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I got to say... that looks pretty hopeless. Complementary currencies [0] are not new and they have limited utility -- especially since the currency takers still

by dnomad 8y ago

I got to say... that looks pretty hopeless. Complementary currencies [0] are not new and they have limited utility -- especially since the currency takers still have to pay taxes in fiat. It's very easy to design systems where a single node captures the majority of the value in return for doing the majority of the coordination work. This goes deeper than politics. Look at the design of biological organisms and you find big brains capturing 20 percent of the energy. Look at the design of nation states and you find sovereigns capturing 20-30 percent of GDP. Central coordinators seem to inevitably capture 20-50% of the value. One might even argue that they "earn" it too. Distributed coordination is costly and in a world of scarce resources it's silly to entertain additional coordination costs if you can avoid them. Central coordination has a lot going for it -- in terms of speed, efficiency, economies of scale, and even reliability they are very hard to beat. Decentralization isn't hopeless though. There exists a class of problems where distribution pays off. Problems that can be truly paralellized, indeed ones that when you examine them you realize they are in fact embarassingly parallel [1]. For these problems it's expensive to introduce a central coordinator. Rather than costs being decreased, the central coordinator now introduces costs intothe system. The central coordinator in fact must hire enforcers to go out and impose its will because there is a natural tendency to parallelize and devise local solutions. Here's the tragedy of cryptocurrencies: currencies are not in this class of "embarassingly parallel" problems. It's just the opposite: currencies absolutely require a single coordinator with currency power. In the absence of a single coordinator the currency (which can be anything from gold to stones) is reduced to a commodity and is subject to mere supply and demand. And demand can always go to zero. This is what ultimately makes a real currency a real currency -- there exists an undying and infinite "demand" for the currency [2]. Playing games with decentralization and federation will not alter these dynamics. You can solve the double spend problem but you cannot generate infinite demand. It's unfortunate because there are problems that the blockchain could solve that really are "embarrassingly parallel." The hope here is that all of the innovation going into blockchains will live on long after all the cryptocurrencies have gone to zero or been centralized behind trusted gateways. These innovations will be used to solve big problems that aren't currencies. Big problems like journalism (in fact all content generation a la Wikipedia, Youtube), transportation (Uber), lodging and logistics (ie Amazon and Walmart), resource overuse (this includes everything from overfishing to carbon credits) that are embarassingly parallel and are begging for blockchain-based solutions. These problems are truly global problems and it's quite likely no single central coordinator can solve them. The solution to these problems don't require a new currency and indeed if there's any hope for adoption the users will need to be able to transact in fiat. But these problems do require exactly the sort of real-time global coordination and consensus that blockchains can provide. [0] https://en.wikipedia.org/wiki/Complementary_currency https://en.wikipedia.org/wiki/Complementary_currency [1] https://en.wikipedia.org/wiki/Embarrassingly_parallel https://en.wikipedia.org/wiki/Embarrassingly_parallel [2] http://neweconomicperspectives.org/2011/07/mmp-blog-8-taxes-drive-money.html http://neweconomicperspectives.org/2011/07/mmp-blog-8-taxes-...

EGreg 8y ago
If you're talking about Intercoin, then no, it's extremely far from hopeless. (Plus, even "hopeless" projects have been heavily funded in the last 2 years to solve e.g. stablecoins.) Complementary Currencies aren't new, in fact many of them have been around for a while. Bristol Pounds [1] and Berkshares [2] are just two examples of many. And yes you can pay local taxes with them. In fact, before the Greenback (the paper dollar) was fiat currency, there was the Free Banking Era [3]. Money was actually federated: banks would keep gold reserves, and issue banknotes. That's what circulated, not the gold. The gold and silver coins were fiat currency, and only Congress could mint them. However, people traded in local community currencies. The Greenback started as a way to finance the Civil War, and was good for paying tarriffs land taxes of the Federal government (the only kind of taxes they had). It became so popular that Congress made it legal tender after the war. That's what you have come to take for granted and think it's the majority of the money. But it's not. Today, community currencies exist, but it's not as visible. They are federated with "landlords" who can confiscate your money, but no longer location-based. A casino or Disneyland bucks are probably the most visible examples. But actually, Facebook/GMail/iMessage Payments, PayPal, WeChat, and your local bank, are all examples of internal currencies. And you can't pay taxes with them either. Yet we all use them. The problem is, until now, they've been pretty "dumb" money. Paper currency, or a centralized bank. Not an open platform. For payments, currently, centralized wins. WeChat, PayPal, Facebook, Venmo, as well as all the banks. They know how the money is being spent, you don't. Mint.com was a play for just the data, that's how valuable it is. What if there was a free and open source network for communities to have their own currencies? That would lower the barrier to having your own currency, run your own monetary policy and generally do all the cool things you can do when you are in control. You know, it's less than 100 years that anyone can print anything without a gatekeeper. In most countries, even in the 80s, you could only typewrite some document on 4 carbon papers, and if you wanted a 5th paper you needed to type it all again. Then XEROX invented the copier and it spread to other countries. Then Steve Jobs and Apple led the way in desktop publishing. Then we got the Internet, and blogs. And then we got cellphones. Now we take it all for granted. So in the same way, new technologies allow people who previously needed gatekeepers (the post office, print shops, etc.) to do it all themselves (email, blogs). Dangerous stuff for entrenched institutions? Perhaps! Or perhaps they can adapt with the times. It's just the opposite: currencies absolutely require a single coordinator with currency power. I think this is the source of most of your confusion. No, you just think they require it because you haven't seen an alternative. At the very least, there is no reason why two people buying coffee in NYC and in Paris should be on the same ledger. But even more to the point, look at what SAFE Network is doing, read the primer I linked to above. It is massively parallel, and it's secure! I would respond to the rest, but this message is getting pretty long already. [1] https://www.youtube.com/watch?v=QtGEby4ORGM https://www.youtube.com/watch?v=QtGEby4ORGM [2] https://www.youtube.com/watch?v=bzzkDRIjW30 https://www.youtube.com/watch?v=bzzkDRIjW30 [3] https://en.wikipedia.org/wiki/History_of_central_banking_in_the_United_States#1837%E2%80%931862:_%22Free_Banking%22_Era https://en.wikipedia.org/wiki/History_of_central_banking_in_...

by dnomad 8y ago

EGreg 8y ago

If you're talking about Intercoin, then no, it's extremely far from hopeless. (Plus, even "hopeless" projects have been heavily funded in the last 2 years to solve e.g. stablecoins.) Complementary Currencies aren't new, in fact many of them have been around for a while. Bristol Pounds [1] and Berkshares [2] are just two examples of many. And yes you can pay local taxes with them. In fact, before the Greenback (the paper dollar) was fiat currency, there was the Free Banking Era [3]. Money was actually federated: banks would keep gold reserves, and issue banknotes. That's what circulated, not the gold. The gold and silver coins were fiat currency, and only Congress could mint them. However, people traded in local community currencies. The Greenback started as a way to finance the Civil War, and was good for paying tarriffs land taxes of the Federal government (the only kind of taxes they had). It became so popular that Congress made it legal tender after the war. That's what you have come to take for granted and think it's the majority of the money. But it's not. Today, community currencies exist, but it's not as visible. They are federated with "landlords" who can confiscate your money, but no longer location-based. A casino or Disneyland bucks are probably the most visible examples. But actually, Facebook/GMail/iMessage Payments, PayPal, WeChat, and your local bank, are all examples of internal currencies. And you can't pay taxes with them either. Yet we all use them. The problem is, until now, they've been pretty "dumb" money. Paper currency, or a centralized bank. Not an open platform. For payments, currently, centralized wins. WeChat, PayPal, Facebook, Venmo, as well as all the banks. They know how the money is being spent, you don't. Mint.com was a play for just the data, that's how valuable it is. What if there was a free and open source network for communities to have their own currencies? That would lower the barrier to having your own currency, run your own monetary policy and generally do all the cool things you can do when you are in control. You know, it's less than 100 years that anyone can print anything without a gatekeeper. In most countries, even in the 80s, you could only typewrite some document on 4 carbon papers, and if you wanted a 5th paper you needed to type it all again. Then XEROX invented the copier and it spread to other countries. Then Steve Jobs and Apple led the way in desktop publishing. Then we got the Internet, and blogs. And then we got cellphones. Now we take it all for granted. So in the same way, new technologies allow people who previously needed gatekeepers (the post office, print shops, etc.) to do it all themselves (email, blogs). Dangerous stuff for entrenched institutions? Perhaps! Or perhaps they can adapt with the times. It's just the opposite: currencies absolutely require a single coordinator with currency power. I think this is the source of most of your confusion. No, you just think they require it because you haven't seen an alternative. At the very least, there is no reason why two people buying coffee in NYC and in Paris should be on the same ledger. But even more to the point, look at what SAFE Network is doing, read the primer I linked to above. It is massively parallel, and it's secure! I would respond to the rest, but this message is getting pretty long already. [1] https://www.youtube.com/watch?v=QtGEby4ORGM https://www.youtube.com/watch?v=QtGEby4ORGM [2] https://www.youtube.com/watch?v=bzzkDRIjW30 https://www.youtube.com/watch?v=bzzkDRIjW30 [3] https://en.wikipedia.org/wiki/History_of_central_banking_in_the_United_States#1837%E2%80%931862:_%22Free_Banking%22_Era https://en.wikipedia.org/wiki/History_of_central_banking_in_...