[sudo-discuss] Virtual currency question? In detail...
GtwoG PublicOhOne
g2g-public01 at att.net
Sun May 5 21:38:54 PDT 2013
Sonja, Rabbit, Ryan, and Yo's-
Re. alternative currencies: I've given a lot of thought to this subject
over the years.
A currency is not only a transaction medium but a measure of wealth in
an economy: real resources that have economic value. There are
basically three types of resources: natural resources, labor, and
capital.
Natural resources include: Renewable energy sources (solar, wind,
geothermal, tidal, biomass), non-renewable energy sources (fossil fuels,
uranium, thorium), minerals (nonliving matter that's taken from the
ground), and agricultural products such as food.
Labor includes: casual labor, unskilled and skilled occupations, and
licensed occupations.
Capital includes: natural capital (land, monetized resources),
industrial capital (e.g. tools, plant & equipment), inventoried goods,
and financial capital (equity and debt instruments).
I'm inclined to treat real estate as a limited natural resource (land)
or as natural capital generally. Today it is often treated primarily as
a concretized form of financial capital, which leads to speculative
bubbles such as the one that produced the present depression.
A sustainable economy, in the purely economic sense (ecological
sustainability is a different axis of measurement), is one that is
largely resilient against manipulation and fraud, and boom and bust
cycles. Boom & bust economies are like bulimia: binge & barf,
inherently unhealthy and harmful.
Ecological sustainability isn't dealt with by conventional economics,
which works on a "flat Earth" model: as if the Earth is an infinite flat
plane. This is the most important fatal flaw of conventional economics,
and it leads to the myth of infinite growth. The most important
foundation for a new economic paradigm is the recognition that the Earth
is not flat, not an infinite plane, but is a Euclidean solid with a
finite surface and therefore with finite resources. From this, the rest
follows.
>From this, two other things follow that are "taboo" in conventional
economics: the ultimate outcome of an economy is necessarily a steady
state, that can be anywhere on a spectrum from the most egregiously
exploitative (e.g. a slave economy with a hereditary aristocracy) to the
most equalitarian ("from each according to ability, to each according to
need"). The most likely outcome of a steady-state economy is the
inexorable demand for economic justice or "distributional equity," with
its center of gravity in a sustainable middle class, and viable paths to
economic sustenance for all.
The role of currencies in building economic resilience is: a) to provide
negative feedback loops in the economy, that prevent the positive
feedbacks that cause booms and busts, b) to minimize the occurrence of
fraud and manipulation, and c) to provide isolation or
compartmentalization that enables "quarantine" of economic damage: such
as preventing a local economic crisis from going global, and preventing
a global economic crisis from affecting every locality.
Currencies, with those points in mind:
A viable economy would include three levels of currency: global,
national, and local/regional. The global currency handles transactions
between nations. The national currency handles transactions between
localities within each nation-state. And the local/regional currency
handles transactions that occur wholly within the scope of
local/regional economies.
The ideal global currency would be denominated in energy, for example in
joules as Rabbit pointed out. Ultimately, energy is the foundation of
all economic transactions: the global common denominator.
National currencies tend to be based on arbitrary measures of value,
whether gold or the credit of national governments. But in general they
tend to represent the wealth of nations, plus or minus the effects of
speculation. If I was setting up a national currency from scratch, I
would value it in terms of natural and industrial capital: real capital
wealth.
There's been much discussion of the proper foundations for local
currencies. In the Bay Area there is a group that is working on the
premise of a local currency denominated in the food production of local
agriculture. But one of the most successful local currencies, "Ithaca
Hours," is based on the value of local labor. To my mind this is
correct: because labor is the one resource that is reliably available in
every local economy.
I've studied the Ithaca Hours system in some depth, and I'd suggest
anyone who's interested in local currencies do likewise, starting with a
keyword search.
The major value of a local currency to any local peoples (such as
ourselves) is that it enables us to maintain functioning economies when
the global or national economies are in crisis. By analogy it's like
having rubber tires and shock absorbers on a bus, to insulate the riders
from bumps and potholes along the road. All other factors equal, you
don't want to ride on a bus where a bad road translates to a
bone-crunching ride.
Even where many or most of our transactions are not local, the ability
of a local currency to insulate certain parts of a local economy from
national and global economic crises, translates to the difference
between having to tighten your belt vs. not being able to eat, or having
less work vs. having no work.
Re. the IRS:
The question always comes up: what does the IRS have to say about this?
As it turns out, the IRS takes a practical attitude toward local
currencies. They have two requirements, that are entirely reasonable:
One, that the exchange rate between a local currency and the US Dollar
must be public, must be arguably reasonable, and must not subject to
insider manipulation.
Two, that income earned in local currency must be declared for purposes
of income tax, translated to US Dollars at the current exchange rate,
and the taxes paid in US Dollars.
If we do those things, we're good to go.
Re. Bitcoin:
I'm highly skeptical of Bitcoin, precisely because it has demonstrated a
tendency toward bubbles and busts, speculation, and manipulation by
questionable actors. These characteristics do not make for a stable
holder of wealth or a stable medium of transactions.
The primary usefulness of Bitcoins is that they facilitate anonymity of
online transactions. This is all well and good, but can also be
accomplished by creating online financial institutions that anonymize
transactions made in US Dollars or other currencies. By analogy think
of Gift Cards, that are issued by Visa and Mastercard, but that aren't
tied down to your legal name.
Anonymization without speculation & manipulation:
In the type of institution I have in mind, account holders would have
accounts in their legal names as they do at any bank or credit union.
Transactions would occur in two steps: one occurring in your personal or
business account, and one occurring in the institution's account.
For example you buy something online. A payment goes from your account
to the institution's common account, and another payment goes from the
institution's common account to the person or company you're paying.
The latter payment is anonymized: it is made between the institution and
the person being paid, and assigned a transaction number that you and
they can use to track it.
For example you sell something online. The buyer makes a payment to the
institution's common account and obtains a transaction number and gives
you that number. You use that transaction number to move the payment
from the institution's common account to your personal account.
The question has been raised as to whether this could be used for, or
seen as, a form of money laundering. I believe the answer is No,
because the institution itself would maintain records of every
transaction, and these records would (only) be accessible for lawful
uses such as investigating crimes or as evidence in civil lawsuits. The
important difference is that the transaction records would be private
aside from those two exceptions (criminal and civil cases), and not be
accessible to Big Data, so your purchases of (for example) consenting
adult porn, or your reading habits in general, wouldn't become part of
your dossier.
As far as Porn-O-Mat or Amazon, Ebay or iTunes, or any of those, are
concerned, they are doing business with another business entity (the
Cyberia Credit Union or whatever we call it). They have no need or
desire for a "person name" for every transaction, any more than
Staples.com does when they sell office supplies to a company that's an
incorporated entity. They are not going to turn down transactions just
because they don't have the legal person-name of the soft squishy human
body that sits in the hypothetical office cubicle for which the office
supplies (or porn, best-sellers, flea-market goods, songs, etc.) have
been bought.
In other words, we can get the most important benefit of Bitcoin,
without sticking our hands in the shark- and piranha-infested waters of
speculation and sabotage that have become Bitcoin's habitat.
So: is anyone here interested in creating a labor-based currency, and/or
an online credit union for anonymous transactions?
-G.
=====
On 13-05-05-Sun 12:09 PM, Sonja Trauss wrote:
> +1
>
>
> On Sun, May 5, 2013 at 11:53 AM, Rabbit <rabbitface at gmail.com
> <mailto:rabbitface at gmail.com>> wrote:
>
> Someone was proposing a currency denominated in joules which would
> represent the ability to generate that much energy in the future.
>
> https://medium.com/armchair-economics/183c2ad47b50
>
> The exchange rate between Bitcoiny CPU cycles and joules would be
> pretty straightforward to figure out.
>
> But: would this be more prone to speculation and bubbles since
> it's based on our estimation of what will happen in the future?
> And what happens when everyone tries to cash in their joules at
> the same time?
>
>
>
>
> On Sun, May 5, 2013 at 10:44 AM, Ryan Bethencourt
> <ryan.bethencourt at gmail.com <mailto:ryan.bethencourt at gmail.com>>
> wrote:
>
> Hi All,
>
> I've been reading/following the whole evolution of bitcoins as
> currency and I'm still a bitcoin skeptic (I prefer potential
> rather than spent processing power :) ).
>
> So I was curious, has anyone in the past tried to create a
> virtual currency based on a resource value, like future usage
> of CPU time (i.e. $1 would equal an equivalent amount of
> electricity and hardware wear and tear for x number of CPU
> cycles, which could be exchanged either for the cycles, at a
> super computer bank or for other currencies)?
>
> To me it seems that bit coin is like a spent CPU resource
> rather than a future resource and by flipping the equation to
> future rather than past value a currency based on this type of
> commodity would be useful... any thoughts?
>
> R
>
>
> --
> Ryan Bethencourt
>
> Tel: (415) 794 6463 <tel:%28415%29%20794%206463>
> ryan.bethencourt at gmail.com <mailto:ryan.bethencourt at gmail.com>
>
> www.bamh1.com <http://www.bamh1.com>
> www.linkedin.com/in/bethencourt
> <http://www.linkedin.com/in/bethencourt>
> www.logos-press.com/books/biotechnology_business_development.php
> <http://www.logos-press.com/books/biotechnology_business_development.php>
>
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