An opportunity for a purpuse driven CRYPTO CURRENCY
I would love to tap into the brain trust of PP on this as I believe my project is well aligned with ‘a future worth inheriting’. I have the opportunity to work with some big guns to develop a new crypto. I want the currency to serve the next human narrative as we grow away from growth!
Please note, I am big boy so don't be shy on the critique side. Cheers:
Social Currency: A Purpose Driven Money-System to Elevate the Human Condition
Creator: David Clark
Co-Creator: Nathan Parkin
Ten years after Satoshi Nakamoto released the BITCOIN white paper[i], we now have a peer-to-peer system for electronic transactions, based on cryptographic proof, that has proved robust. Social Currency would utilize this networked, block-chain innovation to create a purpose-driven currency to Elevate the Human Condition. The new coin would include an option to give to any charity or social cause of choice, exalting the gift economy. Completing the circle of the gift, the giver would be recognized on the network and receive one Social Token. Social Currency would include an inherent deflationary mechanic, to encourage exchange and would be engineered to minimize energy consumption.
Our current money system is debt-based, has no limit of supply, and is a significant contributor to our cultural narrative of endless growth. Every dollar that comes into existence carries an exponential interest component that demands economic growth to repay it. If the economy stopped growing, then there would be no mechanism to pay interest. Our economy must grow and our money system must grow. Nothing grows forever in a finite world. At this juncture of the human story, there is ample evidence that the endless growth narrative is no longer serving us well. A new cultural narrative is required based upon a new money system, void of never-ending exponential growth.
With the decentralized blockchain structure, there is an opportunity to create a new currency that is purpose driven, to better express our humanity, and finite, to better reflect the world round us.
Money is a social contract that should adequately perform the following functions:
- Money should be a medium of exchange,
- A store of value, and
- A unit of account.
The current fiat (faith-based) currency is flawed in that there is an unlimited, increasing supply and hence its purchasing power (store of value) will tend towards zero. This outcome has occurred with every unbacked fiat currency in human history.[ii]
BITCOIN is limited in supply but, as a medium of exchange, its vender adoption has been limited. A significant number of BITCOINs are bought and held as a long-term speculative investment rather than as a medium of exchange. There is not an adequate incentive to spend BITCOIN, especially if its value is going up (denominated in fiat).
Velocity of money
The velocity of money is the frequency at which the average unit of currency is used to purchase goods and services. BITCOIN is being hoarded, in part, because it is perceived to be superior over the current debt-based, unlimited-supply money system. The velocity of Bitcoin has been too low to incentivize vender participation. Ironically, this is a characteristic of any “good money”.
Gresham’s Law[iii], that “bad money drives out good” is a psychological dynamic that encourages the hoarding of a superior money system. Thus, BITCOIN has been a victim of its own success story in that, as a medium of exchange, its adoption has been limited.
However, a cryptocurrency with an inherent deflationary mechanic within each time-stamped unit, would discourage long term hoarding and mitigate the effect of Gresham’s Law.
When each coin comes into being, it will be time stamped. At that point, the value of the coin will be exactly one unit of Social Currency. Thereafter, the value of the coin is a function of a time-dependent coefficient (d), following a straight-line, linear reduction to zero, over a period of lifetime (L). (e.g. one-year).
If t is the amount of time between the coin creation time stamp and its life-time (L), then d would be expressed as follows:
d = 1- (t/L), for all t<L, L 0
With every transaction, the time stamp is renewed and the value of t would be reset to 0. When each coin reached its set life-time, its value is zero and it is extinguished. The life-time could also be a variable, tied to the overall velocity of the currency.
Note that a currency tending toward a zero valuation is not a new concept. Our current fiat money loses purchasing power because of the increase in supply of currency, relative to total goods and services. This dynamic is known as inflation and its symptoms are increases in the price of goods and services. The US Federal Reserve Note has lost 97% of its purchasing power since 1913.[iv] This insidious erosion of purchasing power contributes to the loss of faith in any faith-based (fiat) currency.
However, a currency that is limited in supply and openly transparent about the deflationary mechanic, maintains faith whilst mitigating Gresham’s Law. The total volume of Social Currency in circulation will have an upper Limit, (e.g. seven billion, in line with the world population) as defined by the sum of all currency multiplied by its time-dependent coefficient (d).
Limit = ∑ d *currency
The economy is a function of the total amount of net energy available to society. The amount of net energy available to society will not increase indefinitely. Therefore, the energy footprint of any long-term digital currency must be minimized.
One of the negative characteristics of BITCOIN, at least from a public relations perspective, is the gross amount of energy consumption required by the network.
Social Currency would have energy efficiency as a prime tenet at every stage of its development, adoption and network.
Energy efficiencies would include:
- More efficient mining technology and proof-of-work
- Network supporting wallets on end user nodes that automatically engage when CPU usage is low/idle
- Incentive structures for renewable energy
The internet and the peer-to-peer system for electronic transactions, provide the opportunity to augment the function of money. As well as a medium of exchange, a store of value, and a unit of account, money can also be purpose-driven.
The universe and our world in it, is a gift. Gratitude and generosity have always been some of the most sacred aspects of human nature. With each transaction of Social Currency, the sender will have the option to also “gift” a small percentage of the transaction to any charity or social cause of choice. Each transaction of Social Currency will then comprise of two transactions, one in exchange for intended good or service, and another, as a gift to a recipient of choice (which could be a zero gift). The gift transaction would require extra network energy BUT the gift component would elevate the currency to truly social money system.
In order to best engage the existing economy and social media structure, the sender would have the option to partner with an entity as part of the “gift”. By matching the small percentage of the transaction to any charity or social cause, the partnering entity (NGO, Corporation, etc.) would receive a Social Token (see later) and have advertising rights on the wallet of the sender.
Completing the circle of the gift economy, from the giving to the receiving, the giver would be recognized on the network and receive one Social Token. One Social Token per gift-transaction, regardless of the size of the Social Currency gift.
Social tokens will accrue and be held in wallets on the network until they are themselves gifted.
With each transaction of Social Currency, regardless of size, the sender will have the option to send some or all of the Social Tokens accrued in their wallet.
This gift of Social Tokens would recognize the value of those that give freely to society to elevate eth human condition, above and beyond the receipt of the currency. The Social Tokens would be displayed in the wallet, increase the social status of those that accrue them and could be used for promotional purposes or even as a sub-economy, based on gift.
The total number of social tokens will be tracked by the distributed ledger of Social Currency. There will be an unlimited number of gift tokens in circulation, reflecting that the capacity to give is unlimited. However, to avoid inflating away the value of each new token, the deflationary mechanic would affect the tokens as with the Currency.
The wallet would contain an interface feature, to be embedded with existing social media. This Social Currency interface would detail the number of Social Tokens, the charity of choice, gifting partner(s) and maybe a history of the gifts of Social Currency.
The interface would also allow for secure, user-friendly Social Currency exchange, i.e. the Social Currency Interface would be embedded in an online retailer’s website to enable the purchase of goods and services in Social Currency.
This paper proposes a money system for a new cultural narrative. Leveraging the success of peer-to-peer electronic cash, Social Currency: A Purpose Driven Money-System to elevate the Human Condition, would provide the functions of sound money as well as elevating the gift economy.
[ii] List of 590 Failed Fiat currencies: https://trader2trader.co/tag/historic-graphs/page/3/
[iv] Dollar purchasing power: https://www.zerohedge.com/news/2018-02-28/failure-fiat-currencies
I will have to put more thought into exactly what you have proposed but happy that you made the effort. My first concern relates to the store of value function of money. If the value is preprogrammed to go to zero within a year (unless spent) then how to accumulate capital? Also a gift economy as a goal is admirable and we do need a money system that is not as dependent on energy inputs (which is a detractor for both gold and bitcoin) but what about having human work function as the fundamental basis of value. You might want to look at incorporating aspects of the alternative money system that Charles Hugh Smith has been working on with Money & Work Unchained as well as A Radically Beneficial World and possibly collaborate with him on your ideas.
Thank you for taking the time to post and to encourage discussion on the topic. When I participated at the Roe event, there was a great deal of discussion about the monetary system.
Many feel that we are on our way to a monetary change as the current system is unsustainable, and will collapse at some point. However, many in the west still put their faith in government and in turn government acts in their own self-interest. One of their key pillars of power is the ability to control the money supply and use force to make sure that we pay our taxes in their currency. Until we can either get a government to agree to the use of a currency that is beyond their control, or the majority of a country to abandon the government money; the whole idea of a decentralized currency won’t get off the ground. I live in Canada, and for arguements sake let’s say that a majority of Canadians decide to adopt your currency; what happens when we try to transact with other countries? Our economy has a global element to it, no nation is an island unto itself and so a global crypto currency will require that enough nations embrace it to ensure that a “critical mass” is reached so that the majority of the transactions can be done in that currency.
To me, the first logical step is to find some way to drive society towards the adoption of a crypto-currency; then we could debate the finer points of the currency.
I like the idea of a method to induce spending, but “store of value” should last more than a year. Another idea may be to incentivize spending by increasing the value of the token/unit at random intervals. It would slightly boost the quantity of money over time; but could incentivise spending to avoid the “HODL” mentality that has been adopted by many in the crypto-currency world.