[ExI] Bottom-up currencies

[Kelly Anderson]

On Thu, Mar 10, 2011 at 10:27 PM, Emlyn <emlynoregan at gmail.com> wrote:
> What's on my mind is that Money is, fundamentally, imaginary.
> Something it seems to do, which we understand viscerally, is provide
> us with "conservation of value"; similar to intuitions such as
> conservation of volume. If I give you something, you should give me
> back something of equal value. "Fairness" is mixed up in there
> somewhere.

One of the best books I've ever read on ANY topic is
Frozen Desire: Meaning of Money by James Buchan
He really captures what money is, what it's good for, some of the good
and bad things about it. I haven't read it for a decade, but it was a
marvelous read!! One thesis, stated in the title, is that money is
desire, frozen in a form for convenient interchange. And, that it is
good for nothing particularly until it is 'defrosted' by spending it
in exchange for something you desire.

> Except, that it doesn't look like that if you make the money. In that
> case, it's now something else, a confidence game. What is money worth?
> Whatever we think other people think other people think it is worth.

No, it's worth what the consensus think it is worth. In other words,
the things you desire are desired by others to the point that they
value them in today's money. Depending upon the currency, and exchange
rates, and trust in a particular currency, different sellers will
accept differing amounts of money in exchange for goods and services
(in a free market).

> So if I can convince enough other people that their confederates think
> their other confederates will attribute value to it, then
> it will have value, and I can go ahead, mint it, and hand it out.

Assuming that it is legal... it might not be in many places.

> Which governments do (and is one reason why the intuition about
> national government budgets being like a household budget are dead
> wrong).
>
> So I'm thinking that really, any group should have the power to make
> its own currency and work with it if they want to. They decide how
> much of it there is, when to issue more, and what the rules are.
> There's a lot of power in that, great links in the wikipedia local
> currency article talk about it.
>
> And I guess we see it all the time. Online games and social networks
> create new currencies all the time. There are lots of historical
> examples. But, it never seems to take off as a mainstream concept. And
> meanwhile, I think we often have opportunities for creative and
> productive endeavour stifled simply due to there not being enough
> currency around to make them go, largely because the community that
> understands the opportunity doesn't have the cash, and the people with
> the cash don't understand the opportunity.

The Second Life money (Linden Dollars) is an interesting case study.

> The ability for any group to just define and implement a new currency
> at the drop of a hat (and then another and another) seems to me like
> something that wants a platform. Particularly, if you could easily
> interoperate between currencies (because there was a smooth technical
> platform which provided for allowed automated administration and
> trading), the concept would be more appealing, because if you build up
> real value in a mini currency, you could realise that value in trades
> outside of the currency's community. And communities get to take
> advantage of the benefits (and bear the risks) of making their own
> currencies; micro-economies stop looking like a zero sum game in that
> context I think.
>
> Relating this back to bitcoin, that's trying to do something
> different. It appears to be trying to be a single currency (not
> designed to make many separate currencies), and the ideas about the
> money supply seem to be about trying to tie it to something external
> and objective and non-manipulable with respect to the participants,
> which goes in a different direction to what I'm thinking about (ie:
> actually giving that power of creation and manipulation of the
> collective delusion of money to the participants themselves). It also
> looks like it's trying to be digital cash, which is a laudable aim,
> taking away the power of the central institutions; I would propose to
> do that rather by groups simply abandoning currencies where the
> central institutions are letting them down.

The holy grail of digital money IMHO is some successful method for
micro-payments. I am convinced that when this gets implemented and
widely accepted that it will create new opportunities in the economy
that don't exist now, and that this will be a very good thing.

-Kelly