I’d say that all currencies are backed by something, i.e., all currencies are backed-currencies. In fact the very word ‘currency’ means a token of something (or at least that’s how one should think of it). Fiat is backed by power/authority, Gold is backed by faith/fear, token based backed currencies are backed by the thing they tokenize, mutual-credits (and loan-based currencies) are backed by the future, Vril is backed by exactly what it says it’s backed by (the Vow), and so on… This definition of currencies makes them a unit of ‘promissory-note’; in fact that was the central idea behind Vril’s design. Don’t you agree?
EDIT (May 2021):
Was re-reading through the posts to reply to @noclue who’s waited a month (my reminder just went off)… Wanted to add that I no longer ascribe to the above statements… Hell, I no longer use the word ‘currency’ anymore; the word is just plain silly! ‘Money’ would be a much more precise term. Money is a commonly accepted medium of exchange. Note that a medium of exchange is a good (a good, commodity, or a service) just like any other; it’s just that this commonly accepted medium of exchange is more marketable (unperishable, easily storable, etc) than others. Money Substitutes (digital numbers) can be fully backed one-to-one with the Money they substitute, or partially (in which case it is called a fiduciary media). Money Substitutes issued by a bank or some other entity about whose solvency there exists no doubt can be used as Money (despite part of the Substitutes issued being unbacked, or fiduciary). Hence, credit money is qualifiable as Money. The tokens that mutual-credit systems represent are qualifiable as Money. Regarding which I must add that I have neither the energy nor the spirit to update the original document to reflect my new terminology; sorry Michael; I’d really love to update the doc to reflect my new Austrian thinking around the argument, to discuss a couple of setups in which Vril can be used (hint: reserve (commodity) tokens, credit-tokens, “thank-you” tokens, derivate tokens (what Art calls Computed Tokens)), to update the section on mutual-credit, and discuss the effects (and signals) of the issuance of all 4 of them, and finally differentiate between Wealth and Money, and also remove all the rubbish from the document that @matslats rightfully pointed (though I’d like to add that Matt’s joke about the homo-economicus certainly applies to all economists but not to the Austrian ones; we start from only one ‘given’: that man acts, deriving all our conclusions logically from this one axiom, meanwhile proving the case for liberty, all while sitting in one dark room. To deny our conclusions would be to deny thyself. Note that I’m no professional Austrian yet… Still learning my way through…). Let alone the best-practices document on writing Vril Contracts (especially for those contracts the tokens of which would act as Resources in some REA network)… Have picked up work on a minimalist (h)app as of now; won’t abandon it until complete…
Art Brock is right in his decision of backing HoloFuel with hosting power. Money-Substitutes (what you call currencies) not backed with real goods or services (i.e., what I described above as in Money Substitutes backed by “fear”, “authority”, etc) are not Money! It was plain silly to declare them Money, I admit. Didn’t know enough back then or was confused… Moreover, the word “currency” sounds like Money could be neutral, that it could just as well be plain numbers on a computer. That “medium of exchange” could just as well be replaced with a “system of exchange”. Again, the Austrians have already established that in this ever-changing world, Money can neither be neutral nor stable. Art Brock is right in insisting that all sound Money be backed by something equally sound (i.e., backed by consumable/vendible goods, commodities, or services that can be reasonably backed by). I don’t think hosting (as a service) is a service that can be reasonably backed by. If it is me issuing the promissory tokens that say “1 unit buys you 1 hour of hosting time” knowing that I indeed do have a nice working CPU, then given I issue a reasonable amount of tokens, I’d be able to guarantee that the tokens issued are fully backed 1-to-1. If I were the CEO of a big corporation with millions of such machines in its data centers, I’d be able to issue many more tokens and still be fully sure of my corporation’s solvency. However, if I have no idea how much “capacity” I have, I’m left in the dark. I won’t be able to safely calculate what amount of tokens would be okay to be issued. Or as Michael Burry would say, if you don’t know the amount of leverage involved, you don’t know enough (to make a move). It makes total sense for Holo to be a corporation in itself (like the AWS, Azure, etc) and do utmost KYC of its hosts (its employees, that is). Again, Art Brock is right with that regard too. Finally, one last question remains: that of stability. I’d love it if @artbrock makes Holo give up the pretense that it can create a truly stable currency. All mentions of the word ‘stability’ should be removed from its design papers. Price is a function of supply and demand. You may control supply, but you cannot control demand. Even supply too you can only control in one direction. Basically, the way I see it, ‘stability’ is a very nice excuse to engage in price manipulation. Hell, stable against what? Stable against the unstable Dollar? Stable against your so-called unstable Bitcoin? It’s gonna have to be stable against the currencies you’ve dubbed unstable and hence unworthy! That’s not all. The design of HoloFuel is full of inconsistencies! The latest medium article on HoloFuel reads like a joke! Not to mention that the video on it got taken private… And there has never been anyone to respond to the responses the article has received. Trust me, hiding under a blanket doesn’t help anyone. But wait, there’s more. It’s true that I WAS wrong about “backed currencies”, but you guys (the Holo team) ARE STILL WRONG about it, and that too in a lot more profound way! 1 HoloFuel isn’t backed against 1 clearly defined unit of hosting! When they say that HoloFuel is backed by hosting power, that’s not what they mean. Rather, what they mean is that the total amount (nothing to do with marginal utility) of HoloFuel buys you the total hosting capacity. There is a hosting price (denominated in HFs per unit-of-hosting) besides the HoloFuel price. And the hosting price is, by definition, subject to change. Plus the hosts decide the HoloFuel’s floor price; the whole attempt is “to reduces the volatility of HoloFuel prices, which makes it easier for our ecosystem to make long term plans”! Utter nonsense! I’ve never seen anything like it before; it’s worse than fiat! There is no such thing as a “currency designer” (something that they take pride in calling themselves); calling yourself a “currency designer” is calling yourself a conman! Those looking for sane money must look elsewhere. Their words are inconsistent; they say they do not wish to compete with Bitcoin or become a world currency (a competing money, that is), yet they go on to build a whole new currency for use in their hosting service. If they were true to their words, they’d have rather decided to use one of the existing ones to power their network, or created a derivative token on Holochain backed 1-to-1 to the reserve currency(‘ies’, in which case the LIFO mechanism would come in handy to manage the price relations between those multiple currencies). For instance, Ethereum Swarm doesn’t have its own brand new “revolutionary” currency; it simply uses Ether to compensate its hosts. At best, it would have made sense for Holo to create a “layer 2” lightning network on Holochain for Bitcoin and use those tokens to compensate whoever (in whichever (h)app) needs compensating, or in other words, a bullion bank that stores Bitcoins and offers HoloBits, a promissory token that says “I’m fully backed by 1 Bitcoin”, a token that takes full advantage of Holochain’s (or perhaps, Vril’s) technological superiority when it comes to creating, anonymizing, transacting, and translating (converting one token/claim into another) such tokens. In fact, that’s one of the first tokens that I expect to be created on the Vril network. Plus it would have made perfect sense for such a HoloBank to charge a wee bit amount from its customers for keeping the reserve safe (basically the private key(s) of the bank’s accounts on those traditional crypto networks) just like Bullion Banks charge from its customers for keeping their Gold secure. This revenue could very well have funded the continued development of Holochain. A distributed, decentralized, global, open-to-join (h)app that offered hosting-service would never be in a position to issue hosting-backed tokens since (and as I’ve said already) it would not be able to ensure that the tokens it issues are backed by its reserve (its total hosting capacity) without extensive KYC (which destroys openness), but it could very well have structured itself such that it wounds up not needing to issue its own tokens. For a simple Swarm On Holochain (h)app that offers storage service to store encrypted files on its great-many hosts’ devices, the (h)app would act as a marketplace cum match-maker for customers and hosts; hosts list the ‘maximum amount due’ that they’d tolerate (before deleting the user’s data from their device) and the price per GB per day that they’d charge, the customer uploads his data to the (h)app (automatically selecting the cheapest hosts, thus fuelling competition between hosts). The customer pays periodically so as to never let that maximum be reached. The unit of those payments being someone else’s token on Vril, be it a Precious Metal Backed Tokens issued by a Bullion Bank, be it an Index Token (a Derivative Token, that is; what Art calls a computed token) that indexes top corporate stocks (all issued as independent Vril tokens in and of themselves), be that a Ripple-style token that can be translated from and to tokens of users who belong in that little isolated independent shard of the web of Vril Tokens’ Trust Network, or something else. Simple! Basically, the point is that the design-decision of creating a dedicated token (the HoloFuel Token) that (as is evident, falsely) backs hosting was a choice, a choice that could very well have been avoided entirely just by flipping the design.
@noclue, another clue would be https://www.artbrock.com/threebles/strategy. Clearly, anyone who advocates for using Triple Bottom Line as a prospective (let alone effective) strategy to fight climate change is either genuinely unaware of the ludicrousness of the scheme (and thus unaware of sane economics) or is aiming at image-improving! Radical privatization and radically accessible tort law infrastructure is THE ONLY rational way to allocate our natural resources appropriately whereby the market is let to decide on their rational (over)usage. Art B., check out this article (https://mises.org/library/economic-calculation-environmentalist-commonwealth) where Art C. (Art Cardon) addresses this issue; what a coincidence, no?
Let’s stay positive, though. I have got a hunch that they’re secretly up to something… Last time, it was RSM (Refactored State Model) for Holochain, and it was awesome! Let’s hope that this time the refactoring ends up looking equally awesome (and equally hot! ;–)
Yet, https://open.coop/collaborate/mutual-credit/
To summarize,
I’ve defined what sane money is; it’s a medium of exchange (and not a system of exchange).
Digital tokens of such Money count as Money Substitutes, hence good enough.
Credit Money arose out of the use of Money Substitutes; under specific conditions, it’s good enough.
Mutual Credit (and the truly p2p multi-hop Mutual Credit that Ripple is) is good enough.
Mutual Credit is good enough as long as it is clearly specified what 1 credit token entails, and as long as the solvency of the debtors is undoubted. You can’t say “1 unit buys whatever sells for 1 unit”. It has to be explicitly stated as to what 1 unit entails. That’s the one thing I don’t like about Ripple…
You (@artbrock) can reject the Austrian definition of Money altogether and vouch in favor of the ridiculous-sounding “neutrality of Money”, in which case I’d be at a loss to argue any further…
If HoloFuel’s design does away with the internal hosting-price mechanism and rather makes 1 HoloFuel be strictly backed by 1 unit of hosting (you’re free to define what that 1 unit might be), I’d be happily able to say that HoloFuel is also “good enough”. Until then, HoloFuel, in my opinion (i.e., seen from the Austrian lens, the only lens that can show reality) is perhaps a currency, a current-sea (whatever), but not sane money.
I hope this clarifies that which I don’t like about HoloFuel, @noclue. You didn’t get a response for 30 days, so I felt like responding myself. I’d love it if you could share the link to the medium article that talks about banking (or blockchain, whichever it was) being a Ponzi scheme! You may call blockchain a speculative bubble, but a Ponzi scheme? That doesn’t make much sense. As for banking, though I don’t understand the intricacies, my general understanding is that the modern banking system is qualitatively different from the Fractional Reserve Banking that existed in the times of the Gold Standard. The bank you serve is a product of forced coercion on the citizens and of unjustifiable discrimination against private banking (and the issuance of private currencies). Not only is it immoral from a Libertarian perspective, but even from a Utilitarian perspective, a society that adopts Free Banking prevents resource misallocation by virtue of keeping a check on inflation, thanks to the fact that under Free Banking the limit to the issuance of Fiduciary Media is much narrower than it is when there exists only one “monopolistic” Bank, let alone when the bank doesn’t even promise to be backing every note with the said commodity (Gold or whatever) as is the case when the bank has ties with the military! [I think @MaxxD will agree…] I don’t see how you may ever attempt to justify the existence of such a bank (the FED as it exists today); that is unless you’re a Keynesian, in which case you’re just as hopeless! Anyway, you’re right that Holochain is the future. Holochain is a priceless piece of art, the epitome of perfection! Those behind it (Art, Eric, David, et al.) are geniuses beyond doubt. It’s understandable to have high expectations from its other projects too. It’s up to Holochain (or rather, it’s our (Holochain’s) moral obligation) to realize the dreams that Blockchain showed us but could never realize by itself. The way to do it is via radical scrutiny where necessary. Anyway, gonna go back to learning & coding… I’d shut up for now. I hope you appreciate the reply; took hours to get it right and tame it down…
There is a need for more formal definitions around such higher-order operations, especially those that manage interactions with potential legal responsibilities.