Contents
Concept
Money is traditionally created and controlled by the government. However, historically, governments can only resist corruption for a limited time. It seems inevitable that private bankers will end up passing a law that has a loophole which allows them to influence the money supply, which is all they need to get their foot in the door to expand their power.
One possible way to keep the creation of money spread around is to make the entire system's records completely transparent, and to distribute the creation of money.
I propose a system like BitTorrent or FreeNet, where many many anonymous encrypted copies of people's accounts are stored, as well as statistics about how much money is flowing through the system, which would prevent and bring attention to tampering.
It could also function as a powerful communications network to stop any attempts at controlling it (eg. news alerts and warnings about tamperings so that users can take action to protect the freedom of the network.)
The redundancy would have to be great, so that if a large piece of the distributed network was severed (for example, if an entire country decided to block this service), a complete copy of all financial records could be restored and re-replicated.
This system should have great appeal to the public since it's completely open and interest-free. Its money supply would be optimized to maintain economic stability, not to maximize the transfer of wealth from the masses to the privileged few.
Extra Features
- Money could be classified so that consumers would know what kind of economic activity it came from. This would allow them to "vote" with their dollars by favoring this kind of currency over others. (Example: resource currency, social currency, scientific currency, etc.)
- Micropayments
- Hash-coded paper money which you can print yourself
forward secrecy and blindness are key concepts here
- A platform for large-scale economic statistical analysis
Money Creation
How could the money be created?
One possibility is that your ability to create money is tied to your trustworthiness. Creation of money would be an alternative to lending, and as people trusted you more (via some metric), you could create more money.
All money would be created by this method, so it would be interest-free, and all dollars would be branded by whoever created them. This way, it would be possible to understand the functioning of the economy by paying attention to the dollars that pass through your hands.
Examples: Mutual Credit
Cryptographic Auditing
Christopher Thorpe has done some interesting research into cryptographic algorithms which allow you to add encrypted messages together, which can then be decrypted to give you the sum of the original messages. (See the google tech talk: Efficient, Secrecy-Preserving, Provably Correct Computation.) This could allow anyone on the network to audit all of the transactions, while allowing the amounts of the transactions to stay private. (Keeping transactions private prevents people from exploiting the information -- eg. stock trading.)
Auditing is important so that money can't be inflated out of control.
Time-Lapse Cryptography (another interesting feature of this crypto system) allows data to remain secret until a specified time. This could be used to allow all the exchanges in the system to be disclosed every quarter.
Update
A new system that has even more advanced features:
Fully homomorphic encryption using ideal lattices
One can arbitrarily compute on encrypted data – i.e., one can process encrypted data (query it, write into it, do anything to it that can be efficiently expressed as a circuit) without the decryption key. As an application, they suggested private data banks: a user can store its data on an untrusted server in encrypted form, yet still allow the server to process, and respond to, the user’s data queries (with responses more concise than the trivial solution: the server just sends all of the encrypted data back to the user to process).
Getting the ball rolling...
- Website micropayments
- Credit card processing
- Exchangeable between currencies
- A large corporation that's willing to accept this currency.
A platform that can be used by existing barter systems, and that could unify them
- Start with markets that accept unconventional currency and other transactional intermediaries:
- online poker
- knowledge workers in developing economies
- amateur porn
- online auctions/sales that are too shady for ebay's puritan values
- Or, the supply side! Find places that pay people small amounts for various things online. Then set up something where they are paid in new_currency and provide some simple things they can exchange it for via various partnerships. Proceed to expand the range of services people can buy from your flock of neo-Club-Z-points collectors:
- games to train things like Cyc
- distributed OCR-correction and similar human-labour-harvesting projects
- Encourage mistrust between opposing factions in current financial markets to develop to a point where such openness and transparency in their dealings is the only way trade can continue (preferably without global war in the process). Every financial issue or event should be met with calls for greater accountability!
Legal Issues
Other currency systems
SCC Bank (Sovereign Carbon Community Bank)
BitCoin (P2P crypto-currency)
WebMoney (big in Russia)
VirtuCard (pre-paid virtual VISA that can use eCache)
Vertoro (cash to gold)
Questions
- Money creation should be tied to the growth of the economy. How and when should more money be created?
- Who else would support this cause? Are there any research groups or organizations?
Open Economy
If this system were large enough, it would provide everyone with (anonymous) information about all activity in the world economy. With all of this information completely open and free, it would be difficult to commit fraud since people could see what was going on, and accurately vote with their dollar.
Related Groups
WikiCurrency (A directory of "alternative currencies", and what you can buy with them)
Canadian Action Party (reform of Canada's central banking system)