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Crypto-coins for the 99%?

Can we design a crypto-currency that promotes wealth equality and discourages speculation and hoarding? One that is able to adjust itself to demand, expanding and contracting to keep prices stable?

1) Hoarding:
To prevent hoarding simply build in an expiration timer. If no transactions are occurring for some length of time, begin subtracting value or just delete it. In order to save, one would have to buy some other safe asset, and the currency itself would remain circulating and available for maximum economic activity.

2) Promote equality:
Transfer the above value to wallets with more activity. I think that this might generally have the effect of moving it to people who must spend it quickly, and so presumably have less to begin with.

3) Fraud Management:
It’s probable that then people would find ways to keep their wallets churning, perhaps transferring between several wallets. It should be possible to watch for such repeated transactions and counter them, however. What other scams might be possible?

4) Economy-wide side effects:
What would be the effect on government services if all national currencies were replaced by such an auto-leveling mechanism? Governments would have to tax it, the way states in the US do now. It’s not necessary to issue a currency in order to tax it. Government could also continue to issue bonds for safe savings instruments.

The transfer mechanism from richer to poorer could also reduce interference in government by the rich and promote democracy. Governments of course, typically can provide cheaper, more efficient services by cutting out profit and management overheads. With increased financial equality, and less policy manipulation by hoarders, services should be much better targeted to real needs.

What about international trade? What other side effects might this have?

2 thoughts on “Crypto-coins for the 99%?

  1. Nice blog, and interesting entry, which I fully agree with theory. I am however not sure to what extent these criteria can be met by the technology since cryptocurrency is, as you know, decentralised and inherently anarchistic, hindering proper fiscal policy enforcement and fraud management, where there is no central authority. The problem, in my view, needs to be approached from a technological perspective, and see what’s possible from there, instead of from the economic one.

    I’m a bit sceptical about the auto-levelling and how it would work in practice, since people will not want to hold assets which are at the risk of devaluation or self-destruction, it could prevent the technology’s absorption of large amounts of capital from the real economy. That isn’t to say the risk can’t be built into the system as a function of market dynamics, but it would also need to produce rewards, and it the end it would probably clash with the anti-hoarding ideal.

    Now that I think about it,anti-hoarding and promotion of equality are mutually exclusive. When promoting equality, there needs to be some sort of value transfer from the those achieving the status of hoarder, since they transferred (in the ideal world) some kind of real value into the system to achieve that status. When promoting hoarding and turning cryptocurrency into a safe-heaven asset, then there will be little redistribution. Though, a delicate balance through a risk-based model can possibly be struck, where the more one has the riskier it should be, with a risk being one many will be willing to take as they do now in the current market model of b1tcoin.

    • My initial thought is that savings need to be transferred into real assets, not held as what “money” actually is–counters of somethings, not somethings in itself.
      While inequality can still occur that way–people making a lot of money will buy more assets–that has certain real-life limitations, and since the money is being returned to the real economy to circulate, prevents others from being shut out by it’s disappearance from circulation.

      This is the big problem with the existing cryptocurrencies. The idea that they should be made valuable by scarcity ensures that they will never meet the needs of an expanding economy or remain in circulation. All the old problems of gold recreated digitally.

      I agree that it’s a sticky problem. IMO, what we need is a distributed, independent transactional system that is always available to everyone that has services or products to trade. The benefit would be that unemployment would largely vanish, and monopoly becomes nearly impossible, it seems to me. If you can’t control what others can do by controlling the money supply, it becomes a good deal more difficult to shut the competition down.

      When promoting equality, there needs to be some sort of value transfer from the those achieving the status of hoarder, since they transferred (in the ideal world) some kind of real value into the system to achieve that status.

      The trick here, I think is that with such a system, no “real value” is ever “transferred into the system.” It’s transferred to other real people. The currency is just the accounting chit. All of the current malaise is created deliberately by the holders of wealth to protect the “value” of that wealth by making it scarce. That should never be allowed. I don’t see this as primarily a mechanism for redistribution so much as just a way to prevent monopolization of the system–which would lead to some automatic equality-enhancement since more participants get a crack at the competition.

      As for adoption–sure, those that want to save unearned paper wealth with no interest in dealing with the real world will not want it. Fine. I can see the bonds markets getting a boost, possibly, as companies issue them to actually build plants and products and hire people. The world has discovered over and over again throughout history that effective *currency* depends on it being both intrinsically worthless and safely honest. Can we create such a thing?

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