Ridiculous White Paper 32b

Kampot, Cambodia, author’s pic

This idea is such an obvious non-starter I’m sure I will be laughed out of further discourse on the topic of cryptocurrency and distributed ledgers, but I can’t stop myself from writing it down and publishing it.

My only consolation is that whatever idiocy I come up with must pale before what is in plain sight in the year 2021, when upwards of 20% of all the money there ever was in the US of A was born. Central Banks are right up there with the Wizard of Oz and the Emperor with New/No Clothes.

Fiat currency has been based on something, a physical commodity, at some points in history. There are competing theories about the evolution of money but now fiat currency is based only some Government’s assurance that everything is cool. Even when it obviously isn’t.

Cryptocurrency is challenging fiat currency because, for one reason, at least some forms of cryptocurrency are based on something. Bitcoin, the original, was and still is based on actually accomplishing a task, which is called Proof of Work. There are important implications to a made-up fiat currency, and there are also important implications to Proof of Work.

The Work that is required to ‘Mine’ a Bitcoin is: Solving a Really Hard Math Problem. I’m not making this up. The math problem has certain characteristics but essentially it’s just an adjustably hard problem. Whoever solves it first wins and gets some Bitcoin. The process continues. Money is brought into existence through labor, if not quite like Marx described in his Labor Theory of Value.

The problem that people are justifiably concerned about with Bitcoin mining involves the Externalities; in this case, the computing power required to solve Really Hard Math Problems and keep solving them as they necessarily get Harder and more people compete. The aggregate electrical demand from Bitcoin mining is approaching the aggregate demand of Argentina, I hear. That might be a Cyber-Urban Legend, but I don’t think so.

You can relax, though. Some believe the Proof of Work Externalities problem has been solved. The solution is to switch from Proof of Work to what is called, Proof of Stake and I don’t like it one bit, but then I don’t like the Externalities associated with the current Proof of Work implementations either.

Proof of Stake means putting money into an account and leaving it there, aka ‘Staking’ and by so doing, gaining a proportional share in some kind of new Coin and in some cases, a share in governance. Sounds to me a lot like the way things are now.

So, before we reproduce the current inequalities that legacy financial systems have brought us to with Proof of Stake, I’d like to take one more look at Proof of Work.

Finally — It is now time to ask my Big Dumb Question: Is solving Really Hard Math Problems the only way to demonstrate Proof of Work?

Just asking. I’m sure other people much more committed than I am to the cryptocurrency field must have thought about some other alternative. Like, what about using something that is inherently beneficial as Proof of Work? Like, planting a tree?

Ridiculous, right? It’s too analog, too slow, too variable — how would you even verify it? It would be gamed.

Let’s skip 30–40 steps right here and get right to the point — anything can be gamed. Anything. The Ten Commandments can be gamed. God can be gamed and they are on a regular basis.

Fiat currency is manipulated every day of the week and twice on Sunday to favor existing power centers. That’s why there is interest, from outside existing power centers, in a currency that cannot be so easily manipulated

With the satellite coverage and fast networks now available, it is not hard to imagine a ultra fine tuned database using GPS to specify where trees are needed and confirm when they have been planted. As a top-down project, the Tree Database would take years and never really work. As a distributed project with the right motivations driving the process forward, the Tree Database pilot would be up to speed in months.

Planting Trees is a metaphor and a placeholder in my Ridiculous Whitepaper for all labor directed toward an explicit Social Benefit. Labor-based currencies tend to break down because people disagree over how to value their time as a Doctor, Teacher, Massage Therapist or Stay-at-Home Mom, relative to others. We get hourly conversion factor envy.

Something like a Defined Social Benefit Hour could become a Proof of Work standard. A lowest-reducible quantum unit of Socially Beneficial Labor. Context could be taken into account, unlike the rigid systems we suffer under now. Planting one tree, depending on the location, might represent more than one hour. Growing food to be donated to a community food bank could easily be parsed into Defined Social Benefit Hours (DSBHs).

People who are conditioned to use existing wealth to generate more wealth will not support a DSB system because it would quickly undermine the way most but not all wealthy people maintain and extend their advantage.

Under Capitalism, Owners attempt to determine the value of Labor. That is being seen explicitly in the current US corporate leadership’s many public statements about workers not wanting to work because of Unemployment benefits. At what rate are they being asked to work and under what conditions?

In a Defined Social Benefit System, everyone can vote and be part of the on-going discussion and fine-tuning of Social Benefit Hour Equivalencies.

System information with such granularity has never before been available as an aid to governance. All trees planted are not equal. We can track that now automatically, as well as bushels of potatoes grown and delivered to a Food Bank, or solar panels installed, or bike lanes marked out, or any agreed-upon Social Benefit.

If we track it, we can use it as Proof of Work, the birth of value. New currency.

The Benefit Coin.

Of course none of what I’ve described here could ever happen.

First it would be derided as primitive, which it is, but if by some fluke a few people got into it and the idea got legs, it would next be attacked analytically as seriously unrealistic, which it also probably is for all I know. But it’ll be tough to get an honest reaction from a biased jury trained to ridicule ridiculous new ideas.

Second, for people who are even more of a crypto and blockchain novice than I am, I should acknowledge that the crucial step of Updating the Block doesn’t link into Planting a Tree as easily as the computer that just solved the Really Hard Math Problem. I can think of a few approaches right off the top of my head that might restore that crucial link. I think that’s a detail, a big one, but addressable. In fact, it already is being addressed in the Proof of Stakes moves going on. Updating the Blockchain is becoming fee-based. There is an existing power base in Bitcoin mining already and it is resisting the shift to fees. Who’s in charge here?

The real question is, how do we want to be governed? By a few private individuals with enormous power, high opinions of themselves in most cases, and a bail-out bunker in New Zealand? By an all-powerful Party always making a list and checking it twice — to punish the naughty and reward the nice (who obey).

Or do we want Income, and/or Wealth, and/or Governance Share to be a function of doing socially beneficial things that, let’s say, as much as 2/3 of the citizens of a given jurisdiction agree on. There are plenty of benefits some people would claim that would have a hard time achieving even 50% agreement, much less 2/3. But I believe there are even more that would not be contentious.

How about, after preliminary vetting and training, going to a local facility of some kind, maybe a hospital or an assisted living community, and visiting someone who has explicitly requested visitors? Stay for a certain unit of time, be verified and maybe even rated by the person who received the visit and possibly a facility staff member. I’d bet some of my legacy fiat currency that a system like that would easily receive 2/3 approval.

It’s easy to spin out scenarios like a nursing home visit, especially since I am merely describing what is actually going on in the People’s Republic of China right now in Mega-cities, in Villages and in everything in between.

Coverage of China’s Social Credit System in western mainstream media emphasizes the way misbehavior, as defined by the State, is documented, recorded, and utilized in algorithms that may be restrictive (not being able to buy a train ticket) or limit credit availability. I have read that thousands of older women in villages all over the country observe and report on their fellow villagers, documenting instances of littering and as well as instances of picking up someone else’s litter or helping someone with a heavy load.

The Central Bank of China has also implemented cryptocurrency pilots in urban and rural areas.

What is happening in China is not in my opinion the decentralized, trust-free ledger, linked to a digital currency, that has the highest chance of reducing suffering and improving the human condition for everyone. I believe what is happening in China has a high chance of evolving quickly into an efficient management system for more than one billion humans, by reducing freedom and enabling high levels of inequality. The granularity does not support disintermediated peer-to-peer transactions — in China, the Party holds the Ledger, period.

What is happening in China also shows that a Defined Social Benefit system as a source of new value creation isn’t pie in the sky.

Mark Anthony claimed that

the evil that men do lives after them

he good is oft interred with their bones

We don’t have to let it be that way; in fact, the substantive basis that enables peer-to-peer transaction without authorities getting between us as if we were children can be the good we do specifically so that it is not interred with our bones.

I’m not claiming this is a simple but have you reviewed the U.S. Tax Code lately? Maintaining the privilege and power of an increasingly small number of people while billions of frog people are being slowly parboiled isn’t simple either. But they’re doing it.

If they can, others can, although it will be strenuously and relentlessly resisted.

Any system or network of technologies that can be tuned to individuals as an instrument of oppressive social control can also be turned around as an instrument of liberation. The creation of new value that translates into doing things and buying things from doing what most people agree is the right thing sounds pretty good to me, even though it’s obviously ridiculous.

Pile on!



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