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I find the example given by the author about financial inconsistency to be alarming. When you consider the fact that the monetary system is made up of large num

I find the example given by the author about financial inconsistency to be alarming. When you consider the fact that the monetary system is made up of large numbers of participants and all of them are constantly making small mistakes... Surely it can accumulate into significant discrepancies over time. Imagine that you create a multiplayer MMORPG video game with a 'limited' number of virtual gold coins and you set the supply at 1 billion gold coins and you decide to track account balances using 1000 different systems managed by different companies (which constantly credit and debit each other using different mechanisms) instead of just 1 system managed by 1 company... What are the odds that you will still have only 1 billion gold coins in circulation in one year's time? Surely at least 1 of the 1000 systems will go rogue and start inflating the currency supply; it may start sending fake coins to other systems and the other systems won't be able to know that they are fake since they all operate on mutual trust instead of cryptographic proofs, they will unwittingly propagate records of those fake coins to other systems as if they were real. This is essentially how the fiat monetary system works. The power of money creation is not supposed to be in the hands of private institutions, yet because currency is tracked across so many different systems and there is no universal consistency between them, money creation seems to be essentially guaranteed to occur; especially when you consider that the incentive is to turn a blind eye to errors which benefit large institutions.

kqr 4y ago
The power of money creation is in the hands of private institutions more explicitly than that. When a bank lends you money, they are just incrementing the money counter in your bank account. They cannot print bills, but they do for all practical intents create money. https://www.bankofengland.co.uk/explainers/how-is-money-created https://www.bankofengland.co.uk/explainers/how-is-money-crea...
yxhuvud 4y ago
A mmorpg would have user churn though, so even if it aquired more users to offset that the end result would be less coins in circulation. In other words: The system is already broken by design. Using a single consistent server would not change that. I also wonder why you think money creation isn't supposed to be in private hands. It needs to be regulated with enforcement, but at the end of the day it is the only reasonably efficient way to couple the productive ability of society with its consumption. The world revolves around promises. Not all will be kept, but the system as a whole is built to handle that and eventually resolve inconsistencies. That is also why autocratic and corrupt systems are so bad, they put the self correcting parts out of order.
- jongjong 4y ago
  I think it would make an even bigger difference with churn. The currency which is managed by a single system has a much higher chance of being deflationary in practice (due to churn taking coins out of circulation). The currency managed by 1000 different systems is very unlikely to be deflationary; chances are, at least one of those 1000 systems is going to go rogue (e.g because of a bug or hack) and start issuing coins which will propagate to all other systems which trust it. It may be difficult to figure out which one started breaking the rules and once they found out, there would be no incentive to report it or fix the problem.

kqr 4y ago

The power of money creation is in the hands of private institutions more explicitly than that. When a bank lends you money, they are just incrementing the money counter in your bank account. They cannot print bills, but they do for all practical intents create money. https://www.bankofengland.co.uk/explainers/how-is-money-created https://www.bankofengland.co.uk/explainers/how-is-money-crea...

yxhuvud 4y ago

A mmorpg would have user churn though, so even if it aquired more users to offset that the end result would be less coins in circulation. In other words: The system is already broken by design. Using a single consistent server would not change that. I also wonder why you think money creation isn't supposed to be in private hands. It needs to be regulated with enforcement, but at the end of the day it is the only reasonably efficient way to couple the productive ability of society with its consumption. The world revolves around promises. Not all will be kept, but the system as a whole is built to handle that and eventually resolve inconsistencies. That is also why autocratic and corrupt systems are so bad, they put the self correcting parts out of order.

jongjong 4y ago
I think it would make an even bigger difference with churn. The currency which is managed by a single system has a much higher chance of being deflationary in practice (due to churn taking coins out of circulation). The currency managed by 1000 different systems is very unlikely to be deflationary; chances are, at least one of those 1000 systems is going to go rogue (e.g because of a bug or hack) and start issuing coins which will propagate to all other systems which trust it. It may be difficult to figure out which one started breaking the rules and once they found out, there would be no incentive to report it or fix the problem.