Bitcoin V2.0: The Research Coin Whitepaper
A Christmas gift to bring a bit of hope to people who lost it all, thinking crypto's value would never be proven - when it could still power global innovation beyond our wildest dreams.
What follows - after a summary and introduction - is chapter 5 from my 3rd book "Ethereal Value and the Crypto future", which serves as the whitepaper for a futuristic crypto-based system i've called Research-coin. It comes at the end of a trilogy of books specifically written to explain the how and why of money and value, in the distant past and going into the distant digital future. This release has been a long time coming, but my Twitter feed is telling me now is the time to bring some hope back to the people who are fast losing all hope, and many who've already lost all their money are left with only questions. It might get worse before it gets better, but it could get so much better, as far as crypto in general is concerned, as well as the bleak future of CBDCs, and i want to show that today.
When i wrote my trilogy of books between March and August 2021 (the books releasing in August), the crypto mania was still in full swing. Yet it was obvious to me it would all collapse, simply because the economics of 9000 cryptocoins existing and all being successful never made sense. Well, back then it was 9000, by now it's 22,000+. Blockchain is a wonderful invention, but it only solves a very specific problem. As per the example in my books (that being Theta) - blockchain doesn't solve the problems inherent to peer-to-peer video streaming. As long as those problems aren't solved, decentralized payments are an overhead increase over centralized payment processing, and nothing more.
I've been looking at Bitcoin practically since it's inception (think it first popped up on the tech website i visited in 2009), at which point i did the same thing many people did: conclude it's worthless and move on with my life, thinking it would bleed out over time. Except that it never did, and as i got very interested in finance and economics after the 2008 crash, i wanted to be able to explain why it wasn't going away and what the fascination here was after it continued to pop up year after year.
Over time and revisiting my arguments many times, i managed to split Bitcoin into its 3 constituent parts: A decentralized ledger, trustless verification and the coin itself. And i came to conclude that the decentralized ledger as well as trustless verification do have value, and tremendous value at that. Trust is a big issue in human history, and creating a digital system that all participants can trust without having to trust eachother - that's truly amazing.
And Bitcoin has proven that it works! The security of Bitcoin, even when the market cap exceeded a trillion dollars, has not been breached. No doublespends have happened, no wallet encryption's been cracked. It's all on-chain which is heavily monitored these days, so it's actually one of the few things we can still be sure of in crypto. And i can assure you, at a trillion dollar market cap, practically every hacker worth their salt on the planet had a go at it. The payoff would've been just too big to ignore. Just hacking altcoin "bridges" has yielded thefts in size that exceed all but the biggest bank heists in history on a regular basis.
But then we're left with the coin itself. Which can't have value, by any measure, and contains the brunt of arguments against Bitcoin. It's just software, i can copy my wallet infinitely and end up with an infinite amount of coins. I can "ghost" the harddrive, meaning making a 1-to-1 bit-for-bit copy, so i know i copied the wallet too. That's effectively printing money; were it not that, if even one of those wallets transacts, all others become useless. Meaning; the value isn't in the coin itself - it's in the network that determines where each coin is located.
And that's where i reached the real problem of Bitcoin and indeed all Proof-of-Work systems, the reason why people just can't get onboard with it (if price no go up): The work done has no value. I understand fully why Bitcoin "mining" is needed - the 50% security rule - but my question has always been why is the work we're assigning the network to do, nothing more than a giant brute-force password crack?
Cause that's what it is. Millions of machines asking "is this the right hash? No. Is this the right hash? No. Is this the right hash? No". Until one hash returns "Yes", that miner gets a payout, and the process starts all over again with the next one. Because of security, the difficulty even adjusts so more no's are needed before a yes is produced as more processing power is added.
I want to stress again, i understand why - but that doesn't mean it isn't wasteful, even inherently wasteful. That argument still fell on deaf ears last year, but now almost a year deep into a war and subsequent energy crisis, proponents don't ring as loudly as they once did. So while i've recanted on "it's useless"; "it's wasteful" has and always will remain true, and should be improved.
Added to this is are a few economical mistakes Bitcoin made. While Satoshi whoever he is is one hell of a programmer/systems analyst - he clearly isn't an economist. Examplary of those mistakes is Bitcoin's fixed limit, which many dead alt-coins have noticed is no guarantee for success. And Dogecoin openly mocks this, being a $10 billion market cap crypto, making it the 8th largest, while being created as a permanently inflationary joke. Even worse, Ethereum and other coins got it into their heads that being a permanently deflationary coin is even better!
To show this is stupid i can give a very quick example: If you have $10 in an economy with 10 people consuming 10 apples, each apple is priced at $1. Should another person be born as happens every so often, it would consist of 11 people, $10 and 10 apples. This extra person starts demanding extra income, meaning where previously everybody got $1 and it was in equilibrium, today everybody only got $0.91. Today - nobody eats.
Conversely, somebody dies, suddenly everybody is left with $1.11. Since the farmer selling the apples sees everybody get richer and sometimes buy an extra apple, he's gonna raise prices to $1.11. However, incomes don't snap up like that, they decrease and increase over time. Initially the farmer cuts production as he's left with an apple. Then 9 apples are made, until somebody has saved up for an additional apple. Then there's demand for 10 apples with 9 people. As it sells out, prices move up. But because everybody has savings now, prices overshoot $1.11 until demand/supply equalizes again. When savings run out, prices crash, and there's a recession.
Point being - the ultimate goal of money is to keep prices stable, not to increase (or decrease) in value by itself; exactly the opposite in fact! It's no coincidence that is the main mandate of the Federal Reserve, even when they suck at keeping prices stable. This is why gold and silver were the ultimate money for so long: Before 1800, all labor was human labor, meaning if there were more humans to mine gold, there were also more to mine iron and cut timber. Technology wise the pickaxe was all we had for hundreds of years. So the inflation rate of monetary metals matched the inflation rate of value I.E. "productive metals" in the economy.
And even then when i say stable, there were plenty of inflationary and deflationary panics and events along the way. It's relative stability; because whenever paper is involved, shit gets much more wild much quicker. But even then it loses to sticks. Yes, sticks - the English Split Tally Stick system, which served as tax payment for 700 years without a singe failure before it ended up being replaced by the gold system created by the Bank of England (who conveniently had alot of gold at the time).
In the end, i want something better than gold (and sticks), something that doesn't suffer from the liquidity issues of when we need more yet we haven't found more mines (or it takes time to start them up) leading us to trading sticks - something Bitcoin can't do with its fixed limit - yet that is still mathematically limited so we can't print whenever we want more.
And no, "divisibility" doesn't solve this, because it's a hoarding problem, not a divisibility problem. People don't want to spend anything, because no matter how small the fraction, if they wait a little, the fraction they need to pay gets even smaller. Unstable value over time is the problem. Gold suffers from this problem as much as Bitcoin does, only less so when Bitcoin is finally fully minted and coins start being lost due to carelessness.
So. THAT is what Research-coin is. It solves the value problem with Bitcoin by tying the work that needs to be done into work we already have done on a daily basis, so we can't possibly count that work as "wasted" like the current password-cracking nature of Bitcoin is - which is additional work we never had to do before.
This work i'm referencing is ofcourse Mathematical Research. Think nuclear simulations, AI research, protein folding, or even weather models. Governments and universities all over the world are constantly building bigger and faster supercomputers for their research that use alot of electricity - yet none of these are networked or linked (and nobody complains about that electricity usage). The issue preventing sharing of resources being the obvious one: Trust. How could the US government possibly trust the Chinese government computers to calculate their research accurately and without spying on it?
Well.... Isn't that exactly the only problem blockchain was specifically made to solve?
If Bitcoin 2.0 can calculate weather models in order to produce currency, then it's genuinely beneficial for the environment (or atleast to our understanding of it), rather than detrimental. The small cost of energy for piggybacking a transactional system ontop of that computing power would be worth it, many times over. And VISA/CBDC's cannot do this at all, finally giving crypto utility beyond the traditional governmental payment systems, and fixing its final mistake.
Finally, it's a resource that we'll never run out of as we can always invest in more research - but it's also a research that is still limited, because it still requires sentient beings (us) to come up with interesting and difficult questions to calculate. The amount of knowledge available out there is unlimited, but we mine it with our minds, and that simply takes time. And sentient AI that can think up its own questions is decades away, even then having a speed limit of balancing needing computing power to come up with questions and needing computing power to come up with answers.
So i've put it all together. The first two books, The Definition of Money and The Definitions of Value, were written not just to index what we know (or atleast i know) about the nature of money and value in its fullest detail to help solve the problem of financial illiteracy; they were also written to basically prove i know what i'm talking about here, and since the release in August 2021, nobody's as much dared as to argue with my views. I've only received great support from those who've read them. Which supports me in feeling comfortable enough to release this today, so my deepest thanks to each and every one of you.
The gist of it is, i'm still using Bitcoin as a concensus mechanism (and practically any crypto could function in this so existing networks can be converted, including Bitcoin, as i wanted to make a system for all, not just skeptics, proponents, plebs or elites) - but i'm no longer using Bitcoin to print "money". Instead, it prints "tickets", where as soon as you have one, the Bitcoin network locks you out until you've used it up (among other upgraded security measures). This frees up massive amounts of CPU space previously used for security, and i've called it the "Artificial Artificial Difficulty". The original Artificial Difficulty still remains for tweaking purposes, but is perpetually much lower.
To fill the CPU space back up, this ticket you receive gives you nothing but the right to calculate, or do work, on the second attached network; the research network. If you need an existing opensource example here of distributed computing, a wonderful one already exists, and it's the strongest supercomputer on the planet by computing power, that helped us fight the pandemic: Folding @ home.
https://en.wikipedia.org/wiki/Folding@home
The ticket also details how much work you have to do based on the speed of the Bitcoin calculation to make sure everybody spends a certain amount of time there, the work being measured in distinct calculation units. And only after the research work has been done, do you get a payout of coin, relative to the amount of research blocks you calculated. This guarantees that the coins are backed by actual valuable work that has been done (much like a gold coin proves gold ore was pulled out of the ground using labor), and gives the network intrinsic value through supercharging innovation. It solves the speed problem of Bitcoin only doing 4 transactions per second max by greatly simplifying the artificial difficulty, without compromising proof-of-work (now renamed "proof-of-value" if value is proven) while retaining its scalability.
And it should be even more secure than Bitcoin as there's no chance for double spending irrespective of how much computing power you have. Rather than just having to be faster than everybody else twice in a row, you have to collude with others, as any additional speed just assigns you more research work to calculate to keep you stuck on the second network a bit longer - while still compensating those people equally by printing more coin for more work done. Think of it of a really strong miner only being allowed to mine the same small amount of gold before he has to walk back to the surface which takes as long as everybody else. Fluctuations between more/less research being done as the world turns are absorbed by spending more/less time doing research (to a minimum limit, below which the artificial difficulty can take over in scaling to keep security).
Coins are burnt when spent on research instead of transacted, and printed by the miners for the work done. This way the system balances prints with burns based on research demand, so that if the demand increases, more coin becomes available, and the reverse when demand decreases, allowing the monetary base the fluctuate directly based on economic activity, solving the inflation/deflation problem for good! Bitcoin's innovation is that any limit must be mathematically adhered to, whether that's slow inflation, no inflation, deflation, or even rapid inflation such as Dogecoin.
So too must periodic inflation and deflation that has a decentralized input (AKA individual companies deciding for themselves current profits don't justify the risk level of experimental research they're doing, and scale back spending on the network). The objective behind it being bringing inflation and deflation in line with the normal business cycle of human economy: 4-6 years of growth, then 1-2 years of a minor recession to cut the weeds and reallocate those resources to productive business. For those thinking inflation's based on prices and not currency printing, i'd highly suggest starting at my first book - or just remember why Bitcoin was created in the first place.
Since inflation/deflation and thus "free money printing" relies on the amount of mathematical research we ask the network to calculate for us, where more research means more money (but running duplicate research just to expand the network runs into a brick wall really quickly as that research doesn't generate sales to buy the next batch of coin to cycle); well there's your intrinsic value. Show me the incentive and i'll show you the outcome - and here the incentive to free money is "more research and innovation".
Making this system better than gold, which doesn't provide a yield of any kind. It's pretty, i like it - but it doesn't make the life of the man in the street better on its own. Medical advancements do make him healthier, and that's only part of what my system could accomplish.
Ultimately leading into Trustless Centralized Processors, which solves both the exchanges problem currently plaguing the landscape (in my books i also plead for regulated exhanges, the why of which people are now finding out, while still nearly a taboo a year ago); and it solves the speed limit of decentralization making decentralization inferior to centralized processors in speed, as you can never be as fast sending electrical currents over a network as it is keeping those currents within the same CPU.
Bitcoins inefficiencies hide the fact that this exists, but think about it: If my ping to a server is 10 milliseconds, and there's 100 of those in 1 second, how are you even going to transmit which hash i need to find next more than 100 times a second? Without batching, physics says you can't, and then it wouldn't be a "block"chain but a batchchain.
If you have a layer 1 that can do mathematical research, you can also use it to verify the blockchain itself. And a big realization of mine is that you don't need live verification, as long as it happens within a short enough timespan to deter bad actors from even trying or to get caught if they do, as it'll always lead to arrests afterwards, with the important caveat being it shouldn't affect the network in its entirety (I.E it shouldn't create systemic risk).
So, by connecting wallets to a centralized processor in a decentralized manner, this can be achieved. It splits the financial and research networks again, where the centralized processor handles the financial calculations (so they can speed up again) while the amount they're allowed to handle is dependant on the connected wallets doing research on the research network (I.E. they mine tickets really fast, then distribute these to connected wallets, which reduces the amount of possible tickets mined next second by the tickets distributed-but-not-yet-finished). ONLY when the connected wallet has completed its research tasks, does it receive a coin payout, while passing a fee onto the centralized processor as opportunity cost.
This should keep both sides in check, because there's no point for the centralized processor to try and screw over wallets, the wallet can only screw over the network once before getting banned locking the coins, and due to the low artificial difficulty verification can be increased to many blocks at once instead of just the last one in the chain without slowing everything down, so others would still figure out a centralized processor went rogue before they even received any payout from it, making pre-emptive strikes/disconnects possible.
Meanwhile, since this mathematically guarantees income for those processors, they can also mathematically be asked to pay for verification of their section of the blockchain. Using a "keychain" layer 2 system intergrated with the layer 1 blockchain system then allows the network to cut off any processor deemed untrustworthy while keeping their chain-size managable, while blacklisting any wallets involved in shenanigans, while not affecting the network at large or any wallets that were still legitimate - they simply connect to another processor. Any discrepancies in other chains can be fixed upon the next verification when their chains are squared with previously blacklisted entities, without punishment for themselves. This should even enable reverting payments without killing the blockchain, as it should be easy for the research network to verify the entire chain after the false payments to make sure everything else is still intact. After all the financial side uses nowhere near the computing power of the research side, so "repairing" the chain shouldn't be that hard.
Attach a decentralized exchange to this processor, and voila - pure trustless banking. Not investment banking, the old "my money is safer here than anywhere else" banking. The coins are always in your wallet, the fees paid are mathematically paid at mining by the miners to your wallet so the processor doesn't enter into it, and you can use the attached DEX to directly send from one wallet to another, connected or not, without ever having to worry about the processor collapsing affecting the funds (outside of escrow services). And if the central processor turn dickish/fraudulent/tyrannical? Well, just disconnect your wallet, and connect to somebody else! Works for scam exchanges like FTX - but scales all the way up to governments. Vote with your wallet.
And best of all - due to the nature of mathematical research, it actually runs best on generalized computing hardware, not specialized miners. Those aforementioned supercomputers mostly consist of CPUs and GPUs - hardware everybody at home already has, maybe slightly modified for accuracy of calculations and error-checking. So it also solves the problem of sillicon chips not being free at all to make, being actually quite dirty environmentally speaking, and every single Bitcoin miner is pointless in all other applications.
We already all have this hardware at home. Focusing production on that hardware will make it cheaper (imagine all the Bitcoin miner fab capacity switching to CPUs and GPUs) and our lives easier. If we build nuclear power to power everybody's homes ontop of this, we would literally have a Co2 free planetary research network!!!
In my books i go as far to postulate that this could even power the galactic economy of Star Trek's The Federation of Planets, as they would still have a need to process mathematical research, even when their material needs are completely met by Replicators taking supply and demand out of the equation. It allows them to pay other space empires without using money; by using research time on a superior network (from a species focused on scientific discovery) in exchange for goods and services, without them having to trust the Federation that the counter-performance has value even when it doesn't consist of physical goods. Running calculations in minutes that'd take those empires centuries on their own networks obviously has value to them. As it would to any country on Earth if their research can be completed in minutes on the global network or weeks on the local networks.
Finally - i've given up the patent rights (which is why i've included the first page of Chapter 6, and having recently patented something else, i also know i've been specific enough to be granted a patent if i wanted to). I'm no coder (and not Satoshi either, if you're wondering), i'm merely building on the work of giants, taking my own place among their ranks hopefully so others can stand on mine. Instead, this base version will be free for all like Bitcoin was, and infact my work should be used to prevent others from controlling a network such as this through patents. Money shouldn't fall under anyone's control. I'm trying to start my own company and if i have excess income to pay programmers with i'll probably try my own hand at building all this in the future - my investor atleast is excited enough to try.
But i've got no desire to be in control of the worlds money supply. Too political. And getting people to listen is a battle every day, i can only fight so many of them. So this blueprint exists for everyone to create, even governments if they so wish. I am counting on their incompetence with digital tech plus insurmountable greed to always tweak the systems too much to their own advantage, making it fail as they simply don't understand economics like i do - objectively - and making other competing systems based on liberty win out. And then it's a choice: Join, or stay stuck in the 21th century.
Too risky for my taste to get involved there. I'm not staying anonymous like Satoshi. But - if it's also too risky for everybody else, i'll still have a go at it in the future, because i just love being right when literally everybody else thinks i'm wrong - and i think this invention's too important for humanity to let sit on a shelf indefinitely.
Be the change you want to see. I don't know if it'll be effective, but it is altruistic (and i'm still poor, i don't have any stolen millions to give away, as i sold books not a scamcoin). So without further ado;
Chapter 5: A Futuristic Global Reserve Currency
Plot twist: I'm using Bitcoin as a base for this currency, after just complaining about it for a couple of pages; though i’ve heavily modified parts of it at this point. Mainly because it's the simplest to understand, and again, it's basically 2/3rds of the way there, so for any parts not mentioned in my system Bitcoin will serve as a blueprint. I'm not claiming to have invented the steam engine here, I consider myself more like a James Watt who turned horribly inefficient first generation tech into a usable machine to back a revolution with. Also using Bitcoin as a base will allow most existing other coins to translate the relevant parts in their own system into a variant of mine; keeping my system a framework rather then a singular way of doing things. There’s still plenty of knobs to turn and tweak to create bespoke networks, but the main design i’ve described here is the most advanced and automated design I could come up with at this time.
I won't be going deep into how Bitcoin works, as those who already understand it will know how my system integrates with it, while those who don't will see its flaws more clearly with the benefit of hindsight, with my system explained first. Regardless, i'm using Bitcoin aside from it's functionality because it's open source, and thus available to everyone as an "off the shelf component" – ensuring the system's success as it has no need to rely on proprietary technology.
I will make one clear distinction between how Bitcoin works at it's core (Proof-of-work) and my system, for clarity's sake and because i’ve modified the functionality of some aspects of it. Proof-of-work revolves around doing just the work, regardless of what it is, while my system is value-justified. As such, i'm dubbing my system (and those derived from it) Proof-of-Value, to distinguish between first generation PoW crypto and this new generation.
Furthermore, for the research side i'll be using BOINC, or the Berkeley Open Infrastructure for Network Computing as an open source "off the shelf component" example for the distributed computing side. Folding @ Home is based on the technology, and you'd want the software to be capable of running as many different research simulations as possible. "Work units" will refer to how these systems distribute the work that is requested among the end users hooked up to the system. As for the coin, i'll shorten research-coin to re-coin – i'll leave the eventual name up to the eventual winner, names are not my expertise. As i've stated before, i'm no programmer or engineer, so i can't tell you how to program these systems – but i can explain the theory and functionality behind them, and how a programmer should make them.
Finally, there's one last very important component to the whole system, which it needs in order for the whole thing to work (the 2nd layer system i’ll describe at the end even functions on the basis of it):
Research MUST be fungible!
That is to say, 1 work unit = 1 work unit = 1 work unit. There cannot be any distinguishing between any research performed on the network for any reason! No Throttling!
Or to put it another way; it shouldn't be possible to tell apart a work unit dedicated to North-Korean Nuclear missile research from a work unit dedicated to curing cancer. I understand the need to limit the access of bad actors to the network, but there will be economic ways of such built into reality – and there is no need to compromise the integrity of the network for this reason.
The amount of research – and thus coin – any one actor can generate will still be based on real world economic activity, namely semiconductor proliferation.
North-Korea simply does not have any comparable resources as say, the United States, to build up a comparable network with equal computing power, or to afford alot of time on a global network by trading real world resources for virtual coins. Sanctions and tariffs still work as none of us can escape this reality either, and any advancement in offensive capabilities will immediately be countered by the vast computing power that can be brought to bear developing defensive capabilities in response, almost instantly.
But once the integrity of the network is compromised and some research is allowed and some is not; you're on a slippery slope that cannot be stopped. At some point, the entire network will be limited to defense and surveillance research for "national security reasons", and quality of life for the general population will take a nosedive. Any tool can be used for oppression as well as liberation, and controlling what research is and isn't "appropriate" is a powerful way to steer the future of humanity down a dark path.
Research, in the form of digital work units consisting of calculations, must be as immutable as math itself. Either it works, or it doesn't.
This has monetary reasons as well. Gold is gold is gold, and fiat is fiat is fiat. The only reason a gold-standard works is because you can back any fiat by any gold – There's no need to back fiat specifically produced in 2021 by gold specifically produced in 2021 for example.
Should work-units be discriminated between, universal utility is lost. The network will cease having utility to some people, while retaining it for others. How are you going to separate North-Korean nuclear research from American nuclear research, when the outcome of the research will be the same?
Physics and reality don't change between borders yknow.
Either a product works, or it doesn't. Either research finds the answer it's looking for, or not. For someone to find the answer they're looking for, they still need to be bright enough to ask the right question. As the computing power of the network increases exponentially, the easy questions are going to be answered fast enough by everyone. We might leap, but we'll only leap once – then it's iteration once more, and we cannot lose sight of that endpoint before we reach it.
As long as work units are fungible, and the coins are fungible, any coin backed by any work unit is backed by intrinsic value through universal ethereal utility value; and as such, the coins obtain and retain value through the transference of utility value. You can spend any coin on any research. Which is why they need to stay fungible, at all times. Otherwise, you’re back to specific utility.
With that out of the way, lets talk more technical implementation.
The main problem with Bitcoin is that the energy spent on it is wasted. This has to do with its so called artificial difficulty. See, the reason bitcoin can still only do 4 transactions per second is because as more computing power is added to the network, the calculations to find and generate a transaction block increase in difficulty relatively along with it. In short, where normally more computing power would enable more transactions, the calculations increase in difficulty until transaction-speed parity is achieved once more.
There's a reason for that, which comes from the nature of trustless transactions through distributed ledgers. As long as no one actor has control over more then 50% of the network, it's secure.
Once more then 50% processing power is achieved, a bad actor could find a transaction block as well as verify it by creating a next block before verification by others can be achieved. It may be an oversimplification, but it's enough for now, as my point isn't taking away this transactional limit.
Decentralization will run into its own speed limit eventually, namely the speed of light; electric current that has to travel from a user to a central node will always be slower then the having the same electric current travel between the CPU and local memory. A 2nd layer will always be needed for the financial side.
What's often left out of the explanation of Bitcoin; should computing power be removed from the network, the artificial difficulty scales down. Even though the amount of bitcoin generated per day is mathematically fixed, the amount of energy consumed to generate said bitcoin fluctuates daily. If we continue this line of thinking to its logical conclusion, we can reliably state that all current Bitcoin transactions can be achieved with 1% of the current network calculating power just as easily, because the difficulty just scales down until parity is again achieved.
So, we can also state that, effectively, 99% of all CPU Cycles spent on Bitcoin are a complete and utter waste, since the same can be achieved with less.
But, there it is. At the most basic level, Bitcoin calculations use CPU Cycles. These days, dedicated bitcoin miners are specialized to calculate nothing but Bitcoins, but originally CPU's and later GPU's were used for calculations. And as we learned, these CPU cycles are fungible with eachother.
So, what if we simply reassign that wasted computing "space" occupied by unnecessary difficulty to something else that's fungible with CPU cycles? Such as work units?
So first, for Bitcoin, i propose an artificial-artificial difficulty. Don't worry, this isn't inception, there's no need "to go deeper". The problem is in balancing the needs of the network between transactions and research, as both have to be done at the same time; as well as balancing the payout for work done with the liquidity needs of the network/economy. The artificial difficulty needs to stay to control the security plus verification of the network, but another difficulty is needed to control the network tied in with the verification network, and distribute the work relative to what work is available and the computing power that’s available.
What the combination of artificial difficulty with artificial-artificial difficulty does, is it allows the "initial" hashing of Bitcoin to be greatly reduced in complexity, by only "pretending" to use up the rest of the CPU cycles for the financial side, rather then actually scaling up difficulty. Or in short, if for example the entire transaction calculation took 10 seconds to complete before to find the right hash, it still takes 10 seconds now, but the CPU idles (that is to say, does nothing) for 9 seconds while the financial transaction completes (the hash is found) in 1 second.
This has the added benefit of speeding up the transaction speed of the network without increasing blocksize, as well as making the network as a whole more fair: Once the financial side of the reserved computing space is done, the transaction can be "posted" to the network for verification (as that’s essentially just the next financial calculation in line, which includes verification of the last transaction), while the CPU is still reserved for the 9 seconds after posting. That miner is out of the running for 9 more seconds, but the financial transactions of the network only take a second each.
This means that, if a block should take 10 seconds always to calculate because of the scaling artificial difficulties, rather then the person with the largest computing power automatically winning every time (which is where the 50% rule comes from, 50% of computing power), the financial calculations will be assigned in a Pseudo-Round-Robin manner:
The strongest might be first, they still have to idle 9 seconds regardless – and within that time, 9 others can complete 9 other financial calculations, including verifications, providing them with income and increasing the security of the network near infinitely. After all, even with 99% of all computing power on one entity – you could still only do 1 financial transaction per 10 seconds, regardless of how fast you completed that part.
Before your next transaction to falsely verify the last one – the next person in line will have rejected it, and the 8 people following them have verified that person's transaction while rejecting yours in consensus – leading to immediate drop of trust across all nodes and exclusion of the network. And mining power means nothing if you can't mine the coins because of trust exclusion or if people choose to use a different system and won't touch the currency.
Since the hashes are easy to calculate, and even easier to verify, a lot of verification steps can be added to verify transactions many more blocks ago then is the case now, increasing security further. If there are 50 verification steps, 50 people in a row need to collude to fake 1 transaction.
This "row" isn’t set entirely set in stone by computing power either, since finding the first hash is still a chance like it’s with Bitcoin, not a set number of instructions you have to go through, making the round robin "pseudo". As in, it’s not a set assigned list; if somebody has enough computing power to occupy the 50th spot on the list, his realized spots over multiple transactions will be closer to a range of 40-60 on the list. Averaged over the entire network Bitcoin does ~4 transactions per second, but individual miners have wildly varying times. And any discrepancy could trigger a consensus mechanism that increases the verification steps manyfold for a few blocks until consensus about the bad blocks/nodes is reached.
Not to mention that while it may be "sort of" predictable how long each miner will take to calculate each work unit, it’s still an average. There will be no actual way to tell when each miner is done with research work, and can return to the tender offers. In each "rotation" the queue might be similar, it’ll still be different enough to make it impossible to plan list locations by computing power though multiple passes around.
Further security could be added by slightly randomizing the time spent doing research work within a slight range, since the miners are compensated per amount of research completed, and already automatically get more or less currency if they spend more or less time doing research calculations. Since this would randomize when people drop out of the research network and enter the next tender offer, timing the start of a bad blockchain with co-conspirators would become extremely hard.
Even more security can be added through dynamic verification scaling. The network will always need a set number of verification steps to be completed, so a minimum is hardcoded in. But, when work unit demand slumps while capacity is high, less work has to be distributed among the same amount of connected wallets. The percentage of the round robin can adjust to compensate (throw more miners out of the rotation), but – atleast to a degree – additional verification steps could be added to fill up empty computing space. The minimum is only needed when the network is "accelerating"; when it’s "slowing down" adding verification steps isn’t a problem. The more steps added, the more semi-random people in a row need to collude.
How both the difficulties are set and interact:
The Artificial Difficulty still handles what it always has, the difficulty of the hashes. But now, that has been turned into an "initial tender offer": Currently the hash simply needs to be calculated before a payout is given, while in my system it only offers a gateway to the research network; hence that it’s effectively an tender offer for work (and I refer to it a such), rather then the work itself.
However, contrary to the situation currently, the difficulty is set inversely to the number of people participating in the network: The more miners that are actively tending offers, the lower the difficulty of each offer is, because of the pseudo round robin and pass-off nature of the network. Lower difficulty allows more wallets to participate within the same second, while also allowing increases in verification steps and thus security.
This achieves the holy grail of crypto: Increasing speed without sacrificing security OR decentralization. The more wallets, the more tender offers can be made regardless of the connected wallet’s computational speed, as the tender offers themselves are simple to do, yet all that completing them does – aside from give the network/currency transactional capability – is give them access to the research network’s work units; and the time spent calculating that doesn’t matter to the financial side anymore, as the financial part can be passed on to the network before the research work is done (as it’ll be verified by the next in line which can’t be the previous in line). Payouts are only made after the financial calculations PLUS research calculations have been delivered, so skirting the research work in any way is just shooting yourself in the foot.
Furthermore, if the round robin itself is set to something like ~90% of all wallets connected to the round robin, rather then try to get 100% of them, it will automatically drive investment into the network via natural means. As the bottom 10% of the network essentially never get to tender an offer (outside of fluctuations and research queues), which impacts their bottom line negatively, as time only spent tendering offers is time and energy wasted since the system doesn’t print currency unless research calculations are done as well.
Ergo, nobody will want to be in the bottom 10%, and will either leave the network after a while, or invest in processing capacity to increase their spot on the rankings. While this "90%" number is another example that’ll require a lot of testing to get "just right"; there definitely is a right number, and it’s probably in the high 90’s in order to keep decentralization a thing.
Then, there’s the Artificial-Artificial difficulty, which determines the scaling of the amount of work in work units the tender offer has to perform on the linked research network before the miner is finished completely, and can tender the next offer.
While the amount of currency transacted is controlled by the Price Guide and Interest Rate explained further below (also based on network activity); by scaling the total amount of work units any given tender offer has to calculate before another tender offer becomes available to them (without affecting payout for work done, as that's based on total amount of work units calculated); the round robin security is maintained while both the research side scales up and down, and more or less miners are active, without impacting the ability to do work or fair compensation for the research work done.
The work orders connected to the tender offers are sorted by price, meaning work units which are priced the highest through premiums get queue priority and get calculated first. This’ll drive further investment into top "spot" competition, as those work units pay the most (in a justifiable manner).
As for the work that needs to be done per cycle per wallet, while the difficulty of the tender offer can simply scale based on available mining wallets; the work needing to be done per cycle can be automatically defined by the speed at which the tender offer was completed, versus the difficulty of said tender offer. This speed can be used to determine the wallet’s share of the total work unit offerings on a second to second basis so the work is evenly distributed too.
If the offer requires a certain amount of hashes to complete, and it was completed within a certain number of milliseconds, then the relative speed of the computer on the network is hashes divided by milliseconds, and this can assign work units based on the average time required to calculate 1 work unit on the network to "fill up the required idle time" with work units. It won’t be 100% accurate, but it should come pretty darn close to making sure everybody gets serviced.
To maintain consistency between the financial and scientific side, it doesn't have to be brute-forcing randomly generated encrypted hashes specifically: It could also be a set of example scientific calculations with random variables and a known answer and equation, and having the computers guess the answer by brute-forcing it; meaning simply inputting numbers into each variable of the equation until the right answer rolls out of it. An equation with the answer known but none of the variable inputs is effectively cryptographic, with more or less variables in the equation adding or reducing difficulty. A hash of 2x3=6 is different from one containing 1x6=6.
With this scaling, it makes sure that no one entity can "outrun" the network security by outscaling everybody else in such a ridiculous manner they would be able to finish research calculations plus the financial side "too often" and start occupying too many tender offers on the ladder, still breaking the security when colluding with others of the same speed; or that the system would need to make tender offers so infrequent for a base speed that the slowest PC's (AKA consumers) would spend ages just calculating one, which would break the decentralization aspect.
With my way, the financial side can be based on Time rather then Supply, and even slow computers can be included in the round robin; without impacting fair compensation for more work done on the research side for the fast ones. The total amount of work units then needing completion before another tender offer unlocks (AKA the work is done entirely) is called one "work-cycle". The "right" length of each work-cycle relative to computing speed is left up to the individual networks to debate over.
Then there's the "Price Guide". The Price Guide sets the "Spot" price of how many work units need to be completed per unit of currency, and reads as 1 re-coin = X work units (or ?1=!X). It is automatically determined by the network capacity VS total money stock. The same network capacity VS More money stock = less money printed per work unit calculated (and vice versa). More capacity VS the same money stock = less money printed per work unit calculated (and vice versa).
This process is expressed in "Cycle cost", where the actual payout of each cycle consisting of 1 financial transaction and X number of work units (the amount controlled by the Artificial-Artificial Difficulty), increases and decreases by increasing/decreasing the amount of total work units needing to be calculated per unit of currency paid out, along with "Print Per Cycle", which determines how much money is actually printed upon completion of the work, controlled by the interest rate (more on that later).
The "Spot" price by the way is simply what the Price Guide is set to now, which shows the amount of money currently printed per work unit(s) for the miners.
This is not the actual cost of research, AKA the real price per work unit! That price is still set by researchers, according to whatever they want to pay for the research whenever they order it on the network. Hence the name of the "price Guide", as that’s what it is: it is a guide to the intrinsic value of one unit of currency, but if the fool wishes to pay more for his moonshots, spot+premium will be the real price, as recorded by the chronological record of history.
Network capacity in work units is expressed in work-units-calculated-per-second by all participants; measured in network FLOPS capacity divided by the average amount of FLOPS cost to calculate 1 work unit. This should allow for some leniency in size between work units, as not all mathematical calculations are made exactly the same.
Finally, changes in size of the money stock are determined by the interest rate, which automatically inflates and deflates the amount of currency printed upon completion of the work units, based on work unit demand across the entire network, with total money stock determined by total demand. More research demand, more currency is automatically printed to meet said demand. Demand drops, liquidity will slowly drain, until equilibrium is reached, based on pure natural economic activity. This will finally solve inflation and deflation. (again, more detail later on).
This is just the first step, as we've now created a wealth of empty CPU cycles (in a secure system) ready for the research network, which we're going to fill with work units. So let me talk you through the entire process of how a coin is generated, how the space is filled, and how the coin can be spent. Naturally, all numbers and names are meant to be examples, i'll leave the exact values up to the mathematicians and winners of the capitalist rat-race.
We start the cycle with the "Miners", which "mine research" by completing the calculations given to them through work units. Since we need an initial transaction, we say there is a financial transaction somewhere and an initial coin seed previously. This gives us our first transactional order.
Miner A is first and figures out the financial side in 1 second as per the Artificial Difficulty, and gets a number of work units assigned to him based on his speed and the work-cycle length of the network as set by the Artificial-Artificial Difficulty. The financial calculation is then sent on to the financial side of the network, where other miners verify it with the next transaction in line.
Meanwhile, Miner A becomes "Active" on the research network and calculates the work units given to it for 9 seconds (or whatever amount of workunits is required to complete a work cycle). Once the calculations are done, they are sent to the research side of the blockchain, Re-coin is printed as reward, and Miner A can compete for another order.
On the other side, at the same time on the research network, a researcher needs calculation time on the network, and has already obtained some re-coin (through the initial seed). The researcher opens the software and loads in work ready to be converted to work units. Then, he/she must buy time on the network by spending the coin into the software, and thus directly back into the system.
These coins are burned upon spending. This means destroyed, like gold sinks in MMO's. As i've proven before, streaming economies that retain value through transference are very much possible in the digital space, and Bitcoin's hardcoded limit turning it into a permanently deflationary currency is one of its weaknesses that have to go. You need a currency that can inflate and deflate, just in limited quantities based on economic activity. I'll get to how this is the case with re-coin later.
Spending these coins buys time on the network in the form of amount-of-work-units which each take time to calculate, and the software starts chopping up the work presented into standardized work units and distributing it among "active" miners.
As we still have a CPU active for 9 seconds (Miner A, as this happens at the same time); these work units are distributed to this CPU, which does the work and sends the completed results back to the blockchain. On the technical side, i envision this via a "keychain" rather then a single blockchain.
Meaning, a master-blockchain that records the financial transactions acting as the keychain, then whenever a researcher orders research, this order becomes a blockchain hanging off the master chain like a key, which couples "active" miners with the wallet which ordered the research done; and then sends the results of the individual workunits to this blockchain to "complete it", much like BitTorrent completes files by downloading packets from many different sources, without needing the datapackets to be received in-order.
The blockchain should support both in-order and out-of-order execution though, depending on how parallelized the calculations can be made, as some calculations require the result of the previous calculation in order to work. In-order requests could go to larger connected pools of miners, such as idling supercomputers, which can complete a string of work units faster then smaller computers can – and a premium can be asked for such work. This’ll allow greater rewards to drive a competition "to be the fastest that no-one ever was", driving further network investments via natural supply/demand means, without printing more money for free handouts.
This keychain system also allows the research to be stored directly on the blockchain in a safe manner. As access to each "key" on the chain can be restricted to each wallet linked to the mining software and their respective task – the orders they took on – while the recipient of all completed work units – the wallet which ordered the research – is the only one who has permission to view all individual work orders. It’s also this wallet that’s responsible for verifying the wallets that did the work, to see if it was genuine, as that wallet is the one with all the motive to make sure everybody is doing a proper job. Untrustworthy wallets are disconnected system wide without mercy (you don’t bite the hand that feeds!)
All active miners that connect with that wallet to deliver completed work units, only see the parts they themselves complete, as it’s a one way connection. There’s nothing in that research wallet that’s any of their business, except what they send into it. Some networks could even come to serve as a sort of futuristic Library of Alexandria, where public access is automatically granted after an XX number of years, automatically releasing copyright/patent right on the research without the ability to increase it further, making it public (solving another annoying problem).
Though, i wouldn't recommend going that route for the main network, as it starts to infringe on universal utility. Nature cares little for your good intentions, and the base network has to be fundamentally universal. Copyright laws need reforming (by good people) regardless and i'd rather bet on that. However, for a niche philanthropy-based network it could work.
Once the computer is done doing the work, the CPU unlocks again to compete for another "transaction" repeating the same work cycle. Depending on the price guide, which sets the height of the reward, a certain amount of coin is generated. Naturally, as i've described before, unlimited printing doesn't work, so the rate-of-printing is automatically determined by the price guide. The amount printed depends directly on the amount burned on research, plus or minus interest, plus premiums.
Through this system, where the researcher pays into the system, the coins are transmuted into work units; which upon "consumption" – because completed research doesn't have to be done twice, "the work is spent" and as such "the task is burned" too – transmutes back into coins. This transfers the value of the old coins to the new coins, and redistributes the nominal amount of value of the old coins over the nominal amount of the new coins. Previous research value buys new research.
The work cycle of one miner can be filled with work units from many sources, as the miner merely needs to know what to send where upon completion. As explained earlier, the research is fungible, so the miners don’t have to work on a string of work units from a single source, neither. They take the work that is offered. The proceeds can simply be added up by the system from all work sources serviced.
Now Miner A has value justified Re-coins. Naturally, the miner has no need for coins to spend on research, while universities and corporations do have that need. At this point, it's merely a last step of connecting both to provide an economical path for the Re-coins back to the researchers with a need to spend. Which can be done via simple (audited and trustworthy) exchanges. On the exchange, the miners can sell their re-coin for any local currency they want to purchase the goods they want/need, or Forex traders can even exchange between competing networks for specific research tasks, and the miners can cut deals with them to supply them with liquidity, much like how the Comex was designed as a production hedging tool (sans the naked shorting).
But this is merely an intermediary step – that'll most likely always be needed as governments will still retain local networks and currency, as well as the desire to abandon any sound money for fiat temporarily in times of war. Forex will always be needed. Governments have abandoned the gold standard many times throughout history to fund wars or other sudden, extremely large expenditures. With re-coin it most likely won't be any different; though re-coin does offer a highly superior motive to return to the digital standard through enabling innovation, where gold does not.
In the end, if the government accepts taxes in re-coins or shops allow payment in re-coins, the government can fund university research computing power directly through giving an allotment of re-coins from the tax budget, as well as being able to fund defense research directly, offering direct utility value to governments as an incentive to use re-coins for taxation. The remainder goes towards the government paying for goods or welfare programs. If the population can spend re-coins on goods, it'll have value to them, and there will be demand for them through social programs.
Companies could pay their employees as well as research division in re-coins obtained from sale of goods (whether a direct result from network research calculations or not), while those employees then spend the re-coins on those goods just like any other currency. Miners could just spend their re-coin on goods directly to complete the economic path, most likely to expand their network capacity, or return it as cash dividends to shareholders who can then spend it on goods directly, outside of production hedging type of deals. Only researchers spend, while miners print – Users transact.
Meanwhile, the miners are a constant source of liquidity (rather then relying on credit generated by banks), while universities and corporations requiring research are a constant drain on liquidity, much like gold-sinks in videogames which stabilize perpetually inflating currencies. This creates a streaming economy that doesn't require a central authority to tame inflation or deflation!
A question: Suppose we've reached the theoretical moment where an economy has "peaked" in production, and growth is now going to slow down. What's one of the very first things companies cut?
Experimental research.
As i've stated before, the vast majority of progress comes from iterative improvements. Companies know this, innovate or die, that's why they always spend money on R&D – creating a demand floor. Even in companies where marketing divisions have taken over, some research is still done – but simply not enough to outpace competitors, leading to their demise.
How much money is spent on research, is the question.
That amount varies with economical conditions. Which is logical, the worse the prospects for the future become, the less risk you're willing to take. Humans are naturally risk-adverse. Even the current madness doesn’t come from lack of averseness to risk, but rather the cloaking of risk, making people think there’s less risk then there in actuality is. So, the riskiest part of your business is tightened down first, long before any measurable economic metric shows momentum has slowed to others.
And this happens society wide roughly at the same time, as each individual corporation sees its own earnings slow, so each individual corporation cuts back their research out of their own accord as part of wider cost cutting measures, leading to a societal slowdown. Those common actions based on common values again.
This isn't dissimilar to how top-level gamers work together – they rarely communicate on what to do, as the higher level in skill you get, the more efficient the solution that is chosen, until everyone chooses the same solution at the same time. Simply because it is the right solution, and you don't have to communicate if you already know what the other's going to do (instead you shittalk him when he doesn't). I'll bet on a top-5 team of randoms over a top-25 team that spent a month training together any day. Reductions in misallocation of effort will always beat skill through repetition. Repeating the wrong thing thousands of times only makes you skilled at stupidity.
If i were to put it in terms of lending, loans to people with the lowest credit scores get reduced if not outright put a stop to first as soon as "the economy turns" – which under a gold- or fiat-credits system also means liquidity contracting further, ensuring the coming recession is worse due to debt implosions. In terms of research, the biggest moonshot that could lead to a revolution is axed first, because it's a waste of money 99 out of a 100 times. Once corporate earnings – the big driver of growth outside of easy Fed money and artificially suppressed bond yields – no longer justify lavish expenses, moonshots go first.
When companies start cutting costs, research is one of the first things to go, but it's also one of the things companies want to cut the least. Just like no one wants to sell their gold but they will if they have to, no one wants to cut back on research as that leads to problems down the road – competitors overtaking you technologically is one of the most difficult things to bounce back from, and certainly very costly – but at some point you have to cut research back because the risks being taken have become too outsized and losses start to mount. After all, research doesn't always work out.
So lets implement that into our example. Suppose we have a mass of corporations demanding re-coin and a mass of people at home mining and creating re-coin. During times of economic expansion, the budgets of the corporations for R&D will increase, and thus they have an increasing need for re-coin, meaning the economy as a whole has an increasing need for re-coin liquidity, and the coin goes up in value (meaning the prices of other goods deflate against it).
This causes more people to start mining and the veteran miners to expand their network capacity with the additional purchasing power, because the increased need for liquidity increases the drain on liquidity, increasing the value of re-coin until capacity is expanded. Re-coin helps by expanding the money supply when work unit demand exceeds capacity, by increasing the payout per work unit, thus making sure the liquidity for expansion is available eventually even if miners can’t find investors right away.
Since more capacity means more money at this point, the miners will expand capacity until capacity and work unit demand are back in equilibrium; at which point the price guide stagnates and the money supply ceases to increase. As long as work demand increases beyond capacity, the money supply will increase until the liquidity generation and consumption equalize again.
At some point, this is going to hit the wall of corporations not-needing any more research. Mining companies are printing money, so they're not gonna stop out of their own accord, so they'll always overshoot and create too much capacity. When work unit demand falls below capacity, the interest rate flips negative, and less money is printed per work unit. This’ll hit the miners bottom line, and they’ll spend savings to survive. These savings however aren’t absorbed by work unit demand.
Because it means liquidity increases without need for said liquidity, prices of all other goods start to increase with it, as the amount of goods generated starts to lag the amount of currency generated when research is reduced (as you can sorta see research information as a good too in this context). Re-coins aren't being spent on research, they're spent on everything else, driving those prices up. Meanwhile, the lack of work unit demand vs capacity starts decreasing the price guide again, making it more costly to mine.
Due to the cost of goods going up while mining income drops, mining becomes less lucrative at the same time, because miners have to continually print more currency to keep up with the cost of running those mining rigs in terms of electricity or network expansion/deprecation and replacement. Electricity and computers use real world goods in order to be generated, and these suffer wear and tear/labor input. Increasing costs with decreasing profits causes the worst run miners (least efficient) to go out of business; as printing money is sure to be a razor thin margin business since anyone can offer up CPU space and print some money thanks to the pseudo round robin. Consolidation and bear markets are also as old as the economy itself.
Eventually this causes network capacity to decrease naturally, as people simply unplug their PCs from the network to save electricity when production falls below cost. And because re-coin in itself counts as a raw resource – since the network demands its consumption – while network capacity is decreasing and the same amount of coins are demanded per work unit while less are being printed, liquidity naturally decreases again, as it is burned faster then it’s being generated.
This eventually will start driving prices down again, because less intermediaries are becoming available to trade for goods within an economy – the Miners are supplying exchangers with less coins (due to overcapacity decreasing printing rates and there’s now less of them after going broke) while researchers continually burn the same amount (when demand stops going up or stops going down). This because people transact the currency for goods, while only researchers consume the currency, and only miners generate it – and income is (somewhat) centrally controlled for miners and expenditures for researchers through the price guide; and the miner’s income will lag the researcher’s spending because supply lags demand.
Furthermore, in a streaming economy, rates of generation and consumption control inflation and deflation; not the printing of money per se. Though there’ll always be a large pool of money in the middle, which can be considered a giant "buffer" and must be kept in mind during examples.
Eventually, the following must happen. The economy in general has cleared enough "dead wood" and recovers (recession ends naturally) and work unit demand starts exceeding network capacity again when corporations increase research budgets before miners stop consolidating.
If the general economy recovers, demand for R&D goes back up as companies attract investments in new products, and thus the demand for Re-coins increases again from the research side. Because research is becoming cheaper and cheaper to do (since less and less re-coin buys more and more work units, as work units count as digital goods too, and thus when goods get cheaper VS the currency, research gets cheaper too), eventually work unit demand will exceed network capacity again.
While the coin's general value in the economy increases with liquidity demand + restricted supply, along with its value continuing to increase through deflation with the recession; the value of people's savings is increasing at the same time (the aforementioned "giant buffer"). When easy credit isn’t available outside of a debt-as-money system, investment is driven by increased savings which now buy more; including stock market investments when the stock market corrects during the recession. When demand exceeds capacity, the network prints more currency per work unit, so mining becomes more lucrative as well.
As explained in the first book, this has to reach a point where people will invest their savings again, because of the profitability of companies which are buying research for dirt cheap, as the outsized gains by spending coin now rather then continuing to save the coin for future purchases become too tempting. Outsized gains work outside of Ponzi schemes too, yknow. Simply the increase in profitability from the companies literally printing more money, which is currently worth a lot at the bottom of deflation (meaning the moment before an inflationary regime starts again); will drive investment in that area while the profits gained by those investments increase the availability of liquidity in the rest of the economy again.
When the amount of work units ordered starts to increase again but investment in miners lags, because again, supply lags demand; the miners must first attract investment in new hardware that then first needs to be built, and since they just went through a bear market they’ve got little capital left for investment themselves. More currency automatically becomes available when unit demand exceeds capacity and the network prints more money, turning deflation around.
The realization by the general public that another inflationary cycle has started will start to make savings available to the economy again en masse, as the people realize the incentive to spend now rather then save for later is increased – while the economy now actually has valuable-but-undervalued productive companies ready to invest in, since all the dead wood has been cleared. Sectors that go through bear markets don’t have zombie companies anymore. That’s why recessions are normal and healthy in the first place.
At the same time, because more liquidity becomes available, tax revenue increases again, and thus budgets for universities (or other government affiliated research entities) can increase. Since goods increase in price due to additional liquidity, corporations have an easier time attracting liquidity through profits, which allows R&D budgets of more companies to stop falling and start increasing again.
Assuming there's a need, otherwise the additional income can just be returned to shareholders, further increasing liquidity within the economy, still resetting the cycle to inflation.
This is know as a "pig cycle", after the lean hogs sector which is highly cyclical, based on supply and demand. R&D, mining capacity and money stock all increase, until R&D hits a ceiling of usefulness, and everything decreases again; flipping the supply/demand mismatch back to the supply side, increasing work-units-per-currency-unit, decreasing coin generated by miners, which decreases liquidity and so on and so forth. Inefficient miners go bankrupt, are bought out by people who think they can turn it around (or if it can't be turned around it's supposed to die), and network capacity starts to recover as the economy returns to growth through innovation.
When there's a Supply/Demand mismatch to the Demand side, there will be Inflation.
This is justified, as increasing R&D means increased economic activity, meaning increased production of goods, meaning increased real world value needing representation by intermediaries.
When there's a Supply/Demand mismatch to the Supply side, there will be Deflation.
This is justified, as decreasing research means decreased economic activity, meaning resets of perceived value through defaults, meaning reduced need for value representation by intermediaries.
This system is a self-balancing system!
More research > More value > More intermediaries > Peak investment > Less research > Less value > Less intermediaries > Peak value > More research etc; with the permanent need for research offering a permanent demand floor.
The last key to this puzzle is the Interest Rate i alluded to (many times) before. Since currency is continually printed and burned, the rate at which this happens is crucial, and of course has to be automatically set – lest we get a repeat of 100 years of central banking mishaps. Luckily, this can be done.
Because currency isn't transacted between researchers and miners, and everyone operates within the same fair system – if that system takes from you, as long as it's for the good of the system as a whole, it is still fair. To have winners, you must have losers. This "interest rate" has nothing to do with the interest rate on Credit! But it is a similar system (that carries risk for the miners) and it’s a designation people are familiar with, therefore it is used.
The amount of currency each completed transaction prints is determined by the spot price as set by the price guide, plus or minus the interest rate.
Let me show you this in practice to make it less arcane; and i'll be using "?" as a symbol for the coins instead of any fiat currency signs such as $ or €, so the inner workings are more clear and we aren't distracted by traditional definitions or implications.
If a researcher ordered 10 transactions worth of work-units, and the price was ?10 per transaction, then ?100 was paid into the system and ?100 was printed by the system, divided between the miner(s) which completed the transactions (and research workload). Here, the interest rate is 0%.
If the interest rate was 10%, an additional ?1 is printed per transaction and given to the miner, netting ?11 for each transaction for which only ?10 was paid, and printing ?110 when only ?100 was spent into the system. Conversely, if the interest rate is -10%, the system instead withholds ?1, and prints/distributes ?90 in total instead, even when ?100 was burned.
This interest rate is needed to complete the value links within the system. So far, it's based on Money Stock (the coin), Research (work units), and Real World Intrinsic Value (CPU cycles/Network Capacity). While the money stock can be controlled automatically and CPU capacity either is or isn't available each second; Research is the one that fluctuates. Meaning, sometimes more work units are ordered on the network, and sometimes less, as controlled by the total amount of research/work that needs to be done. Sometimes you find more gold in the ground, sometimes less.
While the theory that the amount of work units ordered is linked to general economic activity holds water, and this is supposed to fluctuate – these fluctuations still need to affect the other two systems. That is to say, when work units decrease in total number, the money stock – as a representative of that real world value which is decreasing – should also decrease. Meanwhile, as the real world resource of CPU cycles are currently not needed, or needed less i should say – network capacity should also decrease! Yet, the price guide has no direct link to it, as it's controlled by network capacity VS money stock which, without the interest rate, would simply transfer amount spent to amount printed regardless of fluctuations in work unit demand. Hence the interest rate.
It might seem somewhat counterproductive to progress in general to actively give up research capacity at times, but this is because human nature is far from perfect: We will start doing research that has absolutely no merit just to justify further increases in network capacity to increase the amount of currency available to us, creating "a research bubble". We won't be able to help ourselves, and it will be very conveniently forgotten that CPU's require alot of real world resources in order to be created – resources we shouldn't spend if there's no societal need for them!
Or in short, it's fine to pause "growth" for a while and consolidate. It'll happen anyway, whether we want to or not because we simply cannot help ourselves, so we might as well take it into account from the start. Atleast for the currency, which is the one thing we require to be as stable as possible. But not absolutely so.
So let me describe how the interest rate should be set.
The interest rate is based on work units ordered on the network per second (units ordered) VS work capacity on the network per second ("empty" CPU cycles), and it is Inverted.
Inverted means: As long as there are fewer work units being ordered as compared to total network capacity for work units, the interest rate is negative.
While when there are more work units then total network capacity, the interest rate is positive.
While work unit demand and network capacity are in equilibrium, the interest rate is zero.
This might sound counter-intuitive as you’d expect more currency to be printed when less work is available, in order to drive investment; but this is a fallacy driven by easy money principles and the moral hazard of not wanting to let people fail so they don’t become angry constituents, or stand on their own two feet to face responsibility. If it’s worth investing in, savings will find their way to it.
So I'll give a little overview of how this looks like, using small numbers so it's easily comprehensible (though that increases volatility greatly, so in real life numbers would be huge, much less volatile, and left up to the computers).
A small legend:
?1 = 1 unit of re-coin.
!1 = 1 work unit.
1u = 1 work unit demanded of the network by the researchers.
1c = 1 work unit of FLOPS capacity on the network, supplied by the miners.
PG = Price Guide.
PPC = Print Per Cycle.
Spot = Spot price of the PG.
So if we measure a second on the network:
1000u vs 1000c = 0% interest rate.
990u vs 1000c = -1,01% interest rate.
1010u vs 1000c = +0,9901% interest rate.
Furthermore, for the example Spot is initially set to ?1 = !10, ignoring the financial transaction cost in terms of electricity, controlled by the artificial difficulty; which should be minimized as much as possible anyway, to the point where it can be subsidized by regular income, meaning no transaction costs for users (or via classic transaction fees if that proves too much still).
In order to be able to order work units on the network at all, re-coin must be spent, and is burned. So we'll also assume there's a money stock of ?100 and this money finds its way back to the researchers from the miners to be spent again, so location of capital and a circular economic pathway are assumed (but not forgotten). We'll leave premiums out of the equation too for now, and it must be remembered that despite the example, in reality there’d always be a large buffer of money stock out there, so not all coins would be spent at any given time.
In the first scenario, ?100 was spent on 1000u at 1000c capacity. This leaves Spot at ?1 = !10, the interest rate at 0%, and the PPC prints ?100 to the miners. In this case, the economy is in complete equilibrium, as the demand for currency equalizes with the availability of resources which demand said currency.
In the second scenario, work unit demand drops below capacity. ?99 was spent on 990u at 1000c capacity. Since the interest rate depends on c VS u, it is set at 1000c/990u = 1,01%, and is inverted. This means that the miners receive 1,01% less currency then was spent, and receive ?98,01 currency per PPC instead of the ?99 spent. Since ?100 existed, there's still ?1 of money stock left out there somewhere, so the total money stock now reads ?99,01.
The PG sees this money stock VS network capacity mismatch, and adjusts the amount of work units that need to be calculated per unit of currency printed up, as the value of the currency versus those work units has gone down due to an undersupply of work units – and it now reads 1000c/?99,01, which when compared to the previous second, sets the spot price to ?1=!10.1. Because of this, in the next cycle, ?99 now buys !999,9 at 1000c, and equilibrium is retained (yes, i know, rounding errors. Scale as well. Again i'll leave the exact math up to people who know exact math).
Miners will take a hit to profitability because they're the first to receive the reduced amount of currency, which still has to pay for goods produced at higher purchasing power; so the Cantillon effect starts working in reverse. This causes the most inefficient to go bankrupt, and capacity to decrease until either work unit demand exceeds capacity again or until it and demand are back at equilibrium. When liquidity is reduced across the entire economy, prices drop, and producer income goes down as well by reducing the cost of goods.
This will drop work unit demand further, until the natural bottom is reached: The producers producing desirable goods will gain relative wealth, as their products continue to sell while the income they receive from those goods will go up in value for them as well as for anyone else still holding savings. Consumers watching their currency appreciate in value will also, at some point, spend it on goods, as deals on stuff they want to possess simply become "too sweet".
When that point is reached, the companies best run are in a position to profit off of it (as they produce the goods for the above mentioned sweet deals), and will start ordering more R&D again in order to profit off their strong capital position. VC firms will use their/other's savings to invest again in companies which innovated at the bottom to get off the bottom, driving currency demand and work unit demand up further. This will no doubt lead to the third scenario below.
As for the location of capital, Exchange programs can always be used to entice people to transfer their currency to research institutions, for example "research bond" issuances that offer a return on research developed with the capital invested. As the currency increases in value through deflation, so does debt denominated in said currency (because debt becomes more valuable to own as the real return on bonds is the principal plus interest plus deflation or minus inflation), which makes it more enticing to lend, until once again, humans are enticed enough and credit recovers. Yes, deflation makes loans harder to pay back, that's the point. Unlimited lending is a menace. Restrained lending can be very profitable for all parties involved.
As an aside – I've got nothing against credit, I just have a massive issue with building credit directly into the currency, and we've got a long history of credit binges ending in busts. In this scenario, if the research doesn't pan out, that's too bad – for the lenders. They have to write-down their investment, but no one else is affected by this – least of all the miners, which received generated currency for work done regardless of the work's ultimate value; compared to bank implosions losing people's savings now thanks to bad decisions yesterday.
This isn't a problem for the entire system as it is with money as debt, because in that systems the reduction in credit starts annihilating either fiat or gold credits fungible with the currency itself, and liquidity disappears with the debts. When the currency isn't based on debt, merely the bad debts go away and the creditors suffer – but their loans aren't fungible with the currency. If you haven't lent re-coin to anyone, you could not possibly be affected. In order to write those loans to lend out currency, they had to first obtain research coin to lend – just as when you lend out physical gold, you can't offer a promissory note, as it’s not paper that is requested. Research-credits will never be able to be spent on the network, so any re-coin lent out, HAD to be obtained through value creation previously.
Systemic leverage can't exist, because it's not a fractional reserve system. Research-coin's a sound money system. Inflation and deflation have to be justified by changes in real world value through environmental changes. If neither is justified, neither will happen.
In the third scenario, only 1000u are processed even when 1010u are available, because the network capacity simply doesn't exceed 1000u worth of c. The researchers still spent ?100 on 1000u, however, because during that second 1010u were available for 1000c, the interest rate is set to 1000c/1010u = +0,9901% (mathematically this doesn't need to be inverted, it's merely the concept of an inverted interest rate that counts). As a result – ?100,99 are printed for !100 of work.
The PG observes this change in the total money stock, and adjusts Spot down to 1000c/?100,99 = ?1=!9.9019. So next cycle, if you want to buy 1000u again, it now costs ?100,99 to do so. Note that the interest rate doesn’t affect the spot price directly, the reason for which is explained further below.
Location of capital comes into play now, as researchers now need to obtain 1 extra ?1 per 1000 work units of research. If they can’t obtain said currency through proceeds off of previous research or through attracting investment, they will be priced out of the market.
This cycle continues until either 10u out of 1010u is priced out of the market and the price stabilizes, or until the miners invest the additional profits into expanding capacity through the Cantillon effect, which states the first person to spend new currency benefits most from its purchasing power, decreasing per spending-step until it's spread out across the economy.
While prices will ultimately increase with inflation; since the miners are the one to start that process, they still can buy any good produced at previous purchasing power level, while the person they buy from can buy any good minus the one they sold for that purchasing power, and so on.
When capacity is expanded in order to service that 10u initially left out, overall research capacity of the network (and humanity) is increased to 1010c, and liquidity (and with it prices), stabilize again.
Note again that the interest rate does not determine price!!!
It only controls increases and decreases to the money supply, based on real world value increases and decreases, which in turn affects spot price but does not determine it. What the actual price of each work unit is, depends on economic conditions.
That is to say, if the PG sets Spot to ?1=!5, and ?200 is spent on 1000u at 1000c – the interest rate is 0% and the money stock does not increase or decrease, just like with ?1=!10 and spending ?100 on 1000u at 1000c! Spot is a guideline, not a law. Hence the name of the Price Guide.
The money stock will stay at ?200 for as long as ?200 "are needed". As for the question what determines that need; the total size of economy VS the network does. As the number of participants increases, not just the need for currency increases, but the number of locations capital can flow to as well!
Meaning, the more goods that are priced in re-coin, the more opportunities to spend re-coin, thus increasing demand for re-coins, which naturally raises their value. At the same time, when people leave the network, there's less need for capital as the total amount of locations of capital decrease, and as such the money stock representing that need should decrease.
This fluctuating money stock is required in the first place because, well, my example is too small and limited (for simplicity's sake); it has assumed that the economy only consists of miners and researchers, leaving out all other demand for currency. This is obviously not the case in reality.
As i've explained before with Beauty, value too is 90% objective, but it's that 10% subjectivity that throws everything for a loop. In finance this exhibits itself in irrational choices. Sure, people can be driven to excess irrationality, but even the most logical mind will slip up from time to time.
As such – the Price Guide can say whatever the hell it wants, if i want to offer more currency for a work unit – for example because i want my work prioritized, which is an abstract value – that should also be possible, and it has to be accounted for.
Actual Price for Work Units will still be determined by supply and demand! Nothing i've typed so far precludes the ability to charge premiums for prioritization of research – there still needs to be a way to determine which one of the 1010u's in the 1000c/1010u situation doesn't get calculated. In this case, a premium can be asked, and that premium can be passed directly on to the miner, so that the spot price is calculated by ((coins spent -/+ interest rate) + premiums); as the premium gets burned but doesn't create or reduce additional value, so it merely transfers the value already created and contained within the burned coins, which were spent on offering the premium in the first place.
There is value in priority, but not additional value from a macro perspective; that is to say the value contained within priority premiums is value equally lost by people priced out of the market by those very same premiums. While it guarantees your calculation gets done, it also guarantees someone else is the one who doesn't get their calculation done. Since value gained and lost are already in equilibrium thanks to location of capital, it doesn’t need adjusting by the interest rate.
So on the researchers side, the software is still free to allow researchers to offer a premium for things such as priority. Should an external event happen that greatly increases demand for research, such as a war or a virus, governments paying a (hefty) premium like they always do allows the network to prioritize that research automatically, either by executing it first or matching with premium providers equipped with faster hardware for in-order executions. These will then properly be compensated for their premium investments, as the premium transfers over to them directly. This is no different from reallocation of effort to any resource useful in war.
Meanwhile, on the financial side, should more transactional capability be needed – the normal artificial difficulty is also still in play, as well as things as blocksizes. These things can be adjusted to strike a good balance between financial calculations and work calculations per full transaction, should the financial side require expansion. It's clear by now this impact on the calculation speed of the network should be as minimal as possible, but sometimes one doesn’t have a choice, so the knob is there to be tweaked should it be needed.
Through this interplay of systems; Money stock, Work unit stock and FLOPS capacity, linked together by natural supply, demand and the interest rate, Research coin will finally solve the one big problem of inflation and deflation:
Too much or too little of anything is never a good thing. Even liquidity.
Inflation and Deflation in a system which is in equilibrium are nothing to be feared. But if actors start distorting the economy and favoring one over the over – such as the US Federal Reserve which has favored inflation while being scared to death of deflation for more then 100 years, or banks lending too much and as a result, draining liquidity from the system once they have to reign in lending – it's then that too much inflation and deflation lead to panics, because the pendulum was previously swung too far in one direction, and now it has to break something on the other side.
But slow increases and decreases in the money supply are nothing to be feared, especially not with a self-righting system. Once doing research becomes too tempting as the price of research decreases, companies will invest more in research, initially halting the decline, and once the research leads to new marketable products, it leads to renewed consumer interest to spend through human curiosity.
Once companies invest in research again, savings start to enter the economy again and production ticks up, leading back into an inflationary regime – currently made impossible by the central banks annihilating savers with artificially depressed interest rates, and being forced to make up the difference with even more debt; perpetuating the idiocy and ending up in hyperinflation.
The system won't need a government to print money, as sound money is printed by the people themselves. Anyone can offer up their CPU to the network, anyone can be rightfully compensated, but unlike the current generation of crypto, everyone will actually have an incentive to do so:
Directly aiding the progress of humankind into the future.
The bigger the network gets, the more and more difficult research we can accomplish.
The energy spent on the network will not be wasted, where it most definitely is currently, as all those CPU cycles are spent compiling long strings of numbers of which only one is right, and all other effort is discarded without use. For researchers, the wrong answer or outcome often has as much value as the right outcome, and many discoveries have been made through complete accident.
Instead of being wasted, i would say the energy would go to the noblest of goals we have: Trying to leave this place a bit better for the generation after us, even if that doesn’t always work out.
And the best thing is; we already have the technology. BOINC exists. Bitcoin exists. Both are open-source software, so anyone can do this (well, if they can program software). It's merely a case of combining both in the correct way, using the correct understanding of economic theory in order to avoid past mistakes (such as artificially limiting or directly controlling the supply of intermediaries).
A stable currency, that is to say a currency that correctly represents real world value at all times, is the most important aspect of trade, even moreso then trust between humans. We must be able to trust the issuance of currency, as well as the trust baked into the currency itself, through the intrinsic value contained within it.
But i am of the fullest of faith that Research-coin can finally obtain the pinnacle of both Trust and Stability among the currency candidates. It meets ALL requirements for sound digital money:
Labor is performed by the computers required to run the calculations as well as the researchers that find things to research. No research, no work units.
Supply and demand is taken into account by the fluctuating amount of work units, as well as the real world resources that computers require in order to be built within reality. No computers, no network.
Time value is taken into account through the network that looks at capacity vs supply per second, while the mathematical calculations always take an amount of time to calculate, and the currency takes this into account by changing the rewards of transaction cycles. And the clockspeed of computers makes sure time is divisible in exact measurable units too.
Perceived value is taken into account by our perception of research and innovation as the only way to progress to a better quality of life, which is both subjectively and objectively true. Premiums take care of any expressions of perceived value during upticks and downticks, while Spot price offers guidance rather then law for what the price should be, based on real world supply and demand values; tracking intrinsic and perceived value directly for the first time in history.
Ethereal values are taken into account as Research is an Ethereal value to begin with, since only humans value the progression of human society, and Research produces only information – to actually build the researched asset still requires additional real world resources; but to build the thing in the real world you first need to know what to build, still providing value. Since research can be digitized, it offers virtual value as well as real world value.
And while it may be pure informational, Virtual Labor shows that effort spent on information can produce virtual intrinsic value as well – as long as we desire to have that information. And a desire for such things will always be the case of anything that could potentially further improve our quality of life, either directly through invention or indirectly through wealth accumulation.
As a kicker, since the computational network needs electricity to be available to run in the first place, and as the network already takes time value per second into account while electricity is generated on the spot; you could even theoretically state that the work performed on work units is "backed" by the energy that is being spent on it on a second to second basis: Should electricity disappear, the network disappears, and there would be no ability to spend, transact or mine the currency – yet it doesn't disappear (outside of volatile memory).
Nor do the computers and their real world value previously backing the network. Should the electricity come back, the network comes back.
And while we cannot quantify research as it is an ethereal value, we can quantify the total amount of research required, as that'd be the total amount of work-units demand by the network, the collective sum of all research calculations that are being done – which have value. While the intrinsic value might not be contained within any one coin but rather the network as a whole, as such, the money stock as a whole does retain its intrinsic value, and the money itself can be trusted without reservation.
No one needs to know the exact value of each unit of currency at any given time (no one knows that currently either and society still works on a day to day basis), they merely need to know how much currency they need on a daily basis for their own needs, the amount they need to spend to obtain the goods they want, and they will request an income accordingly. Through the combined actions of each individual within society, the real price for goods in re-coin (meaning liquidity equilibrium) will be established on its own, without outside interference by any central authority.
As long as the intrinsic value is trapped in the system as a whole, prices can be set through individual action, even if the value of each unit of currency isn't easily measured – the value of the currency as a whole simply needs to reflect the value of the system as a whole, and if it does, people in general can be assured of its value, making the system foolproof. As long as the people to whom it matters can verify the value of the network, regular people can just go about their day, and the system will take care of itself without any need for outside interference by Governments, Central Banks, or even God himself.
Nor can any of them do anything about it, as they'd consign their own country/realm to 3rd world status through killing their companies’ competitiveness through innovation; immediately severely hampering how much wealth the elite can siphon from the economy, and promoting other factions of elite in control of other networks.
5% of $1000 is still better then 10% of $400 – and the elite will finally be disincentivized to keep crashing the economy through excessive money printing, because the prosperity this system brings, brings more to everyone, even them. Not just will digital payment methods via mobile/debit cards make the payment system idiot proof – the whole monetary system is idiot proof. Fuck up too much, the population "switches apps" to a "black market" network (assuming the government even has their own network), and good luck paying goons then. Consequence and Personal Responsibility will have to be reintroduced as the only solution (fucking finally).
And as a final bonus – it’s isolated from stablecoins as well as fractional reserve systems. Since the coins have to be consumed to unlock their research functionality, and only legitimate coins can be consumed; no currency pegged to re-coin can affect its price, as the pegged currency cannot be consumed by the core network. You can believe what you want, when push comes to shove – you can only spend one of the currencies of the peg into the system, and it’s not the foreign one. Pegs, without the responsibility for the peg, become impossible in high-velocity systems (though I will not be held responsible for the future advances in shystering; again I can only do so much and I gotta leave something for the next generation to think about).
It is even impervious to Paper-recoin (as in paper-gold), because it will be fully transparent. As a digital technology, with the money stock, network capacity and work unit demand publicly known, it will be impossible to hide the true supply of the asset, as is now the case with gold and silver. No matter who stores what on what balance sheet or inside of what vault; the total amount of re-coin will be known, and as such, its true value based on supply and demand as well.
While we might not exactly know how much liquidity is available for circulation (what’s life without a lil’ spice, eh?), we will know exactly how much there is in total, rather then having to guess how much metal is located in vaults around the planet, reducing a lot of the security through obscurity frauds rely on. There will always be problems, but atleast they will become easier to track down, name and fix.
To future-proof the system even more, additional layers can be added ontop of the base system to increase transactional speed further. Because at some point during scaling ever larger, with a distributed system like this, the speed of light starts becoming a problem. If transactions are completed in milliseconds, but it takes you a minimum of 12 milliseconds to connect to a node… well. At some point, that’s a problem. And if crypto wants to grow to dominate finance, even those limitations need to be taken into account.
For that problem, "centralized trusted nodes" could be created, which pseudo-separate the financial side from the research side again, but are verified by the base network. Wallets could connect to these centralized nodes, which "lend" the financial processing power from the central nodes while lending their research processing power to these nodes, in order to be able to participate at all.
The trusted relationship here means that the central node is aware of the connected wallet’s processing speed, and will tender offers on its behalf; but since all tender offers from all connected wallets are calculated by the central node instead, the transactional speed increases much further.
The wallet will have to verify its speed at random intervals to keep its place (its rank) on the central node’s list of tender offers distributed, while the network trusts the central node to distribute the correct amount of research work to the connected wallets in the correct order.
Once a tender-offer has been received, the central node calculates the financial side and distributes the research to the relevant wallet, which then completes the associated research while being locked out from receiving more offers from the node. Nodes could share databases on which wallet is connected where, so that wallets can be locked out of both the base network and the nodes network until work is completed. If the work never completes – the wallet never gets reconnected, and can’t transfer out whatever coins were already in it anywhere.
This allows the financial calculations to be centralized again without sacrificing the value proposition of the research calculations; however, verification becomes a problem again, this time verification of the central nodes themselves and their trusted connections.
Here though, it’s more easily solved, since we have the base network: Wallets connected to central nodes offer up a small percentage of their printed money upon completion (however much that is) as a fee transacted to the central node (again, no payment after work is done and stiff the node, connection is severed and the wallet is blacklisted network wide). Every so often (i’ll leave the actual time up to each individual network), each central node is required by the network to run a "verification check" or get booted from the network permanently! No mercy for incompetency when the job you claim to do is so important to get right.
What this verification check means, is that the node has to verify their entire blockchain – and it cannot have a single mistake in it, or the central node is forever booted from the network (not the wallets, which can verify with another node – just the central node itself). Due to their importance, central nodes have more information collected by the software (such as hardware addresses) to make sure they’re permanently excluded should they ever fuck up. Their trusted connections with wallets are checked as well, where the work verified by the wallets connected to the node is verified again by the network. If the verification process was forged, BOTH the wallet and the node get booted (though i’m being a bit dramatic for effect here, it’ll probably end up as "number of infractions per period of time", as a node can’t be held responsible for ALL bad actors).
With the base network available, this verification the blockchain becomes no problem, even if the blockchain ends up very large: The verification work can be chopped up into work units as well, which is what the fee is for: The central node can pay into the network to have its blockchain chopped up into work units, and decentrally verified by the base network. This could even be done at automatic (randomized) time intervals by the software, as all it requires is that the central node keeps a (large) amount of re-coin in its central wallet in order to spend into the software. The only difference with the rest of research on the chain being that, at the end of the calculations, "verification blocks" are instantly "public research" on the blockchain, meaning that the "key" hanging off the main blockchain is instantly publicly verifiable by everyone, humans as well as other nodes, even if the block itself says everything is A OK.
Meanwhile this solves another problem of Crypto, namely that "watching the watchers" isn’t profitable. Afterall, how do you convince somebody to set up a verification node to verify another central node, without being compensated for it? (as they won’t have transaction based income). Having the network print the money to fund verification without work justification will inevitably lead to unwanted inflation again, as verification would become the lowest common denominator in order to get new currency, rather then doing the actual research work.
But, if central nodes get a fee through connected wallets and are effectively "subsidized" to act as a payment processor (Opportunity Cost kids, get used to it) – but they can’t be a payment processor without connected wallets – and have to give up a (large) part of that subsidy to use the base network to verify themselves to the software in order to stay a payment processor (as well as keep getting profits, since the fee could exceed pure costs, allowing for a set profit at a very low cost since it’s spread across many connected wallets)…
Well then you effectively keep the benefits of decentralization, with the benefits of centralized speed, without compromising security or decentralization in the end. The decentralization is still there – but it’s only used for verification purposes, rather then the more difficult and more time-sensitive financial calculations themselves, which are centrally executed.
You could even verify if the central node is assigning tender offers in the proper order to the proper wallets, according to wallet trust verification speed and its internal lists. This makes trustless centralized entities possible through "Distributed Functionality", where the financial and research functionalities are distributed between central node and wallet, but neither can function without both being connected in a fully trusted manner to each other and the network.
And this is why it’s so important that research remains fungible because I thought of this 2nd layer concept months after writing the 3rd draft, during the final reread. Ya never know what that tech could be used for in the end when knowledge becomes hindsight. If you can’t tell what is being researched, you also don’t know whether or not you’re verifying yourself or someone else. It’s all the same to everybody. Security through Obscurity. This’d lift the base network speed on-par to companies such as PayPal, VISA, or even the traditional interconnected banking system. All based on decentralized trust, as the base layer still exists in its perfect state for verification of that trust. Central nodes and wallets would essentially keep eachother in check through mutual interest and mutually assured destruction – the only thing that’s ever worked to keep governance in check.
Gentlemen, as they say, i think that's game as far as money is concerned. I'd like to see gold or sticks become capable of propelling humanity into the future through a global distributed computing network. "Making money work for you" will take on a whole new meaning. I will challenge anyone to come up with a better system backed by more value, or a better value that we all share that can also be digitized in some way – or even to come up with some sort of definition of value that challenges the superiority of my system.
I think its also only now apparent why i needed 3 whole separate books to explain this concept to its fullest. It utilizes and combines many observations others will be years away from making, as few have lived my life and touched as many areas of life as i have – and to be honest, trying to reason your way through 3 interacting "currency pairs" instead of 2 makes things exceedingly difficult (units:cycles, units:coins and coins:cycles).
Honestly, it wasn't fun, and i hope i've just found the truth here and others can now suffer less as a result. It is after all the other side of the coin to improving the quality of life; finding fun stuff to do with that quality of life, and trying to tame nature into being less brutal to the next person in line.
Re-coin also finally offers we, the people, a way to bring our governments and central banks to heel, simply by offering a vastly superior option that is outside of their control. It simply put doesn't need them – though humans will always need government in some form. I’ve specifically not put in any sort of voting system, or made comments on what the best method of control over the software and updates is – as that is something each society will have to decide for themselves.
The people get the government they deserve. And I doubt a second chance to reset things like this will come along, so it’s up to every individual to make the most of it. Causality, not Destiny.
While i'm not against government at all as i've said before, i've got no illusion about the need to keep them under control, rather then the populace. Pure national and international competition will be the big driver here as always, so it also hooks into traditional values and systems, while people will always have the option to abandon one network for the other.
Knowing we have options now, will be enough. Misbehave, and within no time at all, a untrackable black market pops up as a second or third layer ontop of other nation's networks, much like hyperinflating countries end up pegging their currency to something else to stop its fall, often the global reserve currency or a neighboring superpower. Continue to misbehave, the domestic network dies entirely – as people still live in the real and have needs in the real – and that means the elite become poor too relative to elite in other countries as their companies fall behind others (there is no such thing as "the" elite, just factions of elite), while the population just continues business as normal on the black market.
Even though there will always be an elite as they are nothing more then humans innately more productive then others – the general populace keeping those elite on their toes so they don't pull more then their fair share to themselves is exactly what is needed, and nothing more. When the ability to generate liquidity is democratized, that’s exactly what’ll happen. Billionaires will go extinct while the amount of millionaires multiplies greatly, without being so naive as to say "poverty will be eradicated". No, there’ll be plenty of poor people still; but relatively speaking they’ll be alot less poor. $100 puts you substantially closer to $1 million then it does to $1 billion after all.
Finally, as a note, so far i've only been talking research as its the most common value we have and it's fairly easy to think about in the abstract. But there are many more specific tasks that could be run on sister-networks specialized in them.
Scientific Research SHOULD BE the global reserve currency, but as Path of Exile proves, it's perfectly possible to have multiple currency tokens alongside eachother, as long each one of them has its own distinct utility value.
For example, while everybody else races to get their name on the new global reserve currency, smart operators might create a network on the side that focuses on distributed video-rendering specifically, as render farms are a large operating cost for movie studios that use tons of CGI – which is all of em these days. If they could farm this cost out to a distributed network – frame rendering is a highly parallel task so it scales well – it could lead to a whole new era of blockbuster movies, with extreme quality for the biggest titles, and modern blockbuster CGI available to small indie studios. It might even finally push us to the computing power needed for true photo-realistic 3D humanoids.
This could even service the "ASIC" industry, or "Application-Specific Integrated Circuits", which is what the dedicated Bitcoin mining chips fall under; by refocusing this industry on chips specifically made to render video frames, which is a fairly simple process that just needs a lot of repeating. This would allow that industry to flourish, without impacting people’s ability to generate money on the main network, as generalized scientific calculations will always run best on generalized hardware, which is what everybody has at home in CPU's and GPU's (and with that, hopefully keep CPU’s and GPU’s affordable for the consumer).
Meanwhile, movie companies themselves will always have dedicated render farms for lighter or in-house in-development work, farms that currently only cost revenue instead of bringing in revenue when they idle without work. Booting these things up and shutting them down takes more energy then letting them run, and the silicon is actually designed to run continuously. It doesn't happen often that these mainframes run silent as companies try to minimize downtime for obvious reasons, but it does happen.
Simply keeping a mining client on these server farms would allow video rendering companies to automatically and instantly farm out rendering capacity to other companies through dynamically distributing empty computational cycles, while getting automatically compensated for it in currency they themselves can spend on that same network, to obtain the same utility value they already require.
Overhead would be negative, as others basically pay you the resource you need to speed up your own renders using the network, allowing you to spend beyond the initial budget – as long as there's a desire for that computing capacity. Meaning, the economic framework of re-coin will make sure the companies won’t simply all rent out their servers for work others require, meaning no work gets done when everyone is just looking for somebody else to offer work. If there’s no work available to render, no coin can be printed.
And while in my system price might still be set as "whatever the fool pays for it", atleast we'll be working within a currency system where we know it'll right itself once we get too crazy, rather then leading to yet another reset involving war and death; and it automatically gives us a price guideline to boot! At this point, in July 2021, a minor recession every 4-6 years lasting about a year, really doesn't seem so bad anymore.
Beats going through once-a-century crashes every other year.
I think i've said just about everything i can say about the theory behind Research coin, as well as about the practical implementation for Re-coin. All that's left at this point is interpretation and implementation by people far more practically oriented, as well as for the eggheads to have a go at a new area of finance they can mathematize. I wish them luck.
I also hope the entire concept behind value and money has become crystal clear now, not just by explaining what it all truly means, but also through showing there ARE better options available these days; it's just that the people currently in charge or leading the pack really are that clueless. Assurances everything is fine to maintain control have always been nothing more then Bravado, not Confidence. Take it from somebody who clearly does know what he's talking about: They don't.
So here at the end, permit me a "chapter for the author" one last time to round off this adventure.
Chapter 6: The Future of Mankind and its Economy
I guess this is where theory turns to dreams, as the future is never written. But if there’d be nothing left to dream about, life would truly be miserable.
First things first. The cycle of money being controlled by any one entity must be broken, for it has brought nothing but misery to the masses. And since i'm the first to create this system, the choice is mine. I know the uniqueness of the technical implementation – and especially my ability to describe the theory behind it thoroughly and to its fullest – gives me the right to patent Research coin, being the inventor of the technology.
I'm explicitly giving this right up and pushing this technology straight into the public domain!
These books are to serve as nothing more then proof of prior art to prevent others from patenting it, or achieving control by obtaining my patents in some way (though i'll keep the copyright on the books, i'll get my just reward that way. Buy the special editions once they’re out! It'll do well as a conversation starter at parties).
From my time trying to become an inventor in 2019 and looking into patents, i know the world mostly operates under a first-to-file system (the rest use first-to-invent still, which covers this too). However, i also know, a vital part of this system is secrecy: If you publicly reveal your invention, you lose the right to patent it – as does everybody else. It's the one glitch in the system of first to file that i've found which'll protect inventions against bad actors rushing out to patent the idea of others in order to gain control over it, and i'm using it.
Sound money WILL belong to the people from this point onward. BOINC and Bitcoin are already open-source, while my giving up patent rights will ensure many different combinations by many different people can and will arise, rather then one centrally controlled monolith controlled by me or whoever wrestles control away from me. Not even I would be immune to absolute power. And while i'm sure many patented systems will be built ontop of this system offering wonderful functions – i'm not against patents at all (with a reasonable expiry time ofcourse) and i'll happily watch the developments from the shadows – my actions will ensure forevermore that the foundations always remain free, and no oppressive system is given a chance.
The people can always decide to abandon the system and start a new one that's again based on fundamentals, freedom and liberty – without having to go through the same troubles of my and the previous generations trying to figure out why and how things went wrong.
It is my fullest hope i can contribute to the prosperity for all, and my motivations can be simply summed up as "I just want the suffering to end". I believe it can, and there's no reason to continue this Tragedy of the Commons (look that up too). Consider these books me "banking" the technological and monetary progress we've made so far, and we can start screwing each other over again from this fallback point. Games have Checkpoints too, and i'm implementing one into real life.
I've learned from the mistakes of history, and i won't hold back the 4th industrial revolution like James Watt held back the original industrial revolution. We're going to need this tech if we are to compensate for all the future production already pulled forward by relentless money printing that has already happened....
Outro
That concludes the whitepaper. If you've made it this far; thank you very much for reading! Again, please keep in mind there's 2 and 1/2 books infront of this chapter explaining why things are the way they are in terms of value, money, inflation, digital value, virtual labor; you name it i've thought of it. The way i like to write is i first like to go through every counter argument i can think of in my head and dealing with it before i even write the first page; going through even more arguments while i'm writing and deleting anything that i can find any counter too or "doesn't make sense".
So if you've thought of counterpoints to my system - i'd say first make sure i haven't already thought of those myself and went with the current system for deeper underlying reasons. I've called the trilogy "The Definitions" for a reason; i went through every argument until i could define a conclusion and explain it thoroughly. The whitepaper above is around 15,000 words - the explanation for it (and money/value itself) is around 120,000. Hence me charging for it.
As a final note, the makeup of this article differs slightly from the books, because Substack doesn't do underlined stuff, and i underlined quite a bit. I guess that's just too 20th century or something. I've made sure all the important bits are properly emphasized in the book, so refer to the book version if you actually decide to work on this. Also as i've stated in the books before, the math might not be accurate down to the penny, for reasons of keeping everything simple so that the largest group of people could understand it under a "you know what i mean" principle - and i'm not exact in math if it doesn't matter, only in logic. I'm a logician and a systems builder, not a mathematician; hire one of those if you wanna build this rather than invent it.
The books can be found here in e-book form, just follow the link to buy it at your preferred webshop (or just search for the titles on Amazon or Apple):
The Definition of Money:
https://books2read.com/u/bzdaVz
The Definitions of Value:
https://books2read.com/u/3yaZWv
Ethereal Value and the Cryptofuture:
https://books2read.com/u/bMwrNA
I still believe in the title of the last book, that crypto has a bright future ahead of it. While blockchain's only innovation is solving the problem of trust in transactions; that one problem is already a very big one to solve. We've gone through the hype of playing with a new toy leading to the current situation, but now it's time for crypto to mature. We've had our fun, people got hurt, the party is over, time to sober up and see what we're left with.
The frauds need to go, and reason needs to return to the space - or more rather, be infused where previously it was lacking. Regulation is coming, and FTX shows why it is needed. Bitcoin simply isn't valuable enough, and if people get stuck supporting the first iteration of software above everything else as the ultimate solution, we'll never get anywhere. NO first version of ANY software is still in use today, and in time, my system will be replaced by a better one too.
While the zealots themselves admit Bitcoin's not good enough in performance, which is why Lightning Bitcoin exists. Which is unproven, as it's not Bitcoin - it's Lightning Bitcoin. Different rules, different angles of attack, and most implementations out there need stablecoin to grease the wheels - where as my system can function as money itself while still scaling. After a decade in operation, Bitcoin's proven to be secure, but it's also proven to have completely and utterly failed as a currency. Which it was designed as.
Others are already (slowly) coming to the same conclusions, so eventually a system like mine was bound to appear organically. But anything that i've seen come close still makes the same centralization or security mistakes, or the economic ones. Consider this me pre-empting anybody less ethical from gaining control of it all should they invent this system on their own. This way, with the patent rights given up and the information made public, no one group of people can ever gain total control.
And that's the true spirit of capitalism: Competition. Not crushing others under the boot of your monopoly. Errybody still chasing that Amazon money. You can fix the money, but you can't fix the people, not unless they themselves want to.
So please share this article far and wide! It's not about getting everybody to believe it, or to sell my books - it's genuinely only to get it under the right pair of eyes that gets inspired by it, and makes this system a reality, whomever of whatever color or creed that is. I can see many things, but not who the person is that ends up saving the world. It's never who you expect. As i write in my books - we've been "winging it" as a species for thousands of years and ended up with nuclear weapons, and i don't see us changing now. Once the system exists, we'll take it from there. So share generously, and feel free to repost it on other sites! (naturally with due credit)
It is a time for generosity afterall. As for an icon to represent it, i thought why not go with the classic lab coat.
Merry Christmas everybody!
- Kirian "Deso" van Hest.
Find my stuff on Twitter! https://twitter.com/DesoGames
Twitch for weekly streams: https://www.twitch.tv/desogames
My own website (with older articles): https://www.desogames.com
And buy my E-books to get the full 140k words explanation!
The Definition of Money: http://books2read.com/u/bzdaVz
The Definitions of Value: http://books2read.com/u/3yaZWv
Ethereal Value and the Cryptofuture: http://books2read.com/u/bMwrNA
So many words, yet "fungibility" is not one of them. Disappointing. . NEVERMIND, sorry.