I have an idea. More than an idea, a high-level software architecture for a distributed banking system based on sound money (in this case silver-backed - but could be gold or whatever).
This would not be under the control of any sort of centralized bank. Completely decentralized, much like the torrent concept of file sharing.
Before writing me off, I have an MS in computer science from UofIllinois, Champagne/Urbana. I tend to be an engineer in that I put different technology bits together to produce an effective solution. I've had the benefit (if you will) of being on the bleeding edge for 15 years with a wide variety of CS technologies - another 'benefit' of small companies.
My question is twofold.
1) Does is seem reasonable to simply build a 'banking' system based on sound money and allow people to migrate to it - undercutting the current fiat-based fed reserve system?
2) How would I go about finding partners in such an endeavor that are similarly minded? I imagine it would take a few 'programmer' types as well as other types (marketing? business? I just don't know). I have contacts of probable good programmer types with requisite expertise - such as encryption protocols.
Am I nuts? Comments and/or adivce are appreciated.
Joel
Study the history of e-gold and its branches
http://www.e-gold.com
http://www.businessweek.com/ebiz/0004/ep0403.htm
http://www.lewrockwell.com/rozeff/rozeff215.html
We are the soldiers for righteousnessAnd we are not sent here by the politicians you drink with - L. Dube, rip
Thanks,
I'll need to read through the articles, but I took a look at the e-gold website.
The problem I see with e-gold is that it is central. It's way too easy for the government to seize the assets.
I'm interested in a distributed semi-anonymous system where people can choose to hold their own gold/silver/whatever and still have an account that can be used for barter in a completely distributed fashion - similar in concept to torrents where files are shared by many at once (although this would be more involved and require many more security details). It would be impractical for the government to seize the assets without going home to home.
This requires many trusted agents likely using systems like Verisign along with the ability to untrust an agent (so to speak). Lots of replication. It would probably have to use the concept of 'eventual consistency' (look this up related to Amazon's S3 - simple storage service). It would be on any internet enabled device (iphones and the like, etc.). The only limitation here is that the internet isn't taken down :-).
I'd want to somehow have the source code available for inspection / transparency to allow experts to validate, analyze, etc.
Anyway. I hope that provides a bit better concept of what I'm thinking about and whether there is any potential in this.
I read the Lew Rockwell article.
This raises a couple questions for me.
1) Is it legal to barter without using legal tender?
2) The system I am envisioning is completely distributed. It'd be difficult to call it a financial instiution or the like. The data/accounts would be stored on user's devices. Most users would only have a few accounts on their devices - probably those they frequently transact with. The idea being that nobody knows the extend of the entire set of accounts - it's completely distributed. The only thing you really care about is your own account and the ability to debit and credit bits of 'money' to it. And this account data needs to be available to others in the sense of completing a transaction. (Obviously there are a lot of security details involved.) It would be backed by silver in the sense that you might define 500 units in this system to equal one ounce of fine silver. Since this system wouldn't be using legal tender I imagine it would be a bartering concept. But it is also not a company/corporation/institution. Are there laws against such a system (to prevent money laundering, etc.) - given you aren't using legal tender?
(For now, assume such a distributed system is feasible to build and has necessary security and the like...)
I see this as allowing people to chose to transact using sound money principles while continuing with the country's legal tender for tax purposes or whatever.
I guess I wonder if this concept is legal - if there would be legal problems using it. And if it was doable does this sound like something worth attempting.
(I like the idea of a secure account system wherein one cannot look and see who has what accounts in any easy fashion at all.)
How would I exchange your electronic cash for actual physical gold if there is no physical bank? After all, if you succeed I might want to setup a competing currency.
This requires many trusted agents
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
joel1776,
This is a very curious scheme your discussing. I don't have any answers for you, simply letting you know how interesting this is.
<grin>Gold and Silver as a monetary standard is not something I understand. I understand one can have a bimetallic standard, but don't understand how that works. I've been using silver as my example because I can afford it :-). Plus I've read that traditionally there is a 15 or 16 to 1 ratio between silver and gold. right now it's more like 60something to 1. So I don't understand what that means either. Perhaps there are too many people wearing their gold?
So how does one convert to and from silver (into the virtual money, chtis, whatever it would be called)?
My first thought was that person A gives it to Person B and person A's account is credited with 500 units of virtual money. But now there is nothing to stop person B from giving it back to A and so on.
What I want to do is allow the actual silver to be distributed among people. Nothing centralized.
So. Person A gives Person B 1oz silver. Person A's account is incremented by 500 units. Person B's account is decremented by 500 units. The amount of actual silver represented in the virtual bank equals the appropriate number of units in the virtual banks. (No need to carry silver around.)
How does one get this thing started/booted? One purchases silver from wherever they purchase it from using their normal dollars. Then they add the silver to the virtual bank system. Silver is added from outside the system, allowing both monetary systems to be present at once. In the same way I can remove silver from the virtual system (my account was already debited by the 500 units simply by receiving it from someone else in the system).
The actual silver in the system is now distributed among the people (harder to seize).
I have a number of ideas regarding trust (along the lines of certificates in the software world) that I haven't fully fleshed out yet.
However, I'm now confused about how this is used in day to day life :-)
1) I want to sell something to another person. I think that is simply an agreed upon transaction where the person transfers x units of this virtual money to me. I think that works.
2) I'm employed and earn a weekly salary. How is this paid? Simply by transfering the virtual units as well? I suppose so.
So inflation is simply by the introduction of new silver into the system.
Let me know what I'm missing here, this is all new to me :-). I read the first few chapters of Pieces of Eight only a couple months ago. I've only been concerned (or awakened) since the latter half of 2008 - I'm trying to learn all I can about what's going on in the world with what little time I have avialable!
I do not think you are nuts. This view may be partly biased by the fact that I take a similar view and so acknowledge that if you were nuts for taking such a view then it would inevitably not be you alone who would consequently be classed as nuts. I would like to think there are many more similarly minded individuals around the world.
The current banking system needs radical transformation beyond what we know. It may go through a trajectory that embraces the current and the new but ultimately we need a world in which you are my bank and everyone else’s and I am your bank and everyone else’s. A state of banking driven by a P2P transacting framework to power a business Eco-system that is in complete harmony with itself and where the risk of failure of any one particippant are ditributed enough to become infinitesimally small.