posted comment to one of nick szabo's articles

This is a comment posted to Nick Szabo's article:
https://unenumerated.blogspot.nl/2017/03/collecting-metal-inner-and-outer-worlds.html


The "sound money" you've described I would call "forms of money based on efficient barter that works even in anarchy".

The "treasure" category carries value (as you've described before) based on some kind of "order" produced by the objects uniqueness (including history) and/or difficulty in creating it (via skill x time). The skill could be physical and/or intellectual, including a smart understanding of the target audience's desires.

But the "government fiat money" category to me is an advancement & simplification exposing a secondary essence of money, not a setback or unavoidable cheat by powers that be. The purpose of efficient barter is to make sure the trade is honest, resulting in stronger economic individuals & stronger societies. But protocols (law) that can be employed to enforce a reduction in cheats where a fair trade is not easily determinable by the parties in the exchange. I propose most needed trades can't be easily determined to be honest. Worse, many trades can be bad for society as a whole while optimal for the parties at the exchange. So we invented government to enforce laws. But to enforce laws & keep them in "sync", it seems a single money for a single government was needed. I am reminded of economic agents in an A.I. exchanging a currency in order to buy CPU time & memory space. The use of energy in CPU time is kinetic joules & the storage of bits in memory space is the storage of potential joules. The kinetic energy in our economics is oil/gas/solar/etc. The potential energy is gold,copper,buildings roads, etc. Another form of value I'm skipping is intellectual value of the law, building designs, & programs that run iPads, etc. They do not seem to be the same kind of "treasure" mentioned above, but they both are an intellectual property.

So to make a large system optimal in at least terms of strength, a higher level of intelligence beyond anarchistic efficient barter has won human wars: large centralized governments with a single legal money. Democracy aside, it seems to have achieved this via getting all the laws "on the same page" to create a coherent body via a single money.

Cryptography & technology may make governments obsolete only in name: there will still be some kind of system-wide governing (aka a protocol) we will choose to join that optimizes trade & (more importantly) the goals of a society. The possibility of choice in our governance will advance the fittest which may make all the difference in the world. In the end, biology will be replaced by machine. The current extinction rate & expected stopping of population growth shows the trend.

As a cyclical force acting on an closed (not isolated) thermodynamic system, the moon lowers entropy. It creates order that has been crucial for life & the concentration of ores in the mantle. For example of this thermo effect, you can randomly drop balls into a jar they will not be very efficiently pack especially if they are different sizes or shapes. If you shake the jar, they pack more efficiently which lowers the entropy (the cyclic energy injected comes out as heat while the mass inside is constant). It seems to be allowing mass on the surface of the Earth to congeal via our economics. Metals, silicon, & carbon fiber are created by removing oxygen from "ores" which results in a lower specific entropy per mass of the material. It joins our governed economic system for better command & control. It leads to more efficient thinking machines (CPUs control electrons where brains are stuck with molecules) & more efficient use of sunlight (solar cells are 20x more efficient than photosynthesis). Harder materials are lower entropy due to fewer possible states at a given temperature. They are more static (log-lived) & controllable. The released O2 gas increases entropy, offsetting the reduction, so Earth-wide it may not be a reduction. There is lower entropy per mass of our economic system as we switch from biology to machines.

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The point I would like to make is that you seem to be dismissing or neglecting fiat money. And yet, I believe you are the inventor of "smart contracts". Fiat money seems to be the simplified form of money that exposes the importance of contracts (which are limited and enforced by a higher-level of contracts called the governing law). A single contract unto itself is meaningless. It's importance is like the importance of having more than 1 economic agent. Contracts, like agents, must interact for a higher goal. Isn't a single currency important in such a system? For example, if the total currency represents total fluid control of the society's assets, and is printed or contracted with the economy in order to keep prices and wages stable, then a single unit (like the dollar) would represent a fixed percent control of the fluid assets. So with a stable currency to match available fluid assets under control of the assets, then the contracts can remain valid in time and space in terms of that unit. This idealized for simplicity and I'm avoiding the importance of mild inflation to prevent "loaning" hoarders ("rentiers" in classical economics) gaining interminable control of others without labor.