I've been following Ben Laurie's thoughts on Bitcoin and now his new paper on An Efficient and Practical Distributed Currency.
He envisages a group of 'mintettes' that can agree on the distribution of coins, transfer them between individuals, and mint new ones, deciding between themselves how to distribute these. I like the idea of the different mintettes having different Public Good type ideas of where the newly created coins get assigned. The key here is to grow the coin supply at a rate that is lower than the growth of value held, so holders of your coinage get some appreciation, and distribute the new money to worthy causes, or to clients of that mintette.
In effect you're doing an end run around Gresham's law, in the same way that the Brazilian Real did - and not how the US Govt is doing with dollar coins. This is the bit that the libertarian summer camp got backwards - although they traded with gold, they set prices in US dollars.
We do have a precedent for this, and it is an encouraging one. In effect, each company stock is a private currency. The success of Silicon Valley has been helped by the ability of companies here to mint this money-like stuff, and distribute it to stakeholders and investors alike. The difference is that they create new tranches of 'coins' at board meetings, though stock option vesting is a bit like the smooth currency growth that Bitcoin and Ben envisage. Again the goal is growing the money supply at a rate below demand, so that those holding it are rewarded.
In effect we already have things that are more or less like currencies, and these new ones have some encouraging precedents.
1 comments:
The Brasil example did not break or tricked Gresham law. Gresham law only applies when government fixes the value of two currencies at an artificial rate (and even in that case the difference between the natural rate and the artificial rate has to be bigger than the expense to trade the currencies).
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