3 ms·

Interesting ideas. I think in any practical system, you'd still need some central authority that determines: a basket of basic, thickly traded commodities

Interesting ideas. I think in any practical system, you'd still need some central authority that determines: a basket of basic, thickly traded commodities should be chosen; perhaps a basket of specific amounts of basic elements, thermal and electrical energy, and basic food commodities, priced as delivered to several large markets. and A control algorithm such as the PID loop used in process control or robotics is employed to adjust K over time. At a minimum, those aspects of this currency would need to be flexible such that they can be adjusted over time, as needed, to maintain the currency's stability. An inflexible scheme seems like it would be doomed to failure. And yet, any tinkering could also be its demise and undermine its stability and faith in the system. It's a delicate balance. Ultimately money is a social construct based merely on shared belief. Algorithms can used to enhance and support this social construct, but I do not see how it could wholly replace human/social interventions.

pjkundert 2y ago
The "central authority" that determines the composition of the basket -- is the users of the money. The thing about non-fraudulent, wealth-backed money is that there is no barrier to entry, nor is there a barrier to exit. Unlike usury-based money, a wealth-backed currency can cleanly decrease in usage, down to zero. People withdraw wealth pledged to created the money, by returning the amount of money created, and then take their wealth elsewhere. Thus, if people don't like the valuations arrived at by the "basket" underlying the value of each unit of money (ie. something becomes undesirably in/deflationary), they can move to another form of money -- ideally, one that constitutes its "basket" based on a more representative set of the society's basic commodities. In the ideal embodiment, this basket would evolve over time (eg. as energy production moves from coal to oil to natural gas to nuclear to renewables over the years, for example, the energy commodity component of the basket would be revised automatically). As for the PID loop, there are much more advanced controls methodologies that improve error rejection (eg. Kalman filtering), stability (Model Predictive or State Space control), etc. Furthermore, limits on the introduction (or withdrawal) of wealth (and hence newly created units of money) should reflect the current size of the ecosystem to limit shocks that would adversely interfere with the control stability. (ie. you can't create 10x the current size of the economy in newly issued money all at once.)
- JohnFen 2y ago
  This is exactly the sort of thing that will make people seek out a replacement central authority. Most people don't want to, and won't, micromanage their "currency" like that. They just want a medium of exchange that changes value slowly enough that they can be reasonably sure they know what the currency is worth. If cryptocurrency somehow replaces fiat money, people will turn to financial companies and pay an extra fee so that they bring back the advantages of the fiat money.
  - pjkundert 2y ago
    Agreed. 99.9% of users will just appreciate the fact that their money retains its purchasing power (as measured in civilization supporting commodities), across multiple generations. Not just for a few years; their grandkids will be able to purchase the same amount of "stuff" with it). Those that want to create wealth and then monetize that wealth to (for example) purchase property or businesses will appreciate the non-corruptible value management features.
    - JohnFen 2y ago
      > will just appreciate the fact that their money retains its purchasing power I don't see how cryptocurrency enables this, because I don't think this is the result of currency being fiat. I think it's a result of currency being a token of wealth rather than wealth itself. > will appreciate the non-corruptible value management features. I can't comment on this because I'm not really sure what you mean by it

pjkundert 2y ago

The "central authority" that determines the composition of the basket -- is the users of the money. The thing about non-fraudulent, wealth-backed money is that there is no barrier to entry, nor is there a barrier to exit. Unlike usury-based money, a wealth-backed currency can cleanly decrease in usage, down to zero. People withdraw wealth pledged to created the money, by returning the amount of money created, and then take their wealth elsewhere. Thus, if people don't like the valuations arrived at by the "basket" underlying the value of each unit of money (ie. something becomes undesirably in/deflationary), they can move to another form of money -- ideally, one that constitutes its "basket" based on a more representative set of the society's basic commodities. In the ideal embodiment, this basket would evolve over time (eg. as energy production moves from coal to oil to natural gas to nuclear to renewables over the years, for example, the energy commodity component of the basket would be revised automatically). As for the PID loop, there are much more advanced controls methodologies that improve error rejection (eg. Kalman filtering), stability (Model Predictive or State Space control), etc. Furthermore, limits on the introduction (or withdrawal) of wealth (and hence newly created units of money) should reflect the current size of the ecosystem to limit shocks that would adversely interfere with the control stability. (ie. you can't create 10x the current size of the economy in newly issued money all at once.)

JohnFen 2y ago
This is exactly the sort of thing that will make people seek out a replacement central authority. Most people don't want to, and won't, micromanage their "currency" like that. They just want a medium of exchange that changes value slowly enough that they can be reasonably sure they know what the currency is worth. If cryptocurrency somehow replaces fiat money, people will turn to financial companies and pay an extra fee so that they bring back the advantages of the fiat money.
- pjkundert 2y ago
  Agreed. 99.9% of users will just appreciate the fact that their money retains its purchasing power (as measured in civilization supporting commodities), across multiple generations. Not just for a few years; their grandkids will be able to purchase the same amount of "stuff" with it). Those that want to create wealth and then monetize that wealth to (for example) purchase property or businesses will appreciate the non-corruptible value management features.
  - JohnFen 2y ago
    > will just appreciate the fact that their money retains its purchasing power I don't see how cryptocurrency enables this, because I don't think this is the result of currency being fiat. I think it's a result of currency being a token of wealth rather than wealth itself. > will appreciate the non-corruptible value management features. I can't comment on this because I'm not really sure what you mean by it