ECB should plan to issue a digital currency!

2018-09-18 00:07  nodraghi        [permalink]

→ Reuters: ECB has no plan to issue digital currency: Draghi

Here's an idea. Just an idea, floating it here to see what you think, no concrete plans yet. The internet should float a new digital currency. "Wait, what? We have Bitcoin/Litecoin/Ether/... already, are those not internet's digical currencies?" I hear you think. Well, no. They're intended to perhaps become currency, but that kind-of totally failed. The world wasn't ready for Bitcoin when it hit us, and all the nice plans kind of prescribed to one day use bitcoin as currency, but as the hype and dust are now somewhat settling, it's clearly unfit for that purpose. It's still great at what it does though, and it could perhaps serve really well as something like gold: something that holds value you can buy and sell and will most probably get bought and sold in the forseeable future, according to current market behaviours. And there's the blockchain which it all runs on, it's a great proof-of-concept of a public ledger that some industrial settings could greatly benefit from, who knows perhaps in a slow movement from the fortified castle paradigm to the zero-trust concept.

But as a currency? No. Currency is allergic to strong ups and downs in the inherent value. "Didn't we have all this already, the US dollar doesn't have inherent value as well, since we've let go of the Gold Standard?" Well, no. The price of gold may now be free-floating, but since the entire US economy and a sizable part of the world's economy is running on US dollars, you could consider the entire economy as what's carrying the real value of all those dollars. I'm oversimplifying here, but some big large-scale economic metrics appear to work reversed for the US-dollar because of this. A currency as we know them now also had a central body that goversn both the internal use of it, and the powers that exert on it from outside, other currencies and macro-economic movements.

So here's my idea: because Europe is looking to do something about copyright on the web, and newspapers — and perhaps journalism in general — are struggling, something like the European Union should float a digital currency, specifically to make micro-transactions on the web. And I really mean micro. Listening to a song? Bam, something tiny moves from your online wallet to the musician(s). Viewing a video? Bam, something tiny moves from your wallet to actors, directors, lighters, screenwriters and background-painters. Read an article? Bam, you get the idea. How much? How many articles are in an avarage newpaper? How much does a regular newspaper cost? Calculate back from that to get a good first unit of value.

As an alternative way of payment, it could complement the Euro, and only later move up the ladder if there's a base of users with accustomedness. But to get there some important details need to be set up just right. It will need a governing something, but I wouldn't hand it over to Frankfurt. The time is right to involve the people. Bitcoin is doing just right without central oversight, but the required checks and balances need to be baked in. Anything new like this should also be design 'of and for the people'.It will need its proper legislation to get to serve as anything official, an get it accepted as a bearer of value, but by limiting who can exchange how much to and from real currency, for example a weekly global limit on conversion, could dampen the risk of large-scale mutations induced by panic. Or by limiting the maximum amount you could hold per user or per device or per account, could limit the importance of this new stream of cash in regard with the entire economy.

Also as an internet-centric application, every user wanting to participate needs to run the software, but it should be entirely open so each of us can govern that our security and privacy is catered for. Only then it's ready for designing the conduit with which you let the websites you visit know what credit you provide when consuming songs and articles. There needs to be something like a public ledger, since that would make it a new skool digital currency, but requiring every mobile device to keep a full copy of the ever growing full ledger is absurd. And it is also limiting the maximal number of transactions that can get processed in limited time, so that needs to get decentralised as well. I'm not sure how, but I'm sure there are people smarter than me that have been deep enough into the theoreticals that could draft what it takes.

But I'm just dreaming aloud here. Innovation hurts and is hard work. And there are always those that don't want anybody to challenge the status quo.

Update: look, look, this is also about something like that!

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