In a recent blog post, Medialabber and Bitcoin evangelist Simon de la Rouviere raises the idea of “personal cryptocurrencies” – the notion that, since the exchange rate of a currency is a free-market estimate of the value (and future value) of the currency, cryptocurrencies can be used as a proxy for trading on individuals’ societal worth.
Whether the concept is practically realisable in the near future or not, the post raises some very interesting thoughts.
Essentially, Simon is saying that cryptocurrencies can represent a new form of public shareholding, and in this shareholding scheme, anyone (or anything) can be a publicly traded company. This is quite different from, for example, the use of colored coins to trace the transfer of public shares; rather, the currency’s exchange rate becomes the value of “one unit of” share.
The idea again illustrates the ease with which Bitcoin and its derivatives blur the lines between humans, machines, natural entities, legal entities, even inanimate objects. Vanilla Bitcoin makes it possible for anyone or anything to transact – to quote IBM’s Richard G. Brown, “On the blockchain, nobody knows you’re a fridge”. I believe this to be hugely significant, especially in the emerging field of machine-to-machine communication (“smart grid”, dynamic network services, ad-hoc distributed computing, etc.) where one can easily imagine autonomous economies of machines bartering to get access to each other’s resources.
Simon’s idea pushes this a level further, by saying that the currency itself is a store of value. Yes, Bitcoin does have inherent value: it is the value of the network effect, the shared trust in its future usefulness. In the same way, a personal currency (or corporate currency, or that of a racehorse, a kickstarter project, a charity, or a doge meme) has an exchangable value reflecting a community’s trust in the future “usefulness” of the entity to the community. This is a pretty intriguing concept.
An example: I’ve often wondered about the haphazard way in which we “invest” in individuals. As an educator, part of my work is to help get students access to bursaries, and to help sponsors derive value from this investment. It’s a rather hit-and-miss business. The worst kind of bursary sees a sponsor giving money for studies, in exchange for which the student must “work back” the years of study, effectively being taken out of the free job market for some years. The other worst kind of bursary sees the sponsor investing generously in students, but without seeing much return on that investment. Wouldn’t it be much more useful if investors could buy shares in a student’s future career? (Perhaps giving the student the option to buy back the shares through employment). A personal currency could present a more structured way to invest in individuals.
Madcap ideas? Who knows! But one thing is certain: the Bitcoin protocol and its offspring have given us the means to try out concepts like these, concepts that would have been impractical or even impossible a few years ago.