretending that it is anything other than a game. It is time to stop creating unreal digital monopoly money (and paper and coin variants of the same) as debt that needs to be earned and paid back. It can and should be created 'free of charge' at the point of need, or rather as a 'positive charge' instead of the 'negative charge' it represents today.
1.4 Bitcoin and valueThe problem with Bitcoin is that (with the exception of the decentralised blockchain) it replicates the flaws of existing monetary systems. In other words, it pretends that its own inherently valueless digital abstractions have to be 'earned' by mining. In this respect, Bitcoin represents the exact same negative charge as all other fiat currencies. To most people, the idea that it is possible to receive something for nothing is anathema. Tell them that they can have something 'free of charge' and they will think it's a trick and will want to know what the 'catch' is. However, these same people are perfectly content to receive nothing (a 'salary' in the form of valueless digital abstractions or a slip of paper that is converted into the same) in return for something (their precious time and energy).
Bitcoin pretends that it has transformed users of its currency into bankers and presents itself as a global alternative to existing monetary systems. The reality is that it has failed to perceive the true nature of its own revolutionary potential. If 'money' can be created at the push of a button then we as individuals can and should be empowered to create money at the push of a button, free of debt and 'free of charge'. Bitcoin has simply recreated in another form the existing distinction between creators and consumers. In the Bitcoin universe, less than a decade after its introduction, individuals can become 'creators' only if they already possess enough valueless digital abstractions to invest in the warehouse full of ASIC processors required to mine its intrinsically valueless digital abstractions.
Another problem with Bitcoin is that the perception of scarcity is coded into the system. Gold may be a scarce commodity but there is nothing scarce about digital abstractions and it serves no purpose to pretend otherwise. Prior to writing this section, I created a small computer program that opened an 'account' in my name and credited my account with one trillion digital abstractions I call 'money'. My digital abstractions are no more or less 'real' or inherently 'valuable' than bitcoin or any other currency. In order to serve as a currency, you just need to agree with me that my digital abstractions have value, and I just need to provide a way to transmit them to you as a debt-free gift rather than a debt-ridden burden.
The true revolutionary potential of a decentralised digital currency will be realised when individual users of the currency can create their own debt-free digital abstractions as and when they require them. This too will be just an illusion – just another numbers game – but one that is infinitely preferable to existing monetary systems, which create valueless digital tokens and saddle us with a meaningless 'debt', one bearing no resemblance whatsoever to the actual cost of triggering an algorithm to perform a transaction.
1.5 Inflation, market forces, supply and demandWith a few notable exceptions, most countries take active steps to ensure that the 'value' of their currency is not 'debased' by excessive money creation. Bitcoin is no exception in this respect, going so far as to impose a fixed limit on the number of bitcoin that will ever exist. However, if money is merely a digital abstraction with no inherent value then what exactly does it mean to 'devalue' or 'debase' a currency? How can something that has no value (and does not even exist in any physical sense) be 'devalued'? How can something that is fundamentally worthless be made 'more' or 'less' worthless than it already is? The true value of all the currencies currently in circulation (Bitcoin included) is zero. To say that the 'value' of an intrinsically valueless currency decreases as more money enters circulation is a fiction that serves the interest of no one, except those with a vested interest in perpetuating the current merry-go-round of debt.
There are of course many other mechanisms by which the supposed value of a currency may be increased or decreased. It goes without saying that these too are merely convenient fictions. When money exists as information stored and transmitted as an electromagnetic charge then it makes no sense to say that the 'value' of the dollar 'increased' yesterday and 'decreased' today. Under the system to be proposed, the 'value' of one digital abstraction will be pegged to the 'value' of the dollar until such time as the dollar (and all other currencies) wither and die on the vine as they so richly deserve. The 'value' of this new digital abstraction will also be a convenient fiction and mean nothing whatsoever, given that everyone will be able to create their own money. Even so, its 'value' will be no more or less fictional than the 'value' of any other unit of currency.
In a scenario whereby the proposed monetary system becomes the sole monetary system and its digital abstractions become the only tokens serving as currency, the fiction can be relaxed somewhat and the value of one digital abstraction will be equal to itself. The quantity of goods that can be exchanged for one unit will still be determined by markets on the existing principle of supply and demand, but again this will be merely a convenient fiction. The number of units needing to be exchanged for a particular commodity may increase or decrease according to its availability, but this too will mean nothing given that anyone can create the required number of units.
Increased demand for basic goods can be expected under such as system given that everyone on the planet will be able to afford the luxury of actually eating. However, what we think of as 'price inflation' is just a reflection of the way the existing system works to keep us focused on the numbers game rather than the real-world problem the numbers represent. Inflation becomes irrelevant in a system that permits everyone to create money as unreal digital abstractions. It matters not whether 1kg of rice costs two digital abstractions or two thousand digital abstractions. The only thing that matters is whether there is enough rice to go around. If there is not enough rice to go around then the proposed system will allow the creation of unlimited digital abstractions to address the imbalance in a way that is innovative, sustainable, and ecologically sound.
By contrast, under the existing system the principle of supply and demand (and the price inflation it creates) often serves as a surrogate for actual innovation. Here, the 'solution' to a mismatch between the two factors is to deprive people of the commodity in question by inflating the price until equilibrium is reached. Needless to say, if there is a 'demand' for a commodity then there is a 'demand' for it. Increasing the price of a commodity to the point that people cannot afford it has nothing whatsoever to do with 'demand' because the 'demand' is still there. All that happens is that the majority are priced out of the market and the commodity becomes a luxury item until such time as the price falls again. The true solution is to assess whether the imbalance is a temporary blip (the product of a fad or trend) and, if not, to take action to address it. A transition to the proposed system will no doubt reveal multiple 'hidden' demands for basic commodities that have been masked by a system that 'solves' problems by pricing people out of the market altogether.
At the other end of the spectrum, luxury goods are dangled before our eyes as status symbols to aspire to and be inspired by (see the origin of the terms 'aspire' and 'inspire' in the glossary and think about what it means to live in an 'aspirational society') in order to keep the wheels of debt turning. Yet the very idea of a status symbol becomes nonsensical in a system in which anyone can create money on demand. Today, a rich man will buy a Ferrari or Bentley to demonstrate that he is rich and 'successful'. Under the proposed system, a Bentley or Ferrari will be no more a symbol of success than a box of cornflakes. Those accustomed to valuing themselves in material terms will be able to own both a Bentley and a Ferrari, provided there are enough to go around. However, when they see that their neighbour (who has spent his entire life trying to keep up with the Jones') also owns a Bentley and Ferrari they will realise that owning a Bentley and Ferrari in a world where everyone can (in theory) own a Bentley and Ferrari also means nothing whatsoever.
In short, the existing system of 'market forces' is nothing more than a game whereby those who possess enough illusory debt to afford the requisite technology employ computers and complex algorithms to buy and sell. They create an illusion of 'value' in fractions of seconds that hardly even qualify as time. Under the proposed system, markets will operate not to establish 'value' but to act as a barometer identifying pressure points that may require remedial action. Recognising that the existing system is just an illusion, the only question of import is whether there is enough to go around. If there is not, then it becomes a question of how we employ the limitless financial resources of the proposed system to address needs and desires in an intelligent and sustainable manner.
1.6 Competition and developmentThe proposed system bears no relation whatsoever to a 'planned economy' or an 'equality of poverty'. It will decentralise power and give it back to the people. It will allow everyone to have what they want, and if what they want does not exist, or if there is not enough to go around, it will permit this 'lack' to be addressed. It will allow the production of high quality goods produced with a view to maximising their 'recyclability'. If 'pressure points' are identified then it will be left to groups and organisations to work together collaboratively in order to identify the nature of the problem and devise an appropriate solution. Different groups will be free to compete with one another to offer the most imaginative, smart, ecologically sound and aesthetically pleasing solution, and money or 'cost' will not be the determining factor in choosing the winning bid.
It is impossible to deny that we stand on the threshold of a new technological revolution. The self-driving car is already a reality and stands poised to make millions of driving jobs redundant. Similarly, advances in the field of Artificial Intelligence and the emergence of more 'intelligent' chatbots raises the possibility that millions of service sector jobs will soon be redundant too. Even so, the illusion of scarcity built into the existing system means that it hinders as much labour-saving development as it facilitates, and probably a good deal more besides. A wide variety of existing jobs rely on human labour primarily for reasons of 'cost effectiveness'. A host of menial and not-so-menial tasks could easily be performed by machines if only businesses and organisations had the 'capital' required to invest in their introduction and/or development. With limitless financial resources available to address current and future needs, anything and everything becomes possible.
2. The ProposalThe below provides a bare bones outline of the proposed new digital currency with a view to establishing some of the core features prior to the definition of exact functional requirements. Two different systems are considered: the first ceases to pretend that money is anything other than an illusion, while the second allows more scope to pretend that it is real and requires it to be 'earned' as a reward that users allocate to themselves.
In both cases, money is re-conceptualised not as a debt or 'negative charge' created by a central authority (or miner) but as a gift or 'positive charge' created by each individual user.
In a typical transaction, a supplier will ask a customer to make a donation and the customer will make a gift of money to the supplier. This represents an actual and symbolic change in the way we view money and transactions: not as a burden of 'debt' (a kind of 'trespass' or 'sin') that we must 'pay back' but as an enabling force that we give freely.
In the final analysis, both systems represent an intermediate stage between existing 5monetary systems and a future point in time when a more mature version of the human race may wish to dispense with the illusion of a monetary system altogether.
2.1 Preferred systemIn its purest form, the new digital currency will be created 'on demand' as the need arises. This is not to say that anyone can simply create 100,000 digital abstractions with a push of a button and keep creating the same amount (or more) over and over again. Rather, it means that if an existing home owner requests that I donate 100,000 digital abstractions in exchange for their house then they will present me with a symbolic representation of the donation requested. If I wish to take ownership of the property then I will indicate this by scanning the symbolic representation with my mobile phone in order to initiate a transaction. This will not charge me 100,000 digital abstractions but create 100,000 digital abstractions and transfer them to the home owner's account.
Similarly, if the former home owner wishes to take ownership of a new home, and is asked to donate 125,000 digital abstractions in return for it, then the mechanics of the system will operate to deduct the existing 100,000 digital abstractions from their account and add an additional 25,000 digital abstractions to make up (literally) the full gift.
The system will use existing peer-to-peer, public key cryptography, and decentralised block chain technologies to record transactions, and potentially even changes of ownership in the form of a digital deed or 'title'. It will create the illusion of monetary 'value' in a way that is no more or less illusory than the existing monetary system. Nothing of value will be created and nothing of value will be lost, gained or exchanged – only information transmitted through cables and the atmosphere itself. All that remains will be the perception of value. Existing monetary systems operate on the same basis, except that they requires us to view the debt they create as 'real' and work in order to 'earn' it.
Unlike Bitcoin and its variants, there will be no need for 'proof of work' to demonstrate that money has been 'earned'. Money will be created on demand and the entire system will operate on the basis that virtual currency is inherently valueless and does not need to be earned. Users of the currency will have accounts (just as they currently have bank accounts) and will be able to check their account balance and make gifts of 'money' just as they can today. The only difference will be that we are merely pretending that the numbers on screen mean something. Over time, people will no doubt come to think that these numbers do mean something, just as they think they do today. The illusion will become reality and accepted as 'normal' and 'natural', just as the existing debt-based system is.
Incentivisation of those running the hardware and software required to make this a reality will take the form of a transaction processing gift awarded to whoever processes the block containing the transaction. Bitcoin itself is destined to operate on this very basis and it is standard operating procedure for existing electronic payment systems. Needless to say, transaction gifts will be as illusory as any other gift donated through the system. This also means nothing whatsoever. At the risk of repeating myself: things have value because we believe they have value. If we agree that the digital abstractions created by this system have value then they will have value. It really is that simple.
2.2 Alternative systemA possible objection to the above is that people are inured to a system that requires them to do something (work) in return for nothing (valueless digital abstractions) even though few believe that it is possible to receive something in return for nothing. With this in mind, it may be desirable (as an intermediate stage in order to accustom people to the new system) to ask people to do something in return for digital abstractions. The something in question may or may not be 'work', but not in the sense of work as 'paid employment'.
For example, people who come together in order to realise a shared vision may decide to reward themselves with a set number of digital abstractions upon meeting a project milestone and upon successful completion of the project. To avoid meaningless squabbles about whether person A is 'earning' more than person B, the group may agree to award themselves the same amount. Ultimately it does not matter, because the digital abstractions they reward themselves with will have no inherent value or indeed any basis in reality whatsoever. This will not be 'paid employment' as we understand it. Rather, each team member will be rewarding themselves for their own effort – a form of deferred gratification so to speak. There is no reason why such a system could not be implemented in the form of a plug-in added to existing project management software.
There are many other possibilities, including the possibility of allowing people to reward themselves with digital abstractions in return for play or personal development. Some obvious examples include:
• Pokémoney: track down and capture cute bundles of digital abstractions, be
they lurking in the street, inside public buildings, in your girlfriend's
underwear drawer, on mountain tops, bobbing about on coral reefs, or
floating in the clouds.
• Game money: developers allow gamers to reward themselves with digital
abstractions on successful completion of a level, the game, the entire game as
a run-through within a set period of time, or upon defeating an enemy team;
developers may 'cap' the number of digital abstractions gamers can reward
themselves with to offset accusations that they are encouraging 'addiction'.
• Fitness apps: developers allow users to reward themselves with digital
abstractions on successful completion of a 10k run, half-marathon, marathon,
ultra-marathon, or a set distance within a set period of time; organisers of
official races allow participants to reward themselves with digital
abstractions upon successful completion of the distance, or upon completion
of the distance within a set period of time.
• Weight loss: members reward themselves with digital abstractions upon
losing X amount of weight over a set period and meeting their target weight.
• Examination boards, schools, colleges, universities: students reward
themselves with digital abstractions upon passing an examination or passing
with a certain grade. Organisations may wish to 'cap' the number of digital
abstractions students below a certain age can reward themselves with, if only
to avoid situations whereby ten-year-old virtual millionaires decide to
explore the Amazon without their parents' knowledge.
All of the above realise the potential of a digital currency and blockchain technology as a programmable form of money, albeit perhaps not in the sense originally envisioned. Here, the 'proof of work' passes to the developer of the app or plug-in under consideration and the individuals using that app or plug-in. It might be argued that people will try to cheat the system, but why would they do so? They would only be cheating themselves. In fact, the whole concept of cheating loses all meaning in a system that permits people to create their own money in a variety of different ways.
Again, incentivisation of those running the required hardware and software will take the form of a transaction 'gift' awarded to whoever processes the containing block. Here too the new currency is envisioned as a decentralised peer-to-peer system using 7public key cryptography and blockchain technology to record the creation of new money, transactions of existing money, and change of ownership. Apps and plug-ins will integrate with the network and initiate 'generation' or 'coinbase' transactions when the conditions for issuing rewards are met.
2.3 Further considerationsThe Bitcoin network has vast computational power, almost all of which is dedicated to the process of finding the 'proof of work' nonces required to create new bitcoin. If we accept that Bitcoin merely replicates the defects of existing monetary systems then there is no reason why the existing network could not be utilised to make the new system a reality. The technology required already exists and simply needs to be 're-tasked' and the system itself re-conceptualised, i.e. as a truly global system that does not pretend that digital abstractions are intrinsically 'valuable' and need to be 'earned' in any conventional sense. Viewed from a global perspective, there may already be sufficient computational resources in the Bitcoin network to accommodate the needs of billions of users.
Careful consideration will need to be given to the blockchain ledger, which would soon grow to massive proportions in the event of mass acceptance of the proposed system. Suitable methods will need to be devised to archive old transactions whilst ensuring they remain easily and publicly accessible. At the risk of a slight loss of anonymity, it may be preferable to operate the system on a basis similar to that of a mobile/cell phone network, i.e. a system of national nodes and ledgers to process and store 'local' transactions, with 'roaming' functionality to switch between ledgers and networks. For large countries this could be implemented at the level of individual states or regions.
Presently, a bitcoin's 'value' has little meaning outside of its relationship with other currencies. Another way of saying this is that markets tell us what one bitcoin is 'worth' and we accept this illusion of value rather than create our own (equally illusory) understanding of one bitcoin's 'worth'. Ultimately, one bitcoin is worth nothing at all, just as one dollar is worth nothing at all. In the short term – purely for the sake of convenience – the value of one unit of the new digital currency will be pegged to the value of a major currency on a one-to-one basis. There is no reason why users of the new currency should prefer the market's illusory valuation over their own equally illusory valuation.
Based on the belief that this new digital currency can (and indeed deserves to) replace all existing debt-based monetary systems, one unit of digital currency will be equal to itself once these other debt-based currencies disappear. What one unit of digital currency will actually 'buy' (i.e. the number of digital abstractions we are asked to donate as a gift) will of course vary according to the principle of supply and demand. As mentioned above, this too will be just an illusion because it will not matter how many digital abstractions are required for any particular product or service. The only thing that will matter is whether that product or service exists in the quantities required to meet needs, and to take remedial action (using the unlimited financial resources available) to address imbalances.
There will be no actual debasement of the currency or price inflation, only the illusion of it. Collectively, we will simply need to respond to the perception that our 'spending power' has been reduced in order to solve the real-world problem that this perception represents. In short, the principle of supply and demand will do nothing more than identify imbalances and prompt us to take action. This contrasts with the existing system, whereby talking about the 'problem' of inflation in purely monetary terms often serves as a substitute for addressing the actual underlying problem. To reiterate: something that is inherently valueless cannot increase or decrease in value.
It does not follow that because people can (in theory) have one or more of everything then they will actually want one or more of everything. In the short term, in Western countries at least, one can imagine a run on luxury items that the majority can not currently afford. Yet luxury items are merely status symbols and will have no meaning under the proposed system. Moreover, people have different tastes. One person may view Dom Pérignon as the embodiment of heaven on earth. Another may view it as spoiled cider with a funny taste. Eventually, demand for Dom Pérignon will be based not on the mere fact that it is Dom Pérignon (a status symbol) but on whether people genuinely like to drink it. The same holds true for almost any other product or service you care to mention.
In less developed countries, where people live a hand-to-mouth existence, one can also envisage a run on basic staples: wheat, flour, rice, etc. Again, the point here is not to sit around and moan that illusory 'spending power' has been reduced, or to employ people called 'economists' to discuss and analyse the illusion endlessly on our behalf. The point is to address the imbalance. We could begin work today on turning the earth's deserts into greenhouses for food production using solar energy and water piped from desalination plants. The reason we do not do so is because of the illusory 'cost' associated with it. Instead, we hide 'demand' (i.e. the real needs that 'demand' represents) by pretending it does not exist. This situation can and will change under the proposed system.
There is a tacit assumption built into existing monetary systems that people will do nothing unless obliged to do something at the point of a financial gun. This is an insult to the hundreds of millions of people who freely donate their time and energy each and every day. It is an insult to those who choose a profession or occupation on the basis of their interest in it, rather than the financial reward they receive. Under the proposed system and the technological development it will facilitate, hundreds of millions of people will be freed to pursue other interests. It does not follow from this that they will choose to do nothing and passively rot for the remainder of their lives. Freed from the illusion that they must value themselves in terms of the number of valueless things they possess, a new measure of success and self-worth will emerge based on who we are and what we do.
3. ConclusionThe proposed new digital currency represents a change from money as debt or 'negative charge' to money as an enabling force that we create and donate as a gift. The introduction and widespread acceptance of such a currency will change the way we perceive and interact with others, and by extension how we interact with other groups and communities on national and international stages. People will cease to be seen as debtors who 'owe' us and must dish out 'pay back'. Instead, people will be seen in constructive terms as 'positive charges' who enable us to do what we wish just as we enable them to do what they wish.
The proposed system will eliminate the need for central banks and all other financial institutions and businesses, together with the political institutions which regulate and support them. It will be a truly global and decentralised currency available to anyone with a mobile phone or internet access. No one will be forced to exchange their labour power in return for valueless paper or digital abstractions, and everyone will be able to create and access the digital abstractions required in order to live their own version of the 'good life'.
With unlimited financial resources, real-world problems (hunger, malnutrition, disease, poor sanitation, clean water, etc.) can and will be solved. Labour saving technologies that are not being implemented today due to cost factors will be introduced, freeing more people to do what they wish. New technologies will be researched and developed in time-scales impossible to conceive under a system based on 'cost' and the perception of scarcity. Technologies that may seem to border on the verge of science-fiction today will become tomorrow's reality. We will be limited only by our imagination.
“For my yoke is easy and my burden is light." – Matthew 11:30
The author is not at all religious, but the above quotation sums up our 'current' dilemma. Information is currency and currency is information. Information itself is just light in the form of an electromagnetic charge. Light is not scarce and it refuses to be formed into an ingot and weighed as if it were a physical substance like gold. There is no 'burden' or 'debt' associated with light, and yet existing monetary systems would have us believe that there is. I submit that this burden is entirely illusory and it is time to recognise the illusion for what it is and act accordingly.
This new monetary system will be called Freo (Old English for 'free') and its unit of currency will be called a 'proton' – a positive charge. It will liberate the digital atmosphere and allow us to breathe freely. It will amount to a total revolution in world affairs.
GlossaryAspire: "strive for," c. 1400, from Old French aspirer "aspire to; inspire; breathe, breathe on" (12c.), from Latin aspirare "to breathe upon, blow upon, to breathe," also, in transferred senses, "to be favorable to, assist; to climb up to, to endeavor to obtain, to reach to, to seek to reach; infuse," from ad- "to" (see ad-) + spirare "to breathe" (see spirit (n.)). The notion is of "panting with desire," or perhaps of rising smoke.
Source:
http://www.etymonline.com/index.php?term=aspire&allowed_in_frame=0Bitcoin: a digital 'cryptocurrency' first introduced in 2009. It is an open source and decentralised system that operates across a peer-to-peer network rather than a central server. This means that no individual or organisation controls Bitcoin and there is no equivalent of a central bank that creates bitcoin. The process of conducting a bitcoin transaction is not unlike other electronic payment systems such as ApplePay. However, no third parties (banks or card issuers) are involved and transactions are broadcast across the entire bitcoin network, picked up by bitcoin miners, and processed – typically within ten minutes to an hour. The entire system is secured by requiring users to authorise transactions using public key cryptography, which ensures that transactions are anonymous and cannot be associated with a name.
New bitcoin are created by a form of virtual mining that models the process of gold mining. Miners face a law of diminishing returns due to the way Bitcoin operates. When Bitcoin was introduced in 2009, miners earned 50 bitcoin per block of transactions processed. That dropped to 25 bitcoin in 2012 and 12.5 in mid-2016 because the system is programmed to halve the reward every 210,000 blocks. This means there's a fixed limit to the number of bitcoin that can be mined: no more than 21 million will ever be created.
See
https://en.wikipedia.org/wiki/BitcoinFiat money: a currency established as money by decree, as opposed to commodity money which is a symbolic representation of a precious metal and can be converted back to it. Fiat money is declared as legal tender by a State, and although it can exchanged for goods and services it cannot (unlike commodity money) be converted into any other thing.
See
https://en.wikipedia.org/wiki/Fiat_moneyInspire: mid-14c., enspiren, "to fill (the mind, heart, etc., with grace, etc.);" also "to prompt or induce (someone to do something)," from Old French enspirer (13c.), from Latin inspirare "blow into, breathe upon," figuratively "inspire, excite, inflame," from in- "in" (see in- (2)) + spirare "to breathe" (see spirit (n.)).
Source:
http://www.etymonline.com/index.php?term=inspire&allowed_in_frame=0McLuhan, Marshall: a communication theorist who predicted the emergence of the internet thirty years before its development and revolutionised the way we think about technology. McLuhan conceptualised all technologies as mediums, and things we wouldn't ordinarily 11think of as technologies (such as the alphabet) as technologies and mediums. He argued that all mediums can be thought of as extensions of the human senses: sight, sound, touch, taste, smell. He also argued that the real effects of a medium are brought about by the medium itself rather than the content a medium transmits. However, because we are so focused on the content transmitted by mediums we lose sight of their effects as mediums.
Consequently, when a new technology revolutionises the way we interact with the world, people often fail to see the new environment created by this medium. Instead, they become fixated with the content it transmits and think about the medium itself in terms that relate to the technology it replaced. A very basic form of this would be the mobile phone and the way we still talk and think in terms of 'ringing' people as if these devices were still connected by wire and still use the old analogue rotary dial rings. The real effect of the mobile phone has nothing to do with conversation as such, but the fact that it has shrunk time and space (we can communicate with people across the globe instantaneously) and allowed us to communicate from anywhere (rather than a fixed point in time and space).
See
https://en.wikipedia.org/wiki/Marshall_McLuhanNonce: difficult to explain without tech-speak, it is easiest to think of a nonce or 'golden ticket' as a puzzle that is computationally very difficult to solve. The process of generating new bitcoins requires bitcoin miners to select a block of transactions to be processed, solve a nonce and broadcast the successful answer to the rest of the network, and then add the processed block of transactions to the blockchain. In return, they are awarded a set number of bitcoin (currently 12.5 bitcoins per block solved). In effect, bitcoin miners 'earn' bitcoin in return for a heavy investment in the hardware and electricity required to solve nonces.
Rear-view mirror: the concept of 'rear-view mirrorism' was developed by Marshall McLuhan (see above) to explain what happens when we fail to see the impact of new technologies or mediums and the new environments they create for us. In other words, we become so fixated on the content transmitted by these mediums that we fail to see how the mediums themselves have fundamentally transformed society. As a result, we think of these mediums in terms that still relate to the technology/medium which preceded it.
In relation to banks and bankers, we have failed to realise that the virtualisation of money makes it clear that what we think of as 'money' is just an abstraction with no actual value. Bankers still operate as if they were dealing with a real, physical substance and assume that their creation has real value, even though it does not. Modern money is an electric charge transmitted, stored, processed and displayed by computers. It has no real value. The next revolution will involve recognising money for what is is and ending the pretence that it is a real-world object that must be 'earned' or 'paid back' as debt.
