(Sorry for the grammatical errors. I type as a I think, and when I switch plurals with pronouns, it means that I have conceptually abstracted the pronoun's reference. I am not a writer. This was written from the perspective of developing software to encompass the subject domains of commerce, money, and transactions.)
For commerce and transactions to occur, it requires:
Performance is made through a transfer of wealth:
- real estate
- promise to work
- prior work
Trust might be built by:
- performance bond
Accountability is the interrelation of trust and performance over time. Reputation. The historical results of previous interactions.
What is trade/commerce?
- An offer consisting of wealth transfer (gold, time, property, etc.)
- Trust between parties (reputation, performance bond, cosigner, etc.)
Trust is a binary decision. It can be quantified and tracked.
Performance is an analog result (partial performance). It can be quantified and tracked.
Trust + Performance = Transaction
Communication * (Trust + Performance) = Accountability
If a computer system tracked the above, what do we need money for?
Brokers could offer wealth translation services. If you want gold but I only have time, we could introduce a broker to take my time and give you gold. True barter system with 100% liquidity.
Money becomes non-existent. Just Transactions. No more money supply. No more interest. Liquidity becomes moot. Liquidity is the result of individual choice to transact their time, gold, or property. If you had no gold or property, you would trade time (wealth).
Since USD would be a form of wealth in this system, it would be phased out naturally (unless it proved to be a good form of wealth storage).
The entire system can co-exist with the current system and transition seamlessly.
I imagine Gold would likely become the measuring unit to translate wealth, but it is not a gold backed system. Gold would facilitate communication of value.
The above would be fairly simple to design. Describe Transaction messages composed of Trust and Performance messages. Servers process the messages and store the results. All open source and the consumer chooses the company/server. A company of your choice would store your transaction history, validate the integrity and release the data to potential creditors upon approval.
What I'm proposing is simple: a common language that describes the basic transaction/contract (trust + performance). A framework that describes the communication but leaves the details undefined. Trust might be gained through reputation or performance bond. Performance might be made through gold or wheat (or USD or yen).
A common language replaces the need for a common transactional currency.
Currencies become wealth that is bartered.
Money as a transactional currency disappears. Only wealth remains. Wealth is defined by each person/entity. Iran can store its wealth in oil. A farmer can store his in wheat. Wealth translators provide liquidity.
Since wealth translation is expensive, the system naturally tends towards a common wealth like gold. But if gold is hoarded or unavailable, the system self-adjusts by re-introducing wealth translators or by changing the mutually agreed upon wealth to silver or copper or anything else. Dynamically, with no authority, responding to the best available store of wealth.
Pure barter, free from authoritative restrictions. Transactions occur through the common language.
Various companies would:
- process the transaction history (integrity)
- summarize and display the history (similar to a fico score)
- translate wealth from one form to another (wheat to oil to gold to USD)
- provide trust (performance bond, insurance, etc.)
Since all human contracts/transactions can be described as Trust + Performance, it works perfectly within today's system. It also survives a global banking collapse.
The protocol/language becomes the banking system. Each entity within the system is interchangeable. No hierarchy. Totally distributed.
Here's how the system might work:
Define a public specification for a Transaction. It would store who, what, when, and where. Not why or how the transaction was determined. The protocol would be openly designed like HTTP or HTML.
With that described, companies would fill various roles (these companies already exist):
- transaction coordinators
- transaction reporters
- transaction fulfillment
- wealth depositories
- wealth translators
- wealth lenders
- performance assurers
Performance assurers would be household names (Visa, MC, Discover, Amex). When transacting, Trust would be gained by saying: "All my transactions are assured by XY Corp". If you failed to perform, they would perform on your promise (whatever that promise was).
Present a card at a convenience store. The card would identify you. The store would likely accept various performance assurance companies (eg. Visa, MC, Discover, Amex). Trust is gained. Performance will be made through your preferred method (eg. gold). If the store does not accept gold, a wealth translator would facilitate the trade. If they do accept gold, your wealth depository would transfer gold to the store's wealth depository. The coordinator follows the process and sends the result of all transactions to the parties' respective transaction reporters.
With the exception of the coordinators, all of the above businesses exist today. Their only change would be to communicate through the public protocol.
There is a cost to all of the above, but the benefit is authority becomes distributed into interchangeable entities. It also allows total freedom of interaction between participants. No entity can gain control and it eliminates central banks and the need for a transactional currency. Maybe most importantly, the system is built with accountability (rather than authority) at its core.
In small communities, remembering the results of previous transactions is how people know who delivers on their promises.
This would do the same thing, but on a global scale. A protocol that tracks: "what was promised and if it was delivered".
Promises between strangers could be assured by a trusted entity (maybe a mutual friend or commonly known company). Each becomes an interchangeable node on the system.
Since money is "a promise to deliver value", the language is the money.
HTML is a standardized language that allows PC's to exchange text and pictures. No one profits from that standard and the rules are decided publicly through the non-profit http://www.w3.org/
Similarly, if we were to design a standardized language of promises, a decentralized monetary system builds itself. Promise Language.