Crypto Backed-by-Circuits
~ not fiat or gold-backed; HARDWARE as the real store of value ~
TL;DR — A blockchain that tracks and accounts computer hardware, to pay a dividend to the hardware’s owner in return for running the internet. Put all your cash into a Server BANK, and feel secure that your money DOES have real value — because cash is now capital equipment being used by and paid for by businesses and consumers. Any company can produce hardware, and if they have verified performance, they are assigned the appropriate currency value and each chip is listed on the blockchain with its associated coin. NO FEDERAL RESERVE to print money; instead, chip companies oversupply hardware until dividends drop in proportion to costs. That abundance lowers costs to you, and leads to other big benefits. Details below! :)
Gold-Backed vs. Computer-Backed vs. Fiat
All our paper money used to be “backed-by-gold”; you could take your paper to the bank, and ask for a fixed amount of gold or silver in return for it. And, because people are weirdly obsessed with that neigh-useless metal, their paper seemed to have value, as well. But you can’t eat gold.
Later, governments got greedy and decided to stop handing-out gold for their paper. That’s “fiat currency”. The paper only has value because that’s the currency used for collecting TAXES. You better have enough of the stuff on-hand to pay the government, so you have to trade other stuff for the paper, which perpetuates demand, giving it ‘value’. But you can’t eat paper.
Edison, apocryphally, wanted a dollar “backed-by-real-estate” — we would have paper in circulation in equal proportion to the land’s total value. Because more land wouldn’t be created, this would be a “deflationary currency” — which might sound bad, but it means your currency increases in value over time, compared to goods and services. Details are hazy.
But Edison was on to something — you can’t eat land, but your CAN grow food on it! If the currency is “backed” by PRODUCTIVE ASSETS, then the money DOES have REAL value. Unfortunately, most assets depreciate at uneven rates, performance and utilization vary, accounting and allocating yields among components is difficult and unclear… Oof. In most cases, turning productive assets into a currency is just a mess.
You’d need a kind of capital equipment that is durable, reliable, with easy and fast measurement of its performance characteristics. It’d have to be compact, for portability and storage, and it should have a very high physical density of value, like gold compared to water. It should also be a form of capital equipment that we would like to be super-abundant; we’ll need to have continued business-uses for more and more and more of it. Why? Because if all the currency valuation from every nation and small-holder flows into that capital equipment, we will be funding an oversupply of it, subsidizing it! We want to pick something we’ll still use, when over-abundant.
The best class of capital that meets those requirements is computer hardware. And, once you own a particular individual coin (or fraction of one), that coin’s dividend from operations is accredited to you. Because it is uniquely ID’d on the blockchain, you can also track its lifetime performance; poor quality can be determined quickly and individually, to ding or ban companies that produce inferior components.
Computer-Coins Drive Growth
At the same time that your extant coins are earning a dividend for running the world, there would be a multiplied level of investment from chip companies into improving computer hardware MANUFACTURE. If a company can ‘print money’ at half the cost, they win until over-abundance once again drives down yields. So, your original coins will become quickly obsolete; yet you are still likely to make better returns compared to keeping dollars in a bank! Just look at the viability of bitcoin mining rigs; the chips DO pay for themselves, BEFORE they go obsolete.
And, this march of obsolescence is good — it means computer hardware is of higher quality and quantity than it would be if only supported by natural demand. All the bond-holders, gold-bugs, and real-estate-giants would want to hold a portion in computer chips, and that slosh of $Trillions$ would kick Moore’s Law in the pants! This is of immense value because it lowers costs of compute and services to the business customer. When businesses don’t have to pay as much for those services, they can BECOME viable in niche markets where they would have otherwise failed. And, they earn a larger MARGIN in all cases, growing and competing faster as well as recovering better from downturns.
That is the key benefit! We want currency-holders to subsidize those entrepreneurs; if we can find seventy areas in the economy to improve by just 2% apiece, then total GDP is FOUR TIMES LARGER. Lower the threshold to business’ viability, and that can happen. If we make a blockchain that tracks and accounts for dividends from capital, then the world’s vast treasuries subsidize growth instead of playing with monopoly paper. Wooosh!
