Precious metals were deemed as more marketable goods because of their characteristic features, mainly their divisibility, storability (or non-perishability, as they don’t decay with time), and rarity (i.e., limited supply). These features were absent from other commodities. However, the last few advancements in computer science, mainly public key encryption and the advent of the internet, mean that most goods, if not all, can be made just as marketable as Gold, if not more.
Vril is nothing but a “soon-to-be-coming” framework (more specifically, a Holochain p2p (h)app) over which to do the same.
Vril is a platform (much like the ERC20 standard) where anyone can create “tokens” (or “promises”, as used in the technical document), own them, value them (subjectively, that too in the denominations of other such tokens that one trusts), transfer them (to those who “accept” them, i.e., trust the promise, or have faith in the undoubted solvency of the issuer), andhave them converted into other tokens. It differs from ERC20 in that last part. ERC is just a specification; Vril is a full-fledged exchange system. Specifically speaking, it achieves the last part via a Ripple-like mechanism: bartering one token for another until you end up with that which you wanted (be it for holding or for transferring it to someone who would only accept that token which you apparently don’t possess but can exchange with those who do, or with those who possess another token which can further be exchanged for the token you want, and so on, up to any finite level (roughly speaking)). The argument goes that, thanks to this virtual bartering that information technology enables today, we no longer need something like Gold (the role that Ether serves in the ERC20 economy).
Again, I’m a layperson in crypto, blockchain, et al., but I understand generally. How is Vril different from other platforms or exchanges where one can trade tokens?
You don’t just trade tokens on Vril, you create them and value them there itself. You hold them there, you transact them there… It’s like the digital counterpart of the real world economy.
Let’s say you issue three tokens A, B and C. I personally don’t think the C tokens are legitimate or trustworthy, for one reason or another… So I choose to “trust” (and yes, there literally is a function by that name in the implementation) only A and B. Then I get to say, “look, I value 1 A to be equal to 5 B”. That’s it! That’s all I do on my part. Supposing I own 100 A tokens, then all day long, my node (my wallet, my account, call it whatever) would keep fluctuating from owning 100 A units, to 500 B units, to any combination in between (that adds up perfectly to my net-worth in any and all such denominations).
Basically, that’s how I set up my value judgements. Others do so too, and that’s what plays a key role when one goes to barter tokens (as described above).
The thing is, your (and everyone’s) value-judgements (as described above) is what powers the exchange system (remember that there’s no universal denomination in Vril). So I (or rather, my node), even when sitting idle, is being used to power someone else’s transactions, and in doing so, my wallet’s holdings are bound to change.
For example, if Bella possesses A but wants B (to make a payment to Tom), she can come to me and I’d be more than happy to give her B tokens in exchange for A tokens (5 B tokens for every 1 A tokens, to be precise). Also, note that all this happens virtually over the network.
It simply was not possible in pre-historic times… If I have 20 eggs (which, as a vegan, I’d never have, but suppose I do) and the tailor wanted breads, it simply was not feasible by any standards for me to somehow magically convert 10 of my eggs into 1 loaf of bread. However, things have changed, thanks to computers and the internet.
When payments exceed income it is called a trade deficit. I don’t know how you can say there is no such scenario.
Yes my brain often confuses left-right, imports/exports, credit/debit, buying/selling, especially I’m writing fast. I wonder if it is some kind of disability but it doesn’t indicate that I’m speaking nonsense, which, along with other words like ‘spewing’ and ‘incoherent’, and references to totalitarian arithmetic, seems more befitting of twitter than a civilised discussion.
Hi A-Man I haven’t read the whole thread, but I thought I could helpfully chip in. You are clearly processing and progressing a lot in your thinking as documented here, but sometimes your self-confidence seems misplaced. The deeper I got into this subject the more problems I found with the meaning of words, exactly in the way that you saw fit to redefine ‘backing’. Historically backing refers to the redeemability of paper money for metal, which was the standard of value and which was stored in a known quantity in a vault by a trusted authority. Any other use of the term is IMO metaphorical, and potentially misleading. A clearer framing of the same question is why people accept money and value it. So please be more aware that other people understand the same words very differently.
Also you use the term mutual credit in a way that I dispute, and authoritatively contradict thomas greco when you assert that mutual credit is somehow different to credit clearing.
Another over-confident and borderline offensive remark was
I’d love it if [@artbrock] makes Holo give up the pretense that it can create a truly stable currency. 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.
Austrians who view money as a commodity would say that price is a function of supply and demand but there other determinants for example prices can be set by law. Also there are many ways to influence demand depending on where you are in the ecosystem, and if you can control supply you can control the difference between supply and demand, which is the price. Also when you are redeeming money you can constrict supply by simply not issuing and continuing to redeem.
So I suggest you balance your Austrian commodity money perspective with the credit theory of money which is its perfect opposite, and together they point to a deeper truth. Practical and theoretical problems of commodity money are perfectly solved with credit money and vice versa. There can be no perfect money because the very idea of money contains paradoxes. So don’t let me catch you arguing just one side again.
With Vril you seem to be trying to do something original. This is a great thought experiment but I would like to assure you that you are as unlikely to find something original in monetary science as to find an original sexual position or chess opening. There are only a handful of interesting design parameters in monetary theory; the real design and novelty (if any) comes in implementation, where the theory meets the the particular market, the particular technology and the particular power politics.
The kind of thinking you are doing will I hope lead you to a similar conclusion. Mesh credit systems are great mental constructs but I’ve never seen one working, pathfinding is very hard to decentralise efficiently (ripple counts as centralised afaik) and they only work with a sufficiently dense network of relationships. Furthermore, at least in modern culture, there is a kind of taboo on lending money socially, and many people prefer to get credit from sanctioned institutions than from each other. These reasons plus the fact that ripple contains neither a means of final settlement, nor a means to manage trade imbalances (which would make final settlement unnecessary) means that personally I don’t see much scope for mesh credit systems at this moment in history.
@resilience-me, to provide a bit of context, yesterday I decided to reply to no-clue, and so as to avoid garnering unwanted attention I posted my reply as an edit on post 96. Here I’ve copy-pasted the same:
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 Holo chain , and it was awesome! Let’s hope that this time the refactoring ends up looking equally awesome (and equally hot! ;–)
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…
My fault… Totally admit… But it’s not me using the word ‘backing’ metaphorically anymore, it’s @artbrock and Holo as in when they say their HoloFuel is backed by hosting.
It’s not me who’s saying mutual credit is decoupled from credit clearing; it’s @artbrock who asserted that. I’m against that assertion too. To them (Holo), just the fact that there are positive balances and negative balances should be enough to call something mutual credit. In my opinion, mutual credit systems are systems in which one group (the -ve balance group) owes to the other group (the positive balance group). Moreover, what they owe is and MUST always be something concrete and explicitly defined. Furthermore, everyone in the system is, by the very fact of choosing to be in the system, sure of the solvency (the ability to repay the debt) of the debtors.
As an example, if owing 1 unit implies owing 1 boomerang, and it’s fairly easy to assess how many boomerangs one might craft in a day (by looking at their height, health, gender, etc), then if I owe 100 units, I owe 100 boomerangs. Such a credit system is in a sense backed with commodities (real wealth); the credit money that arises in such a system is defined in commodity money; such a credit money is reasonably safe from runaway inflation; such a money is “good enough”, the highest title I’m capable of giving to any money! Haha!
I think you’d greatly benefit from reading my 3-minute article on my fresh understanding of the subject.
Sorry… My apologies… Just wanted to express my undiluted opinion… Don’t know (yet) as to how to reformulate sentences so as to make them sound more friendly…
I hope that was just an example. ¯\_(ツ)_/¯
Ridiculous! By the way, that’s what Holo says, and that makes perfect sense in and of itself. However, stable against what? Price is always denominated in the units of “something else”, as in “4 apples a Dollar” or “2 Dollars a Euro”. That which they (Holo) attempt to keep its price stable with is itself fluctuating in its own price, i.e., is itself unstable! Price stability is a pipe dream. Sure, there are relatively stable monies and relatively unstable monies, but those stable monies are a product of the dispersed decisions of the various actors involved in the market dealings (making the buy and sell orders). Sure, one can say I’m being a perfectionist while they’re not; that they only wish to keep it relatively more stable, even if by just a wee bit, however, any attempt to do so would count as price manipulation, be it “in the name of stability” or “in the name of God”! If they back HoloFuel with Hosting, it would by definition be stable in terms of hosting-units, as in “1 hour of hosting per HoloFuel”. Hosting would get cheaper with time. They don’t do it because they want HoloFuel to appraise in value slowly over time. I want HoloFuel to be a genuine money. I’d rather have it be “good enough money” and depreciate with innovations in hardware tech than have it be a current-sea that appreciates in value. Anyway, who cares!
Totally agree. A few things to emphasize here. I’m no pro-return-to-gold-standard Austrian. In my opinion, one should be a Utilitarian first Libertarian next. Under free banking, commodity monies would automatically become the dominant ones. I don’t believe in a strict 1-to-1 backing of all Money Substitutes with the commodity they substitute. The merits and emergence of credit money can be found in the Utilitarian philosophy on the subject. Credit money arises out of the use of Money Substitutes (paper notes, etc). Under free banking, banks (and in Vril that includes people like you and me and mostly big reputed organizations) get to be free to issue fiduciary tokens but within strictly narrow limits; there’s a responsibility thrust upon the issuance of credit money; creditors are forced to be prudent in lending credit. The issuance of credit money causes wealth transfer. What commodity money does is it prevents the kind of inflation (and wealth transfer and misallocation) we see today by keeping a check on the issuance of credit money. All I’m saying is that in mutual credit systems, debts should look like “2 units owed, meaning two 2 hours of hosting owed”, and not “2 units owed, meaning 2 units worth of services owed”. That too purely for a utilitarian purpose; debts that look like the former are sane money. Debts that look like the latter (i.e., fiat money, Ripple money that’s denominated in fiat, HoloFuel, et al.) make me nervous because they have not as tight a check on inflation as is present in the former.
Yeah, you’re right. It’s just a thought experiment. There’s nothing original about it. As I said, money is a medium of exchange. In a market society, goods and services are traded; the media of exchanges can only be some of those goods and services (those which are more marketable than the rest). Barter can be called a System of Exchange. Barter is not Money, it’s (some of the) the goods that are bartered that are Money. Similarly, Vril is a digital system of bartering digital Money Substitutes; Vril is not Money, it’s (some of) the tokens represented in Vril that can be called Money Substitutes. Vril is like a huge building where you can bring in tokens of one kind and have them converted into tokens of another kind (for use in another platform or whatever); just that. Like how in Ripple I can pay even a distant person with whom I’ve got very little to share with…
That’s my worst fear by the way… I don’t think it would be hard to decentralize, though I fear finding the right path might be computationally too challenging and time-consuming…
I don’t wish to get into big detailed debates about money any more, so i’ll just pick on one point in your article.
If Silver qualifies as Money (which it does),
This statement suggests a naive phenomenology of money if you can state something categorcally about it in opposition to all the other opinions. Understand that money is first and foremost an idea, a belief, a story in the context of a specific society. In fact each society and each person has different ideas about it. One reason money is so difficult is that the same word and the same tool is used for many different functions. Imagine there being only one word for brush and then people arguing what is the best way to make a brush when in fact some want to clean their teeth and others want to polish their shoes and others tidy their hair. Consequently whenever I hear someone asserting what money is, I assume they are either ignorant or propagandising. If I say the best brushes are small with a long handle and unidrectional bristles, then I’m probably speaking for people who want to clean their teeth. Money and statements about money reflect power and political interests.
Also as a social phenomenon, it’s worth hearing the government’s perspective on the question, because as Aristotle said, money exists not by nature, but by law. Our fiat money systems have been coincident with great prosperity, but also overconsumption and inequality. in my opinion it really doesn’t matter what the money actually is, what matters is how well a money system works in practice and in context, for individuals in the marketplace and for countries in the global marketplace, who it serves and who serves it, where it pushes the risk and rewards - this is where monetary science quickly merges with economics.
It’s as though you don’t understand the context. Anyway, I’ll leave you with an answer. It is true that Money does not have a strong catallactic category; its definition relies on the word “commonly used”. It was already discussed later in the document (of only you’d read the in-text citations too) that there are other monies too, or what we call the secondary media of exchanges. True indeed, such a reasoning (as in “if Silver is Money, then so is my ice-cream”) is not sane reasoning. However, I’d established the case for secondary media of exchange in the later section; it would have been redundant to repeat it beforehand. The Silver argument was a taunt, I admit… But to sum up something in a 3-minute article requires sacrifices; you’ve to put the significant conclusions first, the extensive discussion later; at least that’s what the IRAC standard of journalism says. If only you’d been patient enough to read the whole of it…
False. Totally false. Correlation does not imply causation. You’re running into a logical fallacy. If anything, it has only hampered our progress. We’d have had flying cars by now if it were not for the misallocation of resources that fiat inflationist policies of the world caused.
That’s what happens when you learn from experience (or more specifically, from historical understanding) in a field in which the myriad of causes, events and actions cannot be individuated and studied separately in a laboratory, i.e. in the field of economics. Anyway, I hope you were merely emphasizing it as a “coincidence”.
Your opinions about money are the same as what mine were a long time ago… Clearly, I can’t convince you… All I can say is follow your understanding of Money to its logical conclusion and then say whether you really hold it that dear to yourself.
and others allow you to go into a negative balance only if they think you’ll be able to pay it back or if they can hold it over your head somehow, or if they want to just be nice and clear the debt. In Ripple, a 15 year old system, you are always in a “trade deficit” until you have managed to clear the IOU. Your comment about that Ripple (multi-hop mutual credit) somehow “puts Zambians into a global trade deficit” is nonsense. as I already said, the “deficit” is a fiction, you deliberately allow someone to go into more debt than they can get back because you know you can exploit it.
Sorry I didn’t read the full doc. It would have been much more than 3 minutes for me.
When I said coincident, I didn’t state any causality. You stated causality when you you asserted that fiat money caused a misallocation of resources. We couldn’t possibly know what fiat money caused, because you can’t disentangle the notion of fiat money from capitalism, from power, from the energy glut, from technological advances, from the petrodollar agreement and US hegemony, and from all the alternative histories. All you can say in a short comment is that the two phenomena were coincident.
Please also note that in one short post, you have flatly contradicted me, made the same error you accused me of, implied that you are years more advanced than me and concluded with a patronising remark. You said earlier.
Don’t know (yet) as to how to reformulate sentences so as to make them sound more friendly…
Here are some tips:
Instead of ‘false. totally false’ which sounds like how about ‘I don’t understand why you say that because…’
instead of “I can’t convince you” or “your heart knows the truth”, how about “I don’t have space/time to get to the bottom of this right now”, or “would you like to discuss this key point to find where we disagree”.
instead of “we would have had flying cars by now” how about "I believe that social technological progress have been retarded overall "
Instead of "you made a logical fallacy, how about “it seems to me that there is a logical fallacy here”
Instead of “clearly I can’t convince you” which implies that I refuse to listen to the voice of reason, how about “can you link me to more information on this”.
All right, I’m triggered and I’ve now spent more time than I intended trying to be helpful.
I haven’t been rude to you. Multi-hop mutual credit is 15 years old. If you want to go in and attack it based on that it does not work with macro scale trade, it does, so it isn’t true. And what I said about payments is true, otherwise it isn’t a payment but a gift. Even with temporary “deficits”, Ripple only stores any credit balances when there are temporary deficits, otherwise they are cleared. It consists only of “trade deficits”.
It takes my effort and time too… I’m deeply depressed to say that I won’t be available for chat on this forum for a month now.
Before I go away, one more thing. It gives my heart warm satisfaction and relief in pointing you that in asserting the following:
you may be wrong there. You see, there’s this thing called “praxeology”, the aprioristic science that our God Mises blessed us with. You may benefit from checking it out. Again, you may be right; I’m not saying in any way that I know better. I clearly am much less experienced than you. So not giving you any advice; just sharing an observation I made which made me realize how much we previously thought to be indecipherable can be deciphered with the right mental tools.
Also, I’d beg that you reconsider whether we have been rude to you and whether the rudeness of an opponant is sufficient to establish that one’s argument is right. Again, I can be wrong. Perhaps rude people should be condemned to hell, as an extreme case. [Haha!]
Thank you.
Sincerely yours, and yours alone [Haha!],
The A Man
Addressing some real genuine concerns (which I couldn’t have addressed some months ago) [cc @MaxxD],
I don’t buy that argument at all. It runs into itself. No idea why some of the prominent Austrians assist that this is true. Jefferey’s assertion that Bitcoin is valuable (in and of itself) because of the utility of the payment network that it is, is in my understanding cyclical. Sure, there’s no arguing over why and how the price of Bitcoin rose (the Regression Theorem explains it perfectly), the origin story remains a mystery. In my opinion, in the early days of that network, it simply gave people joy (as in removing some felt uneasiness) in possessing coins of a novel crypto network that was the product of so many isolated yet connected developments in the computer sciences. However, I don’t think that that holds true anymore. Back then, paying a dollar for this Bitcoin thing would often put a smile on the tech geeks who could appreciate the work of ingenuity that it was. However, I don’t think that owning Bitcoins is anymore associated with that feeling; plus most people (especially corporate investors and banks who’re swimming in it these days) don’t have the technical prowess to appreciate its ingenuity. Gold never loses its value as a commodity; a Gold ring on your finger would never cease to look pretty. Even setting aside individual value judgments about what’s beautiful and what isn’t, there will always be those who find it pretty. One can say that with Bitcoin too, that there would always be programmers who find Bitcoin “beautiful”. But even that’s shifting; for instance, Holochainers already find Bitcoin “ugly”, a work of “naivete”. Press (including our own Art Brock) is already fuelling this idea that Bitcoin is not eco-friendly, that it should be looked down upon with disgust (and rightfully so, in my opinion). As far as I know, no one (as of yet) says that a Gold-laden woman looks ugly, that Gold jewelry feels disgusting, that Gold causes cancer (haha!), that a gilded decoration makes a mansion sell for cheap. In fact, science has already established that Gold is truly rare, that its formation requires stars to explode (or dead stars to merge, or whatever), that in the periodic table there’s no element like it, and even that we’d never be able to fuse Hydrogen atoms to reach at Gold feasibly, and especially that there’s no hope to find a new metallic element in the higher (unexplored) orders of atomic masses (element 115 (dubbed “Vril”) is an exception though; haha!). We already have found other (and in most cases, “better”) cryptocurrencies. There’re already thousands of cryptocurrencies that can substitute Bitcoin and be better, faster, and more efficient while doing so. The most important argument that truly tilts the scale in Gold’s favor is that of its industrial usage. Bitcoin is left speechless at this point.
In my opinion (and this is no financial advice), to put it mildly, Bitcoin doesn’t have a bright future. The value of Money that is due to its use as a medium of exchange vanishes beautifully when it is no longer deemed as a good enough medium of exchange, or when the society no longer wishes to exchange (as in people constricting their cash holdings). With Gold, I don’t see why that might ever happen in the foreseeable future. And even if it did ever happen, Gold would never drop to zero. However, with Bitcoin, when that drop comes it will be as rapid as was its rise. Most knowledgeable investors already consider Bitcoin to be a speculative bubble. Though in the short term, it might appreciate like hell if fiat crashes before Bitcoin! Haha! Mises never said anything on what might happen should a neutral money rise to dominance; in my opinion, when the time comes (and when they can figure out a means to do so), Bitcoin hodlers would rightfully choose to flee to real Monies (perhaps the Secondary Media of Exchange), taking the Bitcoin price (to plunge) with them! Every Bitcoiner is looking for an exit strategy, no? It’s just that there’s none as of now.
By the way, in Vril, there’s this concept of “thank-you” tokens (i.e., NFTs) that function very much like Bitcoin except with a twist. For instance, Newton might issue a million “Gravity Tokens” that express Newton’s gratitude to the beholder for owning those tokens and express appreciation for their act of holding those tokens as a contribution to the development of his theory. Furthermore, when implemented as a ‘Vril contract’, it would be certain that no new tokens that bear this note get minted. Those tokens would be safe-as-hell (and in my opinion, more resilient than Gold itself), at least as long as prime-factoring (that’s at the heart of the public-key cryptography) doesn’t get “figured out”. No one has even proved whether the problem of prime-factorization is not NP-complete (most agree that it’s NP-hard at the very least), let alone “crack” it. And no, quantum computers are NO threat to it whatsoever. In a sense, this truth (that yet has to be established as formal proof) that some problems will never be easy to solve is more comforting than the truth that creating Gold out of fusion (i.e., out of thin air) would never be possible on a reasonable scale. Moreover, you can always (if you’re lucky) find Gold on other celestial objects. Cryptography doesn’t suffer this problem. However, such “thank-you” tokens can potentially lose their utility as a commodity. Newton’s “Gravity Tokens” would have a hard time when Einstein shows up, writes his theory, and issues “Relativity Tokens”.
Anyway, such thank-you tokens are the closest kin to Blockchain Tokens that I could find in the Holochain space. I hope it ticks your mind into wandering.
Then, one may reasonably ask, what on Earth are Holochainers building in this “fintech” space (don’t like the word ‘cryptocurrency’; even Nakamoto never used that word as far as I know; fintech sounds reasonable)? Again, the officials have utterly failed to convince sound and logical people. Though I can’t speak on Holochain’s behalf, I would be able to on Vril’s.
As a side note, Hoppe confused liberty rights with claim rights in his Ethics of Argumentation (a book that he hasn’t published YET, partly because of the same). Anyway, you’re right. At least historically, the most marketable Money became the dominant one always. However, it’d be wrong to use the word ‘inefficient’ there; the use of many Monies would not be ‘inefficient. The most one can say is that the use of many Monies would collapse into the use of just one of them (whichever is the most marketable among them all). Economic calculation is always bound to have “arbitrary” “inefficiencies”; arbitrary as in the sense, arbitrary changes in profits and losses induced not by genuine profits and losses but by changes in the purchasing price of the Money concerned. Such changes are present there ALWAYS, be it when only one Money is being used (in the society) or more than one. One must never forget that the price of Money (in terms of other goods and services in the economy, for example, 4 toothbrushes per Dollar) is also a result of its (the Money’s) supply and demand. Those so-called ‘inefficiencies’ in economic calculation induced by changes in Money’s supply and demand, and allegedly more vehement changes in the many Monies’ supply and demand, can never do done away with. The emphasis is on Demand here. Supply can be stabilized if the Money is backed. Money’s Demand depends on a gazillion factors; roughly speaking, Money’s demand is a function of whether people wish to trade, and I don’t expect vehement changes in that. As for the changes in the valuations between different Monies (and the Monies I’m talking about are the Secondary Media of Exchanges, which are just as good enough a Money as Gold in my opinion) who knows! Rephrasing as “would multiple Monies lead to more vehement changes in ‘arbitrary’ profits and losses”, it depends on:
Whether the multiple Monies are in an ongoing ‘network-effect’ war with each other, which further depends upon:
Whether there does indeed exist differences in the marketability of those Monies, and
Whether such differences can be universally identified, which is only the case when
Those differences are not “subjective”.
Noone would argue over the superior imperishability of Gold compared to that of a burger. But on a debate on the imperishability of Apple stocks vs Tesla stocks, no consensus could feasibly be reached. As for corporate stocks, asset-backed securities, etc, Mises has argued that they qualify as suitable ‘Secondary Media of Exchange’. Read my 3-minute article for more. Emphasis should be on the word ‘Media’ (plural) there. As opposed to ‘the one Money’, the Secondary Media of Exchange are neither singular nor permanent; they come and go, they’re transient. If it all sounds unconvincing, that’s because Money, unlike most other catallactic categories, does not have a strong definition in praxeology. But what been said on it (at the expense of a few sacrifices in the strict axiomatic approach due to the addition of some assumptions) is still the only most sane tool with which to understand the emergence of money. Such an understanding dictates that if it were not for the objectively inferior marketability of most goods in most dealings, Money as we know it (Gold and Silver) would never have arisen. You can’t pay a cobbler with Tesla stocks! If something challenges this reality, it challenges Money (Gold and Silver). I see Holochain Vril as challenging this assumption that you need cash (Gold and Silver) for any purpose whatsoever, especially for trading in indirect exchange. Without going technical, I believe the future is that of the Secondary Media of Exchange. Furthermore, the way Vril has been architected, one can say that the future is of Indirect Indirect Indirect Exchange, as in you won’t be acquiring Gold to not consume but be later exchanged with, as in this case, the cobbler, so as to get your shoe polished. You’d rather be ‘holding’ Tesla stocks (oh no, not them! Haha!) among other things, as a generalized example. Again, you do not ‘hold’ Gold, you just ‘keep’ it; ‘holding’ most Secondary Media of Exchange bestows you with gains (not just ‘apparent’ gains) as is the clearly visible case with dividend-paying stocks. Also, in this context, in Secondary Media of Exchange I’m being generic enough to include all sorts of financial products and assets; sure there are differences between the two, but for this context, those differences don’t matter. What matters here is the discrimination between ‘The Money’ and ‘The Secondary Media of Exchange’. Anyway, when asked to pay the cobbler, you take a tenth of a Tesla stock and automagically convert it into Starbucks’ Coffee Tokens, something that the cobbler would accept as payment. This automagical conversion, or rather, translation of tokens of one kind into another would simply not have been possible had it not been for the superior efficiency of Holochain in carrying out such a rippling path-finding algorithm. Now, of course not all Money is created equal; the top stable corporate stocks, relatively safe financial instruments, and indexes, would undoubtedly be AAA-rated Monies (i.e., your go-to choice for long-term holding), with Starbucks’ Coffee Tokens being on the lower side of the scale. With seamless translation between the two ad-hoc, Secondary Media of Exchange become not so ‘Secondary’.
Addressing your minor issues,
Since you seem to be familiar with UniSwap, a few notes for you. Though I’ve never programmed (let alone managed) ERC tokens, my understanding is that UniSwap is not a rippling exchange (something that Vril takes pride in being). UniSwap relies on liquidity pools of pairs of tokens (of “socks”; haha!); it works great for a few thousand tokens. As I emphasized earlier, when it comes to the Secondary Media of Exchange (something that Vril is deeply interested in powering), no such token enjoys universal recognition/acceptability. On the Ethereum ecosystem, however, the token Ether enjoys almost universal recognition and it is what most tokens provide liquidity pool against. But as an extreme case, imagine 26 tokens (A to Z): if A can be exchanged for B, B for C, and so on, then on Vril you would need consecutive possession and exchange of at most 25 of such media of exchanges (i.e., such tokens); on UniSwap however, you’d need a 25 + 24 + 23 + (and so on) number of liquidity pools so as to provide seamless and fast liquidity between any and all two of such tokens (unless you can batch consequent swaps on the client, something that’d require you to know the relevant sequence of such swaps that can lead you to the final token; something that’s built-in into Vril). Metaphorically, UniSwap provides liquidity whereas Vril is liquidity.
Anyway, as for your concern that people will, at least in group conversations, tend to stick to just one Money, only time will tell… I personally think against so. Hell, even language can be translated in real-time, let alone Money units. As for the calculation argument, I’ve already addressed it in my article. As an example, me borrowing 100 units of a Secondary Medium of Exchange called X means just that: I’ve borrowed 100 units of X from you which I must pay you back. As for whether I earn another Secondary Medium of Exchange called Y, convert it into X, then repay you, or I earn yet another Secondary Medium of Exchange called Z, convert them into X, then repay you, it doesn’t matter. What matters is that I repay you 100 units of X. What matters is for a calculation to be consistent in using only one Money for denominations; multiple unrelated calculations need not resort to any common monetary unit. I hope it makes sense.
My bad. I’ve now opted for a strict distinction between related terms where necessary and avoid generalization as far as I can. In retrospect, I can clearly see where I was mistaking. The Regression Theorem is all they have got in common. And the Regression Theorem applies to all Monies (i.e., all stuff being used as media of exchange). Besides that, they are different entirely! Their origins differ, their nature differs, their scarcity differs (hint: Bitcoin is scarcer), even their transaction mechanism differs. As for transactions, the nature of transactions, and the transaction costs associated with transactions, I’d love to add a few remarks.
Again, my bad. Representative-Money: [https://www.youtube.com/watch?v=_HR7ocy6eAE]
I’ve resorted to using strict terms with clearly defined definitions (though that requires assuming very high expectations from the reader; anyway, who cares if superficial people exploring this space from just the surface ever comprehend our terms…). Money Substitute is the term I use now. Thanks for pointing it out.
I’d love to distinguish between two types of transaction costs: the primary transaction costs, and the peripheral transaction costs. Their meaning should be self-evident. Gold has no (or infinitesimally negligible) primary transaction costs. Me handing you 1 kg bar of Gold transfers exactly 1 kg of Gold from to you. It has no primary transaction costs. It does have peripheral transaction costs that are way too high (imagine carrying a bar of Gold around, let alone storing it safely). Hence we used to use Gold Substitutes (claims to a particular amount of Gold) which had both low primary transaction costs and low peripheral transaction costs. Bitcoin has very high primary transaction costs. Me handing you Bitcoins requires the use of an intermediary (the Miner), thus Bitcoin has a very high primary transaction cost. It also has a high peripheral transaction cost (running a full node is expensive). Tokens represented as signed entries in Holochain (h)apps (such as Vril Tokens) have no primary transaction cost; all that transferring 10 units of X requires is for both the parties to engage in a handshake (i.e., countersigning). There are no Miners who must facilitate transactions of Holochain (h)apps that implement digital tokens. However, you’d be justified in saying that it too has peripheral transaction costs; for instance, both parties must expend electricity to engage in such a transaction. However, even transferring ERC tokens has no primary transaction cost, but it has a very high peripheral transaction cost (the fee you have to pay in Ether). However, Holochain Tokens don’t even have any significant peripheral transaction costs either (a Holochain app eats very low power and space). It’s low on both primary and peripheral transaction costs. Also, you’re right: the elimination of primary transaction costs (and the lowering of peripheral transaction costs) can make Holochain cryptographic Tokens go mainstream, something that Blockchain’s never could. Also, HoloFuel’s [which is the first digital token being implemented on Holochain, in case you didn’t know] 1% transaction cost does not serve any purpose, though they have listed many a great excuses for its introduction.
As a side note, I think you might be confused about burnability of Bitcoins. Bitcoins are never burned; the Bitcoin implementation, as it exists, doesn’t burn any part of its transaction fees. Though such a burning mechanism can be implemented relatively easily in the Blockchain space. Plus if you consider that people lose their keys, then yes, Bitcoin is deflationary, which is great for any Money to be (as it leads to resource allocation in real wealth-generating endeavors, ceteris peribus; we’re on the same page regarding that). However, as I’ve already argued, Bitcoin is not real Money; Bitcoin is a neutral Money, unlike Gold which is a Commodity Money. Sure, being neutral means devs like us get to implement deflationary mechanisms into it, but at what price? Having to keep a Money “neutral” so as to build into it a deflationary mechanism is a very big price to pay. Sure, from a Utilitarian perspective, all that should matter is the utility that such a society enjoys from a deflationary policy. However, even Mises, the great Utilitarian, has established that “neutrality of money” is logically impermissible; via argument a contrario, such a Money can only exist in an evenly rotating economy (i.e., a world of zombies; haha!). Hence I believe we should stop trying to invent a digital Gold and rather focus on making exchanges more efficient. That’s the only innovation worth pursuing in this fintech space; everything else (in cryptocurrency space) is a bluff! That’s what they (Art et al.) have got right about Money, albeit by chance. We (Holochain projects) should not be building Money, we should be building digital Money Substitutes of real Monies. Our digital tokens are not (and must not be) Money per se, rather they are Money Substitutes represented digitally. The AAA Monies that such Holochain Tokens should substitute are, in Misesian terms, the Secondary Media of Exchange (which includes all sorts of financial products such as Stocks, and even some special commodities such as Gold or Oil). We should not stop there; the goal should be radical tokenization of everything (including consumable goods) that brings the entirety of the financial industry accessible to all. Check out this illustration that speaks of some similar notions. Such radical tokenization, together equipt with a powerful and efficient exchange system (Vril’s rippling exchange system) should provide liquidity never seen before. Holding cash (and cash equivalents) provides the beholder liquidity. When liquidity is no longer a concern, cash (hence Money as we know it, including the sterile Gold that does not lay eggs) would not be deemed as worthy of possessing. Anyway, who knows how the future might unfold.
Anyway, that was my attempt at explaining all things Holochain, an explanation from an Austrian, to an Austrian. I hope you find it as helpful as I found your concerns in clarifying my state of mind regarding my understanding of (the peculiarities of) Money & Exchange over the past couple of months… If you find any fault in my conclusions, please please do let me know; I’ll be obliged (as I already am). Feel free to share your own personal opinions on Bitcoin (its neutrality, its future), on my distinction of transaction costs, on my so-sought dominance of Secondary Media of Exchange, on radical tokenization of commodities, of most asset classes’ assets, of equity (stocks), of consumables, and even of services (such as hosting), on my argument justifying my hesitation in advocating for embarking upon building ‘artificial’ deflationary mechanisms in code, and just about anything related. Your insights are highly valuable.
