Hmm, so, should we launch WorstallCoin?

Been having some chats with a programming type over here. We could get a new digital currency together over a few months of intensive work.

As today’s FT says:

Buying Bitcoins while their price is so bubbly is nothing more than a gamble. Investing in other online currencies, or in companies that can help the Bitcoin economy develop, looks like a sensible use of a venture capitalist’s money.

The problem with the proposition is that if it really only does take a few months of work to launch a new currency then there’s not really all that much value to a new currency, is there?

On the other hand I can think of a few countries where you could target the usage. Those places with capital controls.

15 comments on “Hmm, so, should we launch WorstallCoin?

  1. “if it really only does take a few months of work to launch a new currency then there’s not really all that much value to a new currency, is there? ”

    Aren’t you getting that the wrong way round? The only ‘value’ a currency has is reflected in the transactions the users make in it.

  2. Doesn’t a currency need a government (police / judiciary / army) to enforce its use? The idea being that in extremis, you can always use your pecunias to buy off the people who are trying to cause you harm.

  3. A currency is only worth what you can exchange it for. I seem to remember that tulip bulbs were thought to be worth a lot at one time.

  4. I wonder whether bitcoin (or any type of virtual currency) is in fact money at all or is it some other type of financial product. In some respects it is a bit like a frequent flyer program where you can exchange miles for flights. In this case you can exchange bitcoins for cash through various exchanges. No one things of frequent flyer miles as “currency” but in many respects it is the same as bitcoin isn’t it, but instead of a central controlling body (the airline) controlling the supply the total number of bitcoins is fixed at a hard limit.

    Its an interesting question and I might devote some more thought to it if I can really be bothered.

    On the second point bitcoin has been used to circumvent capital controls and international sanctions in Iran, so yes for circumventing capital controls it does work.

    Of course Bitcoin cannot last. It is really the netscape navigator of digital currency (or digital payments mechanisms). It has a couple of fundamental economic flaws the primary one being the fixed limit on the number of bitcoins which means that as a currency it must be deflationary. Fixed money supply chasing growing number of goods then the value of a bitcoin must go up over time so prices must fall. With ever falling prices no one will spend bitcoins and instead just hoard them as everything will always be cheaper tomorrow in bitcoin terms anyway.

    Still it does perhaps point the way of the future for online payments mechanisms

  5. Andrew M – “Doesn’t a currency need a government (police / judiciary / army) to enforce its use? The idea being that in extremis, you can always use your pecunias to buy off the people who are trying to cause you harm.”

    I would prefer to be paid in gold. I am sure many other people would be too. A currency does not need a government to enforce its use. I have lived plenty of places where the de facto currency was the US dollar. No one expected a SWAT team to come in and enforce its use.

    Perhaps TW can produce an on-line scandium-based currency? You can buy a certified unit, let call it a scandie, at a known purity and weight, which would be stored in a bank vault somewhere but which would have a unique public encryption key associated with it a la bitcoin.

    In fact didn’t someone try that with gold?

  6. Tim,

    I think you’re making the same mistake as Tim Harford. You’re both looking at Bitcoin through the eyes of economists and missing the deeper story: this is one of the most important advances in computer science ever.

    The genius of the Bitcoin designer(s) is that they solved the distributed consensus problem. That is: they built a *platform* for consensus, one that most people thought was impossible. A platform that enables millions of individuals anywhere in the world to come to a globally consistent, cryptographically secured consensus on who owns an arbitrary asset without requiring *any* of the participants to trust any other and without requiring any trusted third party. This is one of the most significant inventions of the last decade.

    The Bitcoin “currency” is just an application for the platform, albeit one with special properties. But there are so many other applications one can build on a trust-free, decentralised, secure asset register.

    I recored an interview with Finextra in this topic here: http://www.youtube.com/watch?v=VDO7TDMlxsY and I’ve discussed these topics on my own blog here: gendal.wordpress.com. (Or just google “colored coins” for a broader discussion)

    Bottom line: ignore the currency/speculation/trading/bubble question…. and think through the implications of a global, decentralised, cryptographically secured asset register. This is huge.

    Richard

    ps I can trace my economic education to two places: EconTalk and your blog. I’d be delighted to repay the compliment and take you through some of this with you face-to-face or on a call… my sense is that if I can persuade you that this is an innovation of historic proportions, I could probably persuade anybody.

  7. All money is a promissory note or derived from it.

    If MasterCard ever issues MasterCoins I shall be happy to accept them. TimCoins, not so much.

  8. We can have the ultimate euro breakup – every town gets its own currency. In fact, why not every household?

    That’ll make us all rich, won’t it?

  9. “As long as the Worstall coin has words like bugger, fuck and cunt prominently displayed I’d be in favour. Otherwise I feel it just wouldn’t be “Worstallish”.

    Richie gets his head on a coin, then. The ultimate accolade. He will be chuffed.

  10. In a small way, I was involved in another attempt to create an online currency

    http://en.wikipedia.org/wiki/Beenz.com

    being a humble techie at the time,I kept my gob shut about the obvious flaws in their model, namely a currency not based on any assets was dependent upon attaining a critical mass of adopters and had to compete with a truly terrifying innovation namely the “credit card”.

    As I said, I kept quiet in the face of the slick marketing that Beenz produced and comforted myself in the sure knowledge that all these clever people from Oracle had also read Ricardo while at University.

  11. @OO

    FF miles ARE a currency, just ones with severe restrictions and whose value is dependent on an unknown process at a private company.

  12. JOhn, are FF mile taxable then, should they be, after all you “earn” miles and you “spend” miles, sounds like income to me and therefore taxable as such, even if only a fringe benefit?

    whaddya reckon?

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