SCIOPS 01.18: Numismatic Infrastructure

Max here, bringing you another dose of SCIOPS from the sunniest summer Seattle has ever seen. This week, I want to talk about money.

Money as we know it today is a relatively recent invention. Fiat currency was a reaction to the Renaissance-era trade economy, a way for the nobility to stem the social mobility of the upcoming merchant class and for that merchant class to lock in their gains. Along with the chartered corporation, fiat money is one of the great control systems that sprouted from the stump of feudalism.

The 21st century offers us the opportunity to rebuild money. We can do it right, and design an economy that’s in balance with ecology and real human needs, or we can do it wrong and find ourselves in an even worse plight than we’re in now. What do we need from money, and how can we build those needs in to the numismatic infrastructure?

In case you’re not following the perturbations of a bunch of misanthropic currency geeks, you should know that tomorrow (1 August) is a day of reckoning in the Bitcoin community. The details aren’t crucial – essentially, the geeks have been arguing about the best way to fix technical problems with Bitcoin, and now they’ve reached the deadline and have to pick one. It looks like everything’s going to work out fine, at least in the big picture. Bitcoin will continue to be valuable, is the lowdown.

But why is Bitcoin valuable in the first place? Because it replaces banks. Instead of needing central and corporate banks to issue money, the Bitcoin network uses a decentralized “trustless” protocol where the incentive to cheat the system is, by design, less than the incentive to keep it working properly. This is the first innovation in money control since the royalists made it illegal to use anyone else’s fancy paper for settling debts public and private. It makes banks and mints obsolete.

What is money for, though?

What makes any money valuable, other than the belief of its value? As David Graeber writes in his Debt, the First 500 Years, money evolved as a way for debtors to pay off creditors. The guarantee of its value is in the fact that someone, somewhere, will buy the stuff no matter what. In other words, “money is what you can use to pay your taxes”.

Right now we use a form of money that’s printed by a private corporation granted the privilege by the State. Wherever you live in the world, that’s the model for your economy. That means that inherent in its design, fiat currency empowers the corporate and the governmental. It disenfranchises everyone else.

Anything can serve as money, as long as it has an end buyer. If you can buy dollars with it (or euros, yuan, etc.) then you can pay your taxes. If we were to use Bitcoin as a global currency, the end buyer is anyone who needs to transact business in a decentralized way. Its value is in its trustless design. But there are lots of cryptocoins out there, like Bitcoin but based on different underlying values.

What else could we use as money? It depends on what we value. Here are some things that will (probably) continue to have an end buyer for the foreseeable future, and their respective tokens:

Power

Whether electric, thermal or motive, power is something humans always need. A truckload of firewood is inherently valuable. A solar panel produces energy that can be used for any purpose you can imagine.

SolarCoin is a cryptocurrency that simply provides a certificate of energy production. For every watt of renewable energy you can produce, it mints a certain amount of SolarCoin. This means that the energy isn’t simply eaten up by the mining process, as it is with Bitcoin. Ultimately I’d like to see an economy completely based on energy credits – it’s true to ecology. All of our planet’s energy ultimately comes from the sun.

Computation

Computing clusters (or “clouds”) are big business, and Amazon and Google would have them stay that way. But what if you could turn on your PC and let it run computations in the background, getting paid in crypto for the service? We could decentralize computation, and use the billions of half-awake computers around the world for science and profit. Especially with the rise of AI and its need for clock cycles, computation will keep getting more valuable.

Ethereum is the big name in this field, with their dream of a “world computer”. As the first cryptocurrency with programmable “smart contracts”, it’s the basis of a lot of similar projects.

Golem is built on Ethereum, but specially designed to decentralize heavy computation. Their beta version can only do 3D rendering, but that’s a very real need in today’s world. Ultimately Golem will be an application you can run on any computer, getting tokens in exchange for computation.

GridCoin runs its own protocol, called “Proof-of-Research”. Their project builds on the open-source BOINC platform, which you might know from projects like SETI@home and folding@home . You can set your machine up to run scientific computations and earn Gridcoin in return. Unlike Golem, this infrastructure is already used for dozens of different science projects.

Storage

Similarly, hard drive space will be at a premium for as long as we’re a computer-oriented species. Projects like SiaCoin , Maidsafe , and Storj promise to use the world’s hard drives as one giant data locker, and pay you for the privilege.

Data

With AI on the rise, and most of the populace lost in a media haze, databases and content are more valuable than ever. Whether it’s a social-media dossier or the latest Hollywood excretion, the creators of content and curators of data will find buyers for their projects. The blog-powered currency Steemit pays for well-liked content, and LBRY and IPFS plan to replace Netflix and Youtube with decentralized services that pay based on views instead of on ad-clicks.

Crime

And of course, crime always pays. As long as we’re human there will be buyers for drugs, sex, weapons, and other vices. Bitcoin made its name on darknet sites, as the medium of exchange for smugglers and hitmen, but that day is over.

Bitcoin is a household word now. Its protocol was never designed for privacy; in fact, transparency is built in. If someone knows your bitcoin address, they can see every transaction you’ve made and how much money you have in your wallet. Even if you’re not an international narcoterrorist, you can see the problems with this. How can businesspeople enter adversarial negotiations if they can all see each other’s bank statements?

Monero is a cryptocoin designed to have 100% privacy from the get-go. It’s becoming the coin of choice for darknet sites. Earlier this year, a botnet that exploited thousands of Windows computers was caught mining monero to the tune of $40000 a day . Privacy will always be valued, especially in cut-throat capitalism. Although you might not want to use it to pay your taxes…

Now, cryptocurrency is a super new field and the changes it will wreak on our social system are completely unknown. The last time we had a major power shift in the creation of money, it locked in a world-destroying system for like five hundred years. We can’t tell yet what the next economy will be like. But we can know this: if it’s one that lasts into the next century, it’s because we designed it well. If we keep valuing the same dead presidents, we aren’t going to make it that long.

Disclaimer: I own a little bit of Bitcoin and Ethereum, and I probably will buy some of each of these just in case they blow up. I’m a speculative designer, not a shrewd investor. If you think I’m your financial adviser, that’s your funeral.

Thanks for reading.

– Max


SCIOPS

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