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Charles Eisenstein on the Next Step for Digital Currency

photo of Michel Bauwens

Michel Bauwens
22nd July 2013


With these learnings from the Bitcoin experiment, I would like to propose a new model for digital currency. The question is how make the issuance of and access to money egalitarian on the one hand, yet also regulate the money supply in an organic, decentralized way.

A new article by Charles Eistenstein:

“Today’s national and supranational currencies have become a blight on this planet. Created through interest-bearing debt, controlled by financial elites, tracked by the surveillance state, and necessitating endless growth, money as we know it is a primary agent of inequality, injustice, and ecocide.

What to do? One response is to attempt to transform the money system; another is to create alternatives that may supplant it when, as is inevitable, the present system stops working.

The most famous of these alternatives is the digital currency Bitcoin. It was designed to mimic gold in both its sourcing and its anonymity. To “mine” the bitcoins, one must solve computationally demanding numerical problems. This makes bitcoins hard to get, just like gold; total supply is limited as well. Also like gold, bitcoin transactions are designed to be anonymous: one can verify the authenticity of a bitcoin, but cannot trace its transaction history to an identifiable person.

The modeling of Bitcoin on gold was done for at least three reasons:

1. To separate money creation and the regulation of the money supply from politics. In theory, no interested party can manipulate the creation of currency for its own political or financial benefit.

2. To ensure it is non-inflationary. A limited number of bitcoins can be mined, limiting the money supply and making long-term inflation impossible. The hope was that the value of bitcoins would be stable.

3. To allow users to be independent of government control in their economic lives. The creators hoped that “no government will be able to control Bitcoin.” Collection of taxes and the tracking of citizens’ purchases and income would be impossible – a blow to the surveillance state. Furthermore, as with gold coins in the basement, there is no way short of stealing passwords for a third party (such as a government) to know how much bitcoin wealth someone possesses.

The results have been mixed. First let us congratulate Bitcoin on its success. Out of the hundreds of new currency models that have been proposed, Bitcoin is among the few actually in wide use. Some of this success might be attributable to its novelty and to its ideological associations with libertarianism, which encourage people to use it as a statement of political and personal identity. Nonetheless, one can make relatively bug-free, secure transactions with it, totally independent of any national currency. That is quite an accomplishment. If nothing else, Bitcoin has expanded our vision of what is possible. I hope you share my gratitude for these brave and visionary inventors.

Bitcoin has also experienced its share of difficulties, some of which are well-known. For one thing, it is not as immune to government interference as its designers had hoped. Even if it would be hard to enforce tax laws on bitcoin transactions, it isn’t always impossible either when physical or virtual goods are delivered, and in any event, any doubts about its legality drive away many potential users and consign Bitcoin to a marginal status. Indeed, when governments began issuing rulings against Bitcoin, its market value plummeted.

That leads to a second difficulty. Bitcoin’s value has been anything but stable: it has in fact exhibited dramatic fluctuations and commodity bubble behavior. This makes it a questionable as a currency. The fluctuations are mostly due to speculation, which is quite natural when supply is fixed and demand is upredictable. A related and more serious long-term problem is deflation and hoarding. When the supply of money is fixed, it is unable to respond to the economy’s demand for money. If demand for money increases, so does the value of the currency. Goods become cheaper and cheaper. You might think that is a good thing, but the problem is that money becomes correspondingly harder to obtain. People with money hoard it, expecting its value to rise. The result is a slowdown in economic activity and the concentration of wealth in fewer and fewer hands. In a system with a central bank like the Fed, the monetary authorities can respond by adding money to the economy. Alternatively, the government can redistribute wealth away from those who are hoarding it and to those who need it through taxation and stimulus spending. Neither of these options is available to Bitcoin. The system is designed to make that impossible.

One of the alternatives to Bitcoin, Freicoin, has an anti-hoarding mechanism built into it. In the Freicoin system, money is subject to a negative interest or “demurrage” charge, so that the nominal value of currency decreases by 5% a year. For example, if you have 100 freicoins in your virtual wallet, in a year’s time you will have only 95. This creates an incentive to spend them rather than hoard them.

This feature makes Freicoin quite different from gold, which unlike nearly any other metal or commodity does not decay with time. Indeed, gold-based currencies suffer many of the same problems that Bitcoin does, including hoarding, deflation, and concentration of wealth. Perhaps Bitcoin is too much like gold. One unintentional parallel is that Bitcoin (and Freicoin) is generated with great computational effort at a high cost to the environment, just as gold mining requires huge mechanical effort and is perhaps the most destructive form of mining on the planet. We don’t really need that gold: some two-thirds of all gold every produced is sitting in vaults. Another huge amount sits in jewelry boxes, worn on rare occasions or not at all. Yes, gold is useful for non-corroding electronics and other things, but at present only about 10% of gold production goes toward industrial uses. With great effort and pollution, we dig gold out of holes in the ground and bury it in other holes in the ground called vaults. Why would we want to model a currency on gold? In an age of climate change crisis, isn’t there a better use of electricity, computer power, and smart hackers than the computation of useless procedures, all to create digital currency that could be created much more easily by some other process?

The reasoning behind the computation-intensive “proof-of-work” process for creating Bitcoin, Freicoin, and others is that it keeps the currency scarce. The thinking goes, there must be some limit on the amount of money created or it inflates and ultimately becomes worthless. Because it is hard to create, the supply of money has a natural limit that politics cannot alter. Or can it? After all, a community of human beings decided on the generating process and upper limit on the number of bitcoins, and that community could also change its mind.

In gold mining, those who, through whatever accident of history or fate, control the gold mines have inordinate wealth and power, power that far exceeds their contribution to society. The same is true of the computational mining of digital currencies. While in theory anyone can do it, in practice it is only people with considerable technical know-how and the means to acquire computing power. Now, I admit that if anyone is to have disproportionate wealth and power, I’d rather have it go to computer hackers than to land barons and mining companies, but I ask, “Why should the money creation process have, at its very outset, disparity of access to wealth built into it?”

With these learnings from the Bitcoin experiment, I would like to propose a new model for digital currency. The question is how make the issuance of and access to money egalitarian on the one hand, yet also regulate the money supply in an organic, decentralized way.

First let us consider the issuance of money. The simplest way to make money creation egalitarian is to issue it in equal amounts to each citizen. To draw on the analogy of gold mining, that would be like sharing the total output of the mines equally among all citizens. There is indeed a strong argument to be made that Earth’s mineral wealth, its forests, oceans, and biosphere should be a commons, and that wealth distributed as a social dividend or universal basic income. By the same token, no privileged minority, whether of bankers or of computer specialists, should be able to enjoy exceptional benefits from their ability to create money: that function should be, perhaps, the “financial commons.”

A digital currency could simply be issued in equal quantity to each user. The technical difficulty is to ensure that each person can register only once – some kind of unique identifier is necessary. This is feasible for a government, more difficult for a private or peer-to-peer organization, especially when dealing with multinational users (U.S. users have unique social security numbers).

Alternatively or in addition, selected organizations could become “backers” of the currency by pledging to sell a certain quantity of goods or services for the currency at a certain price. In return, the issuer would create that quantity of money as a zero-interest loan to the backer. These loans would be a way to finance the development of deserving enterprises; perhaps they might be chosen via a democratic process among the user base. When the loans are repaid, that money disappears; what influences the total money supply is the ongoing level of new lending.

Finally, money could also be created by gift. Digital coins could be issued to volunteers, charities, open source software firms, ecological and social justice organizations, and other people and organizations deserving support. So much important, socially necessary work goes unrewarded today. Issuing an alternative currency via such groups could remove some of their financial hardship once the currency becomes well-established. The recipients of newly issued money could be crowd-selected by the existing user base or some other voting system.

Whether issued to all users or to selected people and organizations, once issued the digital money works just like Bitcoin or Freicoin. Anyone who has set up a digital wallet can use it. The next question is how to regulate the money supply over time.

Ideally, a money system should allow the supply of money to organically grow or shrink in relationship to the economy’s need for money. In our current system (in theory), central banks do this by buying or selling debt instruments, mostly government bonds, on the market, thereby creating or destroying base money. How do they decide how much to create or destroy? They (again, in theory) monitor economic activity, lending conditions, inflation, and so forth to determine whether tighter or easier access to money will serve society. The central bank is supposed to be first and foremost a listening organ that responds to a collective need for greater or lesser flow. As I argue in Sacred Economics, this function is similar to that of a heart.

In practice, of course, this principle is fraught with abuses, but the beauty of the principle suggests that a next-generation digital currency should have a more flexible, organic way of regulating money supply than the simple formulas used by existing digital currencies, which lay out in advance how much money will be created in a given time period. (Most set an absolute limit as well; in the case of Bitcoin, a decreasing amount will be mined every four years until a final limit is reached in 2040.)

How can we design a digital currency to be more like a self-regulating, homeostatic living organism? One way would be to use a more sophisticated kind of formula, one that contains among its parameters feedback from transaction metrics. For example, more new money could be issued as its value relative to goods and services rises, and less could be issued (or some removed) in the opposite, inflationary case. Or perhaps an even better parameter would be the velocity of money. If the number of transactions per “coin” per month falls, indicating deflation, more money could be created. If economic activity starts overheating, money could be removed.

I think, however, that any formula will bump up against real-world exigencies that will create a need to make exceptions and adjustments. This necessarily involves some kind of political process, which is exactly what the designers of Bitcoin hoped to avoid. They wanted money free of political interference, even of their own political interference. This freedom from politics is always an illusion, because money is ultimately an agreement among human beings. Even gold-money exists, in large part, by sociopolitical fiat: societies can shut down gold mines, confiscate gold, or declare something else legal tender. Similarly, Bitcoin could change its rules, increase its money supply, change the process by which new coins are created, and so on. Even the choice to change nothing is a political choice within the Bitcoin community. Politics is inescapable, and we pretend otherwise to our peril.

Granted, the necessary sociopolitical process of money creation and regulation need not be hierarchical or centralized. The dominant money system is, and at the top of the hierarchy are the established elites, themselves beholden to an increasingly desolate ideology of endless economic growth and to the relentless dynamics of debt-based capitalism that enforce it. New digital currencies offer an opportunity to explore new modes of organizational and political decision-making.

To sum up, a next-generation digital currency should have the following features:

- It should be issued in an egalitarian way that doesn’t give undue advantage to any elite, whether political, technological, or financial.

- It should of course be simple to use and secure. Anonymity is probably also necessary in the present milieu of an undemocratic surveillance state. In a more beautiful world, I think all wealth and transactions, especially those of government (whatever that looks like), should be completely transparent.

- It should, like Freicoin, bear a demurrage charge to discourage hoarding and counteract the tendency toward concentration of wealth.

- The addition or removal of money from the system should respond to its need for money, through some kind of homeostatic negative-feedback formula or process based perhaps on price fluctuations or the velocity of money.

- The whole thing should be embedded in a democratic, peer-to-peer political process by which the rules can be changed.

Such a system need not be created from scratch. One of the existing systems, perhaps Freicoin or even Bitcoin, might evolve in this direction. After all, Bitcoin describes itself as an experimental currency. The purpose of experimenting is to learn. The next step is to integrate that learning into a new and bolder experiment.

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46 Responses to “Charles Eisenstein on the Next Step for Digital Currency”

  1. Mark Witham Says:

    Have a look at my site and application I’m building at basicincomeproject.org We may have something in common and to share. Points made in this article are at the essence of my project. Thanks for this post and let me know what you think. ~ Mark

  2. Joe Says:

    Good article. well written.
    There are many other aspects to FreiCoin too including a new protocol called “FreiMarkets” which is being developed by their development team for release in the standard client. this will allow stock shares and the likes…

    Also there are talks about other ways to make better use of the computing power on the FreiCoin network.

    Take a look around and I’m sure the developers can give you more information.

  3. Willem de Leeuw Says:

    I think you’d have a better chance of achieving something if you separated the mechanics of a digital currency within the current order from a socialist political agenda melded with liberalism. The leaps in the article are just too, too great.

    “A digital currency could simply be issued in equal quantity to each user.” So an unfunded tax cut? Hyperinflation, much?

    “There is indeed a strong argument to be made that Earth’s mineral wealth, its forests, oceans, and biosphere should be a commons, and that wealth distributed as a social dividend or universal basic income.” Erm, communism? No thanks. Where would you draw the line? This is a world where people who have played the game and worked hard and have modest savings have them expropriated for ‘the greater good’.

  4. Ruth Rinehart Says:

    Brilliant!

    but, Charles, why do you say that Bitcoin and Freicoin are a “high cost to the environment”?

  5. Raamayan Ananda Says:

    Nice Article Charles.. appreciate the thoughtful process.

    Seedstock and Community Way are good examples of the principles you are speaking of. Now to expand the reach and make it sexy to the end user :)

  6. MaverickofSouth Says:

    I haven’t finished reading Sacred Economics but I still see economic slavery in what is being proposed. By economic slavery, I mean the selling of one’s labor in exchange for currency for which one is dependent upon for survival and a comfortable quality of life. Economic slavery is inherently a growth model. It has to be in order to source the working-eligible population with work for currency. That is forced labor (slavery) which, given limited resources on a finite planet, creates the competitive environment that pits human against neighbor, stratification, insecurity, bigotry, etc… I think the heart and intent are in the right place – and I like the idea of money being used as a “gift” and the purpose of demurrage charges but, unless I’m missing something, there is still more work to be done in creating a system that frees humans from the dependency on currency and “economics” for our survival and happiness. That is the only way we can create a peer-to-peer/neighbor-to-neighbor, truly democratic system that decide which work matters to communities and establishes some sense of real equality. IMHO

  7. Tom Says:

    Good Article.
    I find demurrage an interesting addition to currency on its whole.What will happen with the intro of “gifting”,and a diversion from the current paradigm?As I understand above suggestions will not address the current human behaviour of consumption,for consumption sake,in absence of other more useful pursuits in life.If we perpetuate the “normality” of exchanging goods,services,etc for monetary “value”,we may just shoot ourselves in the foot.There may have to be a quantum mindset change before we can get there,on global scale.Replace the mindset of scarcity,to a mindset of abundance?But that may take some doing,but not impossible!We managed with the trick to implement the scarcity paradigm!!!

  8. Marc Gauvin Says:

    This article assumes conventional economic theory and thus serves to perpetuate a false paradigm that is killing the planet. It carefully preserves the key false notion that money rather than being a mere record of value is an object of intrinsic value the circulation of which must be controlled.

    Money cannot and never has been a circulating object, the illusion that money is such has been perpetuated by the confusion between the logical function of money and the physical nature of certain supports used to record and communicated money. Money is a logical entity with no necessary physical attributes.

    All money is in its first instance a record of value against real goods and services, only once such records exist can positive account entries be transferred temporarily to “circulating” physical supports. Note that all bills and coins are solely and in every instance obtained by first subtracting the appropriate sum from previously existing account entry on a one to one ratio.

    It is the “circulation” of these temporary physical supports from whence comes the illusion of money “circulating”. However, if we look carefully and follow the logic through, it becomes evident that in spite of the “circulation” of the support, the true logical nature of money as a mere record (or score if you will), remains unchanged. In fact, there is no case where money is created without either direct or indirect collateral being pledged first. Indirect collateral being when a nations assets are pledged through the issuance of bonds to back money creation.

    Therefore, if money is a record of the value of goods and services its abundance cannot cause price changes but rather it is only the evaluation of the collateral that can be the cause of price increases.

    Moreover, the only “money” susceptible to any notion of “circulation” is cash as all other money categorically never circulates at all but rather is either entered or deleted from ledgers with no object whatsoever being transferred. Again, it is the simultaneous nature of positive and negative entries that evokes the idea of a circulating object, although in reality no such circulation takes place.

    The only thing that really circulates are goods and services money, simply annotates and records the input of goods and services as a negative entry in the account of the receiver and a positive entry in the account of the party that forfeits those goods and services.

    This should be sufficient to put to rest the false representation of money requiring control over circulation and establishing that any logically coherent notion of money can only be that of an annotation of value for which the only “control” required, is that of the mutual acceptance of a common standard definition of “money” as a measure of value and requiring no more interference by any authority. Just like the control of any measure (kilo, meter etc.) is in the technical definition and not in the access to the unit, likewise it should be with money.

    The question of digital versus analogue money is a non issue/red-herring as the definition of money has no dependence on such a distinction, digital technology only represents a modality for recording and communicating what is already defined irrespectively of that or any other modality.

    With respect to BITCOIN it represents no advance whatsoever to the cause of alternative currency, it misleads the movement for rational money and convolutes the issue by introducing a pseudo commodity/resource the sole purpose of which is to speculate and create a financial bubble precise¡y within the same erred paradigm of the current de facto standard. It is not widely used as it has been established that most of the transactions have been generated repeatedly between few agents, this would indicate that BITCOIN is quite possibly an intelligence PSYOP to distract from real and more accurate debunking of the current system as well as to possibly provide a precedence to justify regulation over all alternative currencies that have nothing to do in practice or theory with BITCOIN except that they be administered in a digital format. And to end, there is no one to congratulate either because the perpetrators of BITCOIN are unknown and remain anonymous, for which there is no reason as BITCOIN has never been declared illegal nor has anyone claimed it to be a security issue. Much of the same goes for FreiCoin, both are attempts to take the relatively simple principles of true money from of the consciousness of the commons into a more esoteric techno realm.

    We don’t need computer wiz based solutions with hacker like figures acting out romantic Hollywood like outlaw/rebel roles, what we need is to provide everyone the means to debunk the subtle misrepresentations inherent in the current false money paradigm.

  9. Michel Bauwens Says:

    An extra contribution from Charles Eisenstein, sent via email:

    “You know, Georgist economic thinkers would say that yes, Google stock (and any source of economic rent such as IP, land holdings, etc.) should have some sort of carry tax that represents its dependency on the social commons for a part of its value. The decay rate is one version of that.

    Obviously, we want to appreciate and incentivize awesomeness (i.e. innovative contributions to society like Google). The idea here is to offset the portion of its profitability that draws from the commons, while still allowing the portion of the profitability that comes from the innovator’s unique contribution and hard work. One rather clear example that illustrates this principle is when a company rushes to patent a development that was going to happen anyway as the next natural development in technological culture.

    A communist might extend the reasoning even further and say that even the supposed “originality” of an inventor also depends on the social environment, and that one’s capacity to create and work hard is only possible with the support of society, and that all invention draws on the numberless contributions of thousands of years of cultural innovators, and that, therefore, no one has a right even to the fruits of their own originality and labor. I am not comfortable taking the argument that far, but I do find when I’m honest with myself that my own small achievements would not have been possible without a lot of support from society and, well, the planet. Did I earn this rich intellectual context I draw on in my writing? Did I earn the thoughts of so many others that add up to the intellectual climate I live in? Did I earn being born with a well-functioning brain, in economic circumstances that allowed me to receive an education? I look at the source of my gifts and see that the only honest response is gratitude, which makes me want to give forward and not hoard for myself. However, it is a big leap to make from that, to the state taking something from me by force. On the other hand, I believe the social agreement that we call property needs to embody the understanding I just described.

    Obviously this conversation is much bigger than the technical merits of one or another model of digital currency. Ultimately these larger issues are unavoidable I think. Moreover, the recent persecution of Bitcoin isn’t just about what they say it is about. It isn’t just about tax avoidance or black market transactions. Bitcoin suggests that the current social agreement that we call money is not the only possible such agreement. It demonstrates that other agreements are possible. Personally, I think that Bitcoin itself isn’t the ideal either, but what do you expect for an early experiment in what will probably be a long journey as humanity transitions out of the story of separation that has held it in thrall for centuries? In any event, Bitcoin is a threat to the powers that be because it punctures the myth of TINA (there is no alternative).”

  10. Gary Says:

    I remember the year – it was 1986. I got my first computer. Wow, was I excited, dreaming of what I could do with it. More than twenty-five years have passed now, and I feel the same excitement, except this time it is in dreaming of a life without it.

    I applaud your work Charles, but you nailed it so many times with two magnificent words – “The Gift”. That is who we are, who we have always been, who we are coming back to – if we can only get out of our own way, once and for all. Your message is reaching many, so please if you might accept a simple suggestion – stay away from the latest fads, trends, and the like of the (seemingly ever-increasing number of) human beings that always, and throughout history, have felt the compelling, rather irrational need to continually reinvent and overcomplicate things.

    In other words, please come back to the majestic simplicity of the gift. As you know well, the gift needs no paper, no precious metals, nor any phantom digits floating across billions of blinking computer screens across the planet, all of which impede the very foundation of the gift itself – trust and love.

    Rumor has it that when Henry David Thoreau was up at Walden, one day, he tossed a stone that was sitting on his desk out the window. It was serving as a paperweight for his notes. The reason he tossed it? It was one less thing to dust, one less thing to complicate his life.

    My, if he were alive today what he would have thought of our ever connnected, forever disconnected lives today . . .

  11. Marc Gauvin Says:

    I might agree in part if BITCOIN was not so contrived. We never needed BITCOIN to let us know that there are alternatives, mutual credit does that wonderfully. What I do know, is that BITCOIN drags us back into the conundrum of money as a circulating object of value, which is the root problem resolved by mutual credit and the exact opposite message we need.

    As for the merits of intellectual property, what is being recognised are identifiably unique contributions that cannot be attributed to any identifiable previously existing work. If someone dedicates their person to creating such an original work, they have full right to determine a priori all and any conditions under which such a work is to be made public and exploited.

    Also, I am really wary of the “awesomeness” of many mega successes of strategic importance to society. In the phony world we live in, most of such successes are censured if not out-rightly fabricated by “risk capital” of unknown origin that backs them, which in and of itself is a genius-to-riches myth buster. Also in many cases the foundations are not original but through ruthless money the true creators are bought out or elbowed out of the picture.

    So your comfy anecdotes of appreciation of oh such wonder may very well be misplaced as the current status quo driven market is not what it is made up to be. Big money continues to design at will what we see and how we see it and the last thing it seems to want is anything genuine as you describe. What it doesn’t do well is cover its tracks very well, instead it hubris precedes either its nemesis or another round of deeper depravity and destruction.

    Of course, it is possible that such powers are equally brainwashed as the rest of us by The Money PSYOP here: bibocurrency.com/index.php/store/14-english-root/101-book-page

    and therefore are simply playing out the current madness out of their ignorance. What do you think?

    You might enjoy this presentation too: bibocurrency.com/images/Presentation%2011%20junio%202013%20final%20eng.htm

    The real problem is that because of the power inherent in the control of money the powerful can pretend to be anything they want to be. The only way to sniff out imposters, is to force them to take a stand on a logical point where the truth undermines their power base. For example, if you prove a truth about money that cannot be logically debunked but that implodes the false paradigm from whence they garner their now proven illegitimate economic power (illogical things cannot be legitimate) then, if they accept then prove genuine, but if they lie and deceive and beat and dance around the bush, then they are found out. Finally if they stay silent, the are equally exposed.

  12. Karl Says:

    Bitcoin is no threat at all to the status quo since it’s simply the existing exchange model which has been embedded in the internet. I cringe every time I hear Charles promote demurrage. This also plays into the hands of the status quo since it encourages consumption.

    Isn’t communism a stateless society? By definition, it cannot take anything from anyone. It seems to me that both the act of giving forward and working for oneself are fundamental to that idea. The socialist state model is the authoritarian corruption of it. At this point in time, people really should give their definition of these political models if they use them.

    I’d like to point out to Marc that the measure of weights and distances are objective. ‘Value’ is an abstract concept and always subjective. Money cannot be objective and using it will never produce equitable outcomes.

  13. Marc Gauvin Says:

    Karl, the value attributed by individuals can be subjective but the resultant measure can certainly be objective. That is determined by the definition of the unit and the requirement that all transactions be Passive BIBO in nature. If such requirements are met money becomes stable without any need to control its abundance and circulation and can safely.

    In any event, the only possible coherent behaviour of money is as a measure irrespective of the error in measure. That is to say that under no circumstances can money logically ever be a prerequisite for the creation and transaction of goods and services but rather only a posterior record of these. That observation is sufficient to debunk most if not all of contemporary finance and economic theory.

  14. Marc Gauvin Says:

    Sorry left a line uncompleted,

    ….If such requirements are met money becomes stable without any need to control its abundance and circulation and can safely BE USED.

  15. Charles Eisenstein Says:

    A few replies:
    1. Communism. No, actually what I am referring to in my mention of a social dividend representing a share of the commons is the Georgist perspective, called a “third way” between capitalism and communism, developed by Henry George in the late 19th century. The idea is to counteract “economic rents” — the profits one makes through mere ownership of land, IP, etc. — while allowing profits from making better use of the commons than other people (by dint of innovation, hard work, etc.)

    2. Hyperinflation. The whole is that there must be a way to regulate the money supply. I don’t see why issuing money to each user would be more inflationary than issuing it to bitcoin miners, as long as the total money supply were regulated in relationship to the volume of goods and services exchanged. That’s the whole point.

    3. Environmental damage: some people have criticized the computation-intensive mining process — days and weeks of runtime — for using a lot of electricity. I’m not sure how much it uses, but it is some.

    4. Economic slavery. I’m not proposing this model of digital currency as a panacea for all socioeconomic ills, but rather as a “next step” for digital currency. One of the ideas I play with in the book is a social dividend, aka a universal basic income. There is a whole chapter on it. The idea cannot be dismissed on trivial grounds like, “But then no one would have an incentive to work.”

    5. Does money actually circulate? I agree with the comment that money is not a thing. It is a social agreement and, as the commenter says, a means of keeping records of… of what? Of the socially-accepted claim on goods and services. In my studies I have come across many definitions of money, all of them incomplete, and all of them nonetheless useful. Likewise, it is often useful to treat money as if it circulates. It illuminates some things about it, and as the commenter implies, obscures other things. I agree that money as we know it is killing the planet. But it is primarily a certain aspect of the agreement we call money that is killing the planet, namely, its creation through interest-bearing debt. That is what drives the growth machine.

    6. The gift. I do think that ultimately, gift is at the root of economy; it is where it came from and where it is going. We are very from that today though, never in human history having had a gift economy on a scale beyond 500 or so people. My economic ideas are ultimately about how to get there, and in the short term have two dimensions: (1) How to reduce the role of money in our iives right now, and (2) How to change the nature of money so that it takes on more and more of the qualities of gift economics. So, one of the principles of a gift economy is that gifts circulate, and one does not enjoy a social advantage by hoarding wealth. Demurrage is a way to bring that principles into money mechanics. But I agree, it is a small step.

    7. One more comment from facebook was about whether demurrage would cause overconsumption (and inflation). Here is what I said: I discuss this objection in Sacred Economics. The answer in short is, “Not necessarily.” For one thing, if people are saving for some kind of goal, lower (or negative) interest means they have to save more, and not less, to reach that goal. This was predicted by Keynes and has been borne out in eimpirical studies that indicate no straightforward correlation between interest rates and savings rates. There is this idea in conventional economics (and particularly Austrian economics) that human beings are by nature profligate and have an infinity of needs, so that some reward (interest) must be offered to induce and reward savings. But maybe it is the opposite. In any event, the matter is not as simple as one might think.

  16. Dlight Sky Says:

    Eisenstein is surprisingly stuck in the “old school” alternative currency mentality. He rightly congratulates Bitcoin but then falls into the same misunderstandings that other so-called “progressives” do.

    First of all, people don’t hoard. This is absurd. In the US people have very little savings and are massively in debt. We could hardly be accused of “hoarding”. This is just something that has been repeated for years among “old school currency” buffs. In truth people love to spend money.

    But who in their right mind would want a currency that becomes less valuable over time? We already have such a currency – it’s called US dollars – demurrage is roughly the same thing as inflation.

    Eisenstein doesn’t quite *get* Bitcoin. It’s not an accident that Bitcoins can’t be handed out automatically to our favorite charities – there’s simply no way to build that into a currency if it is to be truly decentralized.

    But Bitcoin brilliantly enriches everyone holding Bitcoins equally and all together by becoming more valuable as more people begin using it. Like many systems, it confers an advantage to those who get in early. This is a great motivation for people to begin using it. As a network phenomenon, this makes perfect sense. The value of a network is the number of people connected.

    This is true of the Internet itself. In 1985, if you bought a computer, you had a device that could do some word processing and not much more. In 2013 if you buy a computer, for the same price you are buying the entire Internet, which is to say, access to 5 billion people, virtually everything they know and any products or services they offer.

    Therefore, independent of Moore’s Law, computers have become infinitely more valuable as the value of the network has increased.

    Progressives should be encouraging their friends, and especially the disadvantaged to jump into Bitcoin now, while it is still early. Putting it down only gives an advantage to the establishment.

    Bitcoin could be improved. But first it needs to be fully embraced so that its strange but brilliant logic seeps into our heads.

    Bitcoin is repairing our entire concept of money. In the era of credit we’ve gotten in the habit of thinking of money in terms of future promises (known as debt). We logically realized that having more money now, is worth making promises for the future, in the hope that with increased prosperity, these promises will be easy to fulfill. Unfortunately the powers-that-be gamed the system and tricked us into making promises that were impossible for most of us to keep – we were setup.

    Now $40 trillion is owed in the US to private banks. We have become their slaves.

    Bitcoin releases us from this slavery because the meaning of Bitcoin is work *already* done — products or services *already* provided. No future promises involved. It’s also a currency that can’t be manipulated, no *trusted 3rd party* can print it out of thin air. It has restored the actual *meaning* of money.

    We are so accustomed to money that is conjured out of thin air and constantly manipulated, that when we see a monetary system that actually has integrity we think it’s broken! We need to wake up from our fiat currency trance!

    The meaning of money should be: “The bearer of this coin has already provided a product or service to society, one that someone else voluntarily considered valuable”.

    If money can mean this again, we will each be rewarded fairly for our work, instead of being robbed by countless invisible hands, as we are under the fiat currency system. This simple conception of money will bring a tidal wave of prosperity to the planet.

  17. Marc Gauvin Says:

    Dlight wrote:

    The meaning of money should be: “The bearer of this coin has already provided a product or service to society, one that someone else voluntarily considered valuable”.

    MG: That is not the case for the creation of BITCOIN. But it is the case for mutual credit where money is a record of value generated as a consequence of the transaction of goods and services.

    If money can mean this again, we will each be rewarded fairly for our work, instead of being robbed by countless invisible hands, as we are under the fiat currency system. This simple conception of money will bring a tidal wave of prosperity to the planet.

    MG: Again BITCOIN precisely because it is limited in number its value is necessarily speculative, hence it cannot function of a fair measure of value.

    MG: What is needed is for money to cease being a commodity itself as that is the sine-qua-non requirement for it to preserve its function of measure.

  18. MaverickofSouth Says:

    Charles, thanks for commenting on my question about “economic slavery.” I am committed to promoting awareness of economic slavery and the need to bring it to a close. I look forward to your thoughts in that respective chapter in your book. Yes, “incentives.” I don’t much care for an incentive-driven system. That “incentive” for the overwhelming majority of people in our current system is fear – of not being able to pay the rent or mortgage; of not being able to put food on the table for one’s family; of poverty. The list goes on. For a very small group of people, the “incentive” is status which provides no lasting happiness or contentment. These incentives work in getting people in to meaningless, resource-wasteful, dreadful jobs that rob one of their health and spirit, and seemingly serve only to make a profit while providing no discernible benefit to humanity. It works, but is it really humane? The hope is that we can one day move our economics and values to where the incentive is a desire to contribute to something meaningful and democratic, void of the force of fear and the allure and illusion of status. For me, the end game – way on down the road, past our lifetimes – is a system where success is defined by genuine happiness and the currency of exchange it trust. No legal tender. Anything that puts us on that path is good with me. Keep up the excellent work.

  19. Marc Gauvin Says:

    Charles, money cannot be an agreement as it is nothing more than a record of an abstract measure of value (for whatever that is worth). If you say that money is an agreement then you have to tell us exactly who are the parties to that agreement, what exactly is the object(s) of the agreement and what the time frame is.

    Also and to date, money has never been an agreement because it’s very definition is utter nonsense and basic contract law stipulates that valid contracts/agreements can only be based on valid premises. The definition of money has no foundation in any logically consistent axiom or independently observable natural law or principle and therefore is simply ludicrous.

    So there is no transition that doesn’t include the complete negation of judeo/christian/sino economic “science” and a subsequent reform of the judiciary and common legal practice to conform to legitimate and legal principles and axioms.

    In this light, there is only one objective for anyone in the money reform business and that is to halt the execution of all money contracts until an objective logically consistent definition of money is established.

    Since my work has proven that the only possible logical definition of money is that of an abstract measure of value, then it is impossible for it to be a resource requiring a supply, it is impossible for it to “store” or “carry” value of the goods and services that it represents and it is therefore impossible to render legitimate any business based on the supply, storage and distribution of money.

    bibocurrency.com/index.php/store/14-english-root/101-book-page

    bibocurrency.com/images/Presentation%2011%20junio%202013%20final%20eng.htm

  20. Etienne Hayem Says:

    “Money is an agreement to use something as a medium of exchange in a community of trust.” says Bernard Lietaer.

    Let me try to put visible all what you agreed, all what we agreed, consciously or unconsciously, wether its written on the rules, in the law, in the governance of money or wether it is the way it works independently of any visible and known architecture.

    It is agreed between the users, the bearer, the issuers, the controler, the tax payer & the superviser.
    It is an agreement to give a share of your time (wealth), power of action against something that represents it (representation of wealth).
    It is an agreement to accept, recognize and trust this representation of wealth as real wealth and to be able to trade with it.
    It is agreed that I accept the variation of this medium in terms of quantity of value and can’t do anything against it.
    It is agreed that I trust this system to give me back value of the same amount in exchange when I trade some money for some real wealth.
    It is agreed that this is the only medium I’m allowed to use in order to pay my taxes and to pay my debt as a legal tender.
    It is agreed between the users that it will serve to finance new projects : emission of credits, going into a specific directions.
    It is agreed that I can use it and keep it over time at my own risks.
    It is agreed that if I put it into the bank I can get it growing with interest.
    It is agreed that there are risks of booms and burst, of inflation, of deflation, of crash.

    It is agreed that We will carry the risk if the system fails and we will be in debt as our governements takes loans to private banks.

    All what we haven’t decided officially is agreed in the currency.

    Therefore we need to open that code and decide what kind of agreement we want. To do what, to go where, and how.

    To me :
    A monetary system is a collective convention to engage together toward a common future.
    The direction of this common future is decided by the emission of new money : what do we finance?
    The fuel to go toward this common future is the fact that the users, contribute by giving, entrust their power, value, for it and will contribute to the system by paying the inflation-deflation / variation of stability of the system.

    Wether its mutual credit, demurrage or this or that are just specifications of the system to go toward this future together.

    I will write an article about the kind of process of money creation that I’m working on for a region around Paris.

  21. Marc Gauvin Says:

    I am sorry, that some would speculatively put forth an assumed rationalisation to define money as an “agreement” as you describe, does not make it so.

    Money is agreed by many to be used but that does not define money as an agreement.

    We may agree to use my parrot as payment for a massage, but that fact does not define my parrot as an agreement. Right?

    We must not confuse the definition of the object of the verb with the definition of the verb (function is an action i.e. verb). Money (however it is defined) can be recognised as an object of agreements, but does not itself alone constitute the agreement.

    Now, that that is clear, the agreements in which money is used are not valid because the accepted assumed definition of money is not logically consistent. That is, it is logically impossible for money to simultaneously be what the standard de facto definition prescribes i.e. a store, a medium and a measure. Moreover, of those three things, money could only ever be a measure, the other two are allegoric nonsense.

    But if money were to be a measure, then it could not then be an industrial product requiring a supply, but rather only a specified definition that presumably all would freely reference.

    In the name of all those losing their homes and livelihoods on the basis of such ontological garbage, we owe it to them and to all of us so afflicted directly or indirectly, to provide water tight definitions. In the meantime, we are morally required to put a halt to the execution of any agreement that uses such sloppy logic. Don’t you think so?

    Right?

  22. Etienne Hayem Says:

    Hmmm I would request you some respect : you can’t say from Bernard Lieater that he “speculatively put forth an assumed rationalisation”..
    I don’t think people reach definition by randomness or speculatively. You need to give a little respect to other definition before being able to debate or there is nothing to debate. At least for Bernard Lieater’s time and work and Charles.

    I’m going to try to defend my vision, please pardon my english that can be not very correct.

    in your example : you parot is your medium of exchange, but you lack a community of trust in which parrot are accepted as money : 1) certain quantity of value 2) medium of exchange 3) community
    If the parrot is money, is it generally easily accepted in the community? is it common to trade with parrots? than we have agreed parrots can work as money.
    We either decide it and push it with law, or it becomes the reality in a time of crisis where we don’t have anything else to use.

    Money can be : a cigaret, a parrot, coins, cheques, gold, birds etc..

    If I had to describe it more precisely : Money is a facilitating tool that permits :
    1) to agree to use a trading system : a real assets against this ‘Money stuff’
    it is not barter, it is not gift, it is an exchange against this paper that I believe I will be able to use tomorrow for the same value within a defined community.
    2) to measure a quantity of the wealth of the desired trade ‘how much’
    3) to exchange it ‘deal’ With somebody else

    This means once you traded your object for money, you are still tight with money, you can’t eat it, drink it or use it as an object, you still need to connect again with the community to swap it back to an asset you need : it is a debt between you and the community.

    As certain as measure function is embedded in the money, my strongest belief today is that money is an agreement of trust : I trust that I will be able to spend it tomorrow (it will be accepted), I trust that I will be able to spend it for the same amount of value (its value won’t have exploded).

    In other words : I see money as a materialisation over time and place of the honnor swearing that we had in the past : I give you my words, and I swear I will pay you back. Now I give you money, and you’ll go see with the bank : you don’t need to trust me anymore, just trust the system and you are good. Respect, honor, trust has been externalised into the monetary system.

  23. Rahul Jain Says:

    Issuing currency without dominion over land and natural resources is a fruitless endeavor. Almost half of the wealth in the world is in the value of land, and it increases in value over time as opposed to capital goods that decrease in value as they deteriorate and are made obsolete by new technologies. P2P currency sounds exciting, but it will always be a fringe. Valuable for keeping governments with banker-friendly monetary policies in check, but without the backing of government or their delegates (landlords), such a currency will not be a reserve currency, but just a temporary escape valve until landlords get wind of the increased productivity and start charging higher rents.

  24. Marc Gauvin Says:

    Etienne,

    Let’s dissect Lietaer’s definition of money:

    “Money is an agreement to use something as a medium of exchange in a community of trust.”

    Now it is clear that money cannot be both the agreement to use a medium as well as the medium itself.

    If money is the “medium of exchange” then Lietaer’s definition is circular as shown by substituting “medium of exchange = money” with the term “money” producing the following invalid circularity:

    ““Money” is the agreement to use something as a “money”..”

    So only in the case that money is not “the medium of exchange” can his definition hold. But, if he is saying that something other than money is the “medium of exchange” his definition is incomplete as no one can know what in heaven he is talking about, particularly when he must know that money is already commonly although incorrectly defined as a “medium of exchange”.

    Do you see what I am saying?

    Also, many of us have been been at this business of debunking conventional money and money systems a lot longer than Bernard and our contributions are as or probably more significant. Of course we don’t have the years of profiteering as offshore fund managers nor as “architects” of the failed euro which is nothing more than a replica of the Federal Reserve. Granted with some econometrics to establish the different national conversions but the jury is still out as to whether those were or were not correct, if such a determination were even possible. But such experience is mostly irrelevant to the question of alternative currency design, as the latter is an exercise parting from a fresh set of requirements decided by the people for the people. I am sure that in the case of the euro, Bernard was “designing” strictly from the standard mold for which I find it facetious to claim “architect status” in bringing about the euro.

    Also lately, I am finding that the key issue is not interest free versus interest bearing (of course interest free is a requirement) nor is it a question of whether banking should be private or public but rather, the issue is how money is defined and what dependencies arise from that definition.

    In this regard, it is vital that a set of clear open requirements for currency definition be established and published prior to any design. Because otherwise the same bunch that have muddled the current de facto standard will define once again an “alternative” and impose it without proof that a clear and unambiguous set of requirements are being satisfied, simply because none were ever published!!!

    Requirements must precede any implementation and having such requirements set out in math and formal logic is crucial because only then will we the people have a hand at policing the implementation. It is like open source software, most cannot check it out but the fact that many can is enough to keeo the designers honest and above board. Otherwise we will fall once again into a trap of “believing” and “assuming” that there is some rhyme or reason when like today there will be none.

    In another post we can explore Bernard’s use of yin and yang to define complimentary currency and as an indirect apology for conventional currency.

  25. Etienne Hayem Says:

    Thank you Marc for taking the time and patience to make your point and answer my question. I completely follow you. This is very precious to me as I’m writing a book at the moment and want to give a good definition of money / monetary system in order to set up a clear design and show with that definition what are the settings possible, in the system today, in other systems..
    So if the definition is flawed.. the proof can’t be “water tight”.

    I like when you say

    This something other than money can be anything, any object, any bill, coin, paper, any form, any stuff, pen that we agree on. It is what we want it to be. It is what we believe has value and can be traded for something else. It can change tomorrow, it can die tonight : We decide.
    Money only exist with a community of trust and it is the community, each individual that agrees to give its trust to it and to accept to exchange stuff of value for this money.

    When we said money in the past we only thought bills and coins. but cigarets during wars, shells in ancient time were different kind/versions of the tool that is money and can be used as the unit of exchange.

    What about :
    A Monetary system is the agreement to use money as a medium of exchange in a community of trust.
    Money can take many forms : coin, paper, bills, information system etc.. and different features

    I think it is the other way around : when he uses “money” to define it as an agreement, it means before we use money, we believe and agree to use this system of hierarchy of value embedded in the design.
    So I wouldn’t say : something other than money is the medium of exchange, in day to day language : money is the thing we use as the medium of exchange. But what is the implicit agreement that we do, the bigger picture than the visible money?

    If money is the visible part of the iceberg, what is the code that gives life, value, quantity, quality, use, trust, sustainibility etc… to money?
    I call this code a collective convention, and this is why I took Bernard’s definition for “agreement”, because at some point we give our power to this money. Without us money doesn’t exist or has a life by itself, we agree at some point to give our power to this stuff and this is where, I believe, I can make the biggest shift, in helping people to understand they need to change their system of belief in what they give their power and trust to.

    If we agree to use money and to give it our power, it means we can disagree, and we, the users, are the only ones able to chose this.

    This led me to this definition :
    A monetary system is a collective convention in which people agree to use something as a medium to exchange things of different kind and dimension of value in order to create a common future.
    This something is usually called money.

    Maybe I would be better at saying what money embedds instead of saying what money is. Now, I’m curious, what do you need for a definition to be valid? What is enough? what is too much?
    I also often see many definition by field : mathematics, sociology, history etc..
    when is it ok to have various definition based on the background and the point of view of where you observe the object from?

    For me, there is a trap when we speak and try to define money as we use in current language money for coins and notes and for the tool to facilitate trades.
    What does interest me is the bigger picture of all the consequences of the way this tool is designed, created, circulated destructed, by whom, on which rules, defined by who, how etc.. because it still facilitates trades but it creates a whole different paradigm and society. And the trade is just the western, parcelar, isolated portion view of a peer to peer exchange and of a use of money, but it is not the global picture of the mass, changing form of what money is or can be.

    Therefore if money (as we know it) is the leaves or the branches of a tree, I want to see, make visible and speak about the seed.

    For me, a monetary system is a tool to put hierarchy in value and facilitate the measure, quantification, qualification, exchange of this values within societies today and for the future.
    When I create credit for a project, I issue new money : I take a risk that I dilue on the whole community/ money bearer, I give life to a future, giving it credit (belief) and reducing the community’s monetary power for the new project.
    The power of money and of credit creation is to issue belief for a certain future based on some hierarchy of values and to not give birth to other projects/future.

    Question that matters (a lot) to me is :
    - who decides this hierarchy?
    - based on what?
    - how can we create a system in which by design this power is decentralised, shared and crowd-sourced and time+context-related?

  26. Marc Gauvin Says:

    Etienne,

    You might like to read my book, here:

    bibocurrency.com/index.php/store/14-english-root/101-book-page

    In a nutshell, I dissect the conventional definition: A Store of Value, Medium of Exchange and a Measure of Value.

    My analysis separates physical properties form functional logic. Money is not a physical store of goods and services, value is inseparable from goods and services, therefore since money cannot “store” the goods and services it cannot store value. Money is not a physical medium of “exchange” of goods and services as it cannot carry goods and services and therefore neither can it carry their value. Conclusion, money CAN ONLY BE an annotation of a measure of value.

    As such, it is not a physical object subject to being supplied or being scarce nor does if really “circulate”, all of these notions arise from assumed allegories based on the properties of physical supports use that have no bearing on the logical nature of the function. Also these allegories are based on the presumption of a valid measure of value.

    These allegories serve to attribute false quasi physical limits and restraints in order to establish a PSYOP in which money becomes an industrial product that needs to a supply as. But this contradicts the logical function of measure and therein lies the Achilles heal of the current paradigm. Basically, if money is a measure it cannot be an industrial product, cannot be bought and lent cannot, can never be valued in multiples of itself and cannot be a sine qua non requirement for transactions. Similarly, if money is not a measure then the “store” and “medium” allegories based on it being a measure become blatantly silly. Therefore, money really in nothing more than a record of a measure of value.

    Social governance is a separate issue that fails when it is reduced to money accounting. Why? Because the functional scope of a stable money is not the same as the functional scope of running an economy. Just like the functional scope of the stable measure of longitude although required is not that of the design and realisation of a complex building structure.

    Social governance cannot be reduced to value accounting but value accounting and serve to assist social governance. Only a PSYOP has us believing otherwise.

    As stated at our website www.bibocurrency.org, the root fallacy is the notion that money can simultaneously be both a unit of measure and scarce commodity of variable value.

    You might be interested in this presentation too:

    bibocurrency.com/images/Presentation%2011%20junio%202013%20final%20eng.htm

    Marc

  27. Etienne Hayem Says:

    Dear Marc,

    “My analysis separates physical properties form functional logic. Money is not a physical store of goods and services, value is inseparable from goods and services, therefore since money cannot “store” the goods and services it cannot store value. Money is not a physical medium of “exchange” of goods and services as it cannot carry goods and services and therefore neither can it carry their value.”

    I agree with you : value is inseparable from goods and services. Intrinsic value belongs in the real stuff.
    but we can give value to this paper, system, coin, whatever, and give life to it.
    and we do and we have done and we keep doing it.
    Like people value a fake painting, as it represents the original, even if it’s not the original.
    You give value to the 5 euros in your pocket. People do.

    So money can store that value, if we agree to do so, if we give it that power.
    Money is not a physical medium of exchange, it is a representation, may it be physical or not of the real goods and services and therefore can SERVE as medium of exchange. Money can carry the value of goods and services, it is as valid as the good itself in the community of trust, but it doesn’t carry the intrinsic value of the goods and services themselves.

    If you need to drink, you need a glass of water and water, not 1€ for the price of a glass of water. But you exchange money, that carries a certain amount of value for the drink.
    Or don’t you? what do you exchange?

    I agree with all what you say in the opposite between a scarce commodity and unit of measure etc.. this is clear to me.

    I believe social governance is linked since Value is absolutely subjective :
    1) to people
    2) to context

    Money, Value is human related, therefore it is not a hard science.

    There are so many way to see different value to stuff. This is why, bringing the Human, the people, the one that give life and power to this tool to decide, choose, be aware of what they give value to, is for me not an option.

  28. Sepp Hasslberger Says:

    Let me try to summarize from my own point of view:

    Money is a record of valuables (an object, service, or other consideration) having changed hands or having been supplied, as part of an economic transaction, by one party to another.

    The only purpose of money is to record the agreed-upon value of such transaction, and to represent a collective promise to supply, at some time in the future, an object, service or other consideration of agreed equal value in return.

    Money represents credit, which is “a record of having given”.

    Money also represents debit, which is “a record of having received”.

    Its object is to facilitate economic activity by providing a record of – and allowing a time delay in – the exchanges of valuables that constitute economic activity.

    - – -

    Since we would like to overcome the limitations and pitfalls of the current monetary system, perhaps we should even find a new term to use instead of “money”, which is heavily laden with multiple, and at times conflicting, meanings and ideas?

  29. Marc Gauvin Says:

    Dear Etienne,

    Money cannot both represent value and be the value it represents.

    If money is a measure of economic value and also is ascribed intrinsic economic value then money is prone to becoming the object of transactions rather than just a representation of the value of goods and services of transactions.

    If we want to be logically consistent, we are not free to do whatever we imagine, but rather we are limited by the logic of the objects and functions we define.

  30. taotech4096 Says:

    I think any currency either digital, paper or gold is in it essence an information storage about our relationship between each other and the environment. Clearly there is no “information” about environmental impact in all this currencies. The information contained in a price tag is mainly related to supply, and demand wich is clearly process manipulated by few people in the world. The only economic system i understand that could effectively outrun in the shortest time with poverty, war, social and technological elitism, massive waste of resources and extremely dangerous environmental destruction is a Resource based economy as presented by jaque fresco and the venus project. I now many people reject the idea immediately by comparing it to preconceived ideas from the past history of economic systems. But i deeply encourage studying this concepts an ideas deeply to truly understand them and be able to criticize them constructible. It takes long long study and analysis of this proposal to make sense of it.

    ¿Have you deeply analyse the RBE, proposals and ideas Charles?

    By deeply i mean understanding the goals of this system, the theoretical basis in terms of ecology, psychology, sociology and technology? I saw a couple of comments around the web and in your book Sacred economics about it, but i could sense where made from a partial understanding of it.
    My background studies are as Industrial Engineer, Renewable energies, Emerging technologies, design for sustainability, Macro Economics, Business management, human behavior, ecology.. well Holistic sciences. And it took me 4 years of continuos education to understand the full implication and coherence of a RBE. truly a paradigm shift and clear aim for global transition for the better of all people in the world and not just a few. Alternative currencies surely needed fro transition.

  31. MaverickofSouth Says:

    Taotech4096,
    I do believe there is some validity to Jacque Fresco’s Resource-Based Economy and Venus Project. Where I find fault with what he proposes is, for starters, when you ask Jacque Fresco how resources would be allocated in an RBE, his response is that one “applies for what one needs.” This implies that there is a big brother/communist element present in his system that simply won’t fly. That doesn’t engender the trust we’re looking for in a system, long-term. I do believe, however, that the communist element of the economy he proposes can be easily tweaked out. I would also say that he places perhaps too much emphasis on technological advancement as though it were the savior of man (bad hyperbole). I’m not sure I believe in the ecological soundness of a global community that is dominated by technological advancement. I don’t believe in a global community that is dominated by permaculture either. I do believe there is a good mix of both that feed off of each other to complement something that is ecologically sound.
    The Venus Project is the one economic proposal that resonates with me the most – along with Fresco’s logic and understanding of the human condition – from what I have seen, thus far. But that is more than just a shift. That is one huge jump. Because you are moving into what I see as the long term goal; a society free of money, with success being defined by happiness and trust being the currency of exchange. There has to be a phase-in period to that paradigm.
    In reading the comments above and the attempts to define “money” and the value it does or does not hold, you see the difficulty in understanding how money does or should work. You also see the difficulty in reshaping, restructuring, and redefining the nature and function of money in any economic model, existing or proposed. The currency exchange simply isn’t ecologically sound, period, IMHO. The more formulas applied to it, the more we, the people, get screwed. So we know in the immediate, we must wean ourselves off of the dependency of currency and exchanges for our survival and quality of life. Then we must wean ourselves off of physical currency and formulas, period. That also includes developing social values that support this and the economics of the future.

  32. Dlight Sky Says:

    It’s awesome that there is such a deep exploration on this thread of the meaning of money. It is indeed rather mysterious because money seems to wear so many hats.

    I personally believe the goal of any currency should be to “model human transactions”. It should neither encourage nor discourage the spending of money. However, we can see that the current fiat currency system causes money to be scarce basically because the banking system cleverly and automatically removes it from the economy, ie steals it). Therefore the effect of the current system is to strongly inhibit human transactions because of a lack of money to represent (model) them.

    Many progressive currency designers think that the reason rich people and the financial system have so much money is because of hoarding. This is a mistaken understanding of how the system works. The banking system prints money every time they make loans. Then when the “interest” on the loans is paid back, this money conjured out of thin air becomes *their* money.

    This represents money earned for doing nothing. This distorts the meaning of money which ideally should be “work, goods or services” already provided to society.

    It is this “money for nothing” that creates the 1%. Not the fact that rich people hoard.

    If banks and governments couldn’t print money out of thin air, then the 1% would disappear.

    Among other things, this problem is what Bitcoin fixes. People who don’t see Bitcoin as progressive are missing this important point.

    Furthermore, the “scarcity” of Bitcoin is very different from the scarcity of US dollars. As I mentioned earlier the scarcity of dollars is caused by the banking system sucking them out of the economy as we have been experiencing since 2007 with their “deleveraging”.

    The scarcity in Bitcoin, is not a real scarcity because Bitcoin is designed to become more valuable over time. When Bitcoins increase 10x in price (as they have since the beginning of the year), the total money supply increases by a factor of 10. So the money supply of Bitcoin is in fact very elastic.

    And this appreciation in value is very close to the socialist ideal of everyone being equally enriched by holding Bitcoins.

    Because Bitcoin is truly decentralized, it automatically robs power from those who used to be the gatekeepers of the monetary system.

    Many currency ideas may sound “progressive” but they don’t have the proper incentives to become widely adopted. The fact that Bitcoins become more valuable over time give a strong incentive of people to jump in early.

    Bitcoin has created an entire eco-system of digital currency. I don’t think it’s necessary for one coin to perform every function. There can be separate coins for many different purposes: for example, Stable Coin which acts as a price reference, Micro coin for free microtransactions, Private Coin for anonymous transactions, Integra Coin for reversible transaction.

    Just as in a factory, you have many types of machines all working together to provide a complex function, so too can we have several different interlocking currencies working together to model the many different needs and styles of human transactions.

    The Bitcoin eco-system and its decentralized nature should be embraced and built upon.

    People who think that Bitcoin some kind of capitalist libertarian scheme are completely missing it’s true importance to the worldwide progressive movement.

    But in the case of proposed alternative currencies, there are highly practical issues involved that are independent of whether a currency is sufficiently “socialist” or “Commons”, which I believe is being debated here.

    The practical issues are thus:
    1)

  33. Dlight Sky Says:

    The practical issues are:
    1) How will a currency system be desirable enough to overcome the tremendous momentum that the entrenched currencies hold?

    2) If it succeeds in sparking growing adoption, how will it prevent brutal suppression from many powerful interests who stand to lose by its success?

    3) How will it avoid being gamed and manipulated by 3rd parties?

    Bitcoin excels at all 3 of these practical points. If your proposed currency system can’t automatically surmount these challenges, then no matter how well-intentioned, you are not designing a system that has a chance at revolutionizing our economy.

    Bitcoin, on the other hand, continues to grow exponentially, with a huge developmental and entrepreneurial effort building worldwide. It has rendered most theoretical discussions of currency obsolete.

    What was money in the past? Fiat currency declared and controlled by governments and large banks.

    What will be the future of money? The crypto-currencies, out of reach or control by any central authority.

  34. Marc Gauvin Says:

    Dlight,

    Your “practical issues” are popularity issues not currency issues. BITCOIN simply is not a solution to anything because it perpetuates the wrong model.

  35. Marc Gauvin Says:

    In any event BITCOIN has already been gamed attacked and can be stopped by the conventional powers.

    The real practical issue is how to get people to liberate themselves from the Money PSYOP.

    Consider the following:

    Please keep in mind that if money is a measure of value and it has to be, it can only come about as a result of the prior existence and transaction of goods and services, right? Also, it can never be worth more than the goods and services that it represents. If such is the case, then:

    - The only way to increment one’s balance is to forfeit value.
    - One’s balance can never exceed the value forfeited to generate it.
    - Therefore if power (i.e. a net increment of value) is generated with money it is no longer functioning as a measure.

    There can be no “power” in money because value in, can never exceed value out. Hence, the real problem with money is not WHO has the “Power of Money” but rather it is the errant definition of money and the system where money can be power. What we are exploring through those links, is that Passive BIBO Currency is the only valid

    Simply, if your money is worth more than your stuff then you are in a delirious economy.

    BITCOIN is about “The Power of Money” and for that reason alone has nothing to do with decentralisation of economic power.

    If I were the powers that be and were acting to preserve my drachonian power over others, I would have invented BITCOIN as it reinforces the using money as wealth as opposed as a mere measure of wealth.

    Our mission is to give everyone equal and unfettered access to a common open technical standard for the stable measure of economic value, the function today’s “money/currency” should fulfill but doesn’t and neither does BITCOIN. To review our achievements in clarifying and refining the true function of money go here:

    bibocurrency.com/index.php/downloads/14-english-root/105-passive-bibo-currency-achievements

    And to unravel the Mind from the Money PSYOP go here:

    bibocurrency.com/index.php/downloads/14-english-root/101-book-page

  36. Marc Gauvin Says:

    Errata:

    …. What we are exploring through those links, is that Passive BIBO Currency is the only valid ..

    Should read what are exploring through the links below, is that Passive BIBO Currency is the valid standard for money as measure.

  37. maggie Says:

    digital money is still money, reinforcing separation and self-other relations. Whenever a medium of exchange exists, it will always be monopolized. Abolish money www.petitiononline.com/7771111/petition.html Abolish evil

  38. Marco Says:

    On 2003 in Italy we invented a new monetary system based on a non-scarce currency, basic income and free-interest loans. We called it FAZ, Financial Autonomous Zone. After ten years our theory is perfect to build a post-crisis new economic system. And we wish to build it starting from cryptocurrencies.
    Can you help us?

    More info: faz.im/english/faz/

  39. Marc Gauvin Says:

    Marco, I would love to have an exchange you can reach me at info (at) bibocurrency.com

  40. Dlight Says:

    Marco I’d be happy to discuss building a crypto-currency based on your system.

  41. Marco Says:

    If interested in FAZ project, you can write to info@cenpea.it

  42. Matt Bennett Says:

    Charles, good thinking! I agree with your take on wasting computational power and energy for these coins. To that end, I love how Ripple is now awarding XRP to users who donate their idle computing power to distributed scientific endeavors. Also, we must remember that the future is a polyculture comprised of many resilient solutions to each problem. Perhaps only a mixture of complementary currencies can fulfill the complex needs and desires of Glocal Communities. Thanks to digital wallets, it’s now easy to carry and trade in many currencies, all from your pocket mobile.

  43. Matt Bennett Says:

    So why not use PPcoins for one transaction, USD to pay for fuel, Philabucks to buy artwork and get a massage, and Freicoin for books online…

  44. John Galt Says:

    You should check out www.kachingkaching.org – P2P mobile digital currency made easy

    -John Galt

  45. Anne Says:

    This was an outstanding read, Charles. Although I don’t think the adoption of a communist/socialist ideal that you appear to be promoting is a good thing. These points have already been addressed in this forum, so I am not going to get into it. I just want to add that I have enjoyed reading all the comments on this forum. People are very economic savvy. Many thanks.

  46. poetspietnik Says:

    digIDs, taxes, bonds and putsch protection
    plus.google.com/u/0/b/110100351831106053963/wm/4/110100351831106053963/posts/eTn7i8NFwfv
    www.youtube.com/all_comments?v=QiKF8JN1qmk
    plus.google.com/u/0/116078767850550744794/posts/cuJGVz2gocV

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