The truth about "gold backed" cryptocurrencies
Posted by Poplicola 8 years, 10 months ago to Going Galt
This piece warns of questionable practices behind "gold backed" cryptocurrencies. It also leads me to speculate below on how Galt would use such technology.
I suspect that if Rand were writing a new edition of AS today she might have Galt employing some sort of cryptocurrency technology with a fix ratio 1:1 convertibility to gold, since carrying significant value in gold coinage outside of a highly secure and ethical community like the Gulch would be somewhat problematic and inviting to the criminal classes.
Using state of the technology, it would make the most sense to have each person carry a biometricly secured digital wallet. It might externally look like a coin in the movie but it would have no intrinsic value to a thief.
Instead it might log intended transactions, tentatively exchanging crypto tokens representing the amount gold being transferred. This part of the system could operate independently of network accessibility, however, incoming funds wouldn't be accessible until "cleared" at a physical bank. This would make it possible to defend against a "gun at the head" attack by requiring a Passcode to be entered into the payor's wallet at the time of the transaction.
It could then be compared to an internally stored "Duress Code". Anything other than the duress code would cause the pair of wallets to commit a regular transaction, but the duress code would log both parties' identities (for accountability to preclude false robbery accusations) and an SOS Token in the payees wallet.
A payee trusting his or her payor could elect to defer clearance and accept uncleared funds stored in the wallet with the understanding that he or she might be asked to testify in back tracing any duress credits to the originally flagged criminal suspect. Thus transactions would only be be anonymous absent duress in the payment chain and would in other respects be as good as cash.
There would be no way for a criminal to know if the person he tried to rob employed a Duress Code, but he or she would have to assume that it was, creating a verifiable record of his or identity that would eventually become known to the police.
This post should be considered prior art in case anyone tries to a get a software patent this rather obvious idea.
I suspect that if Rand were writing a new edition of AS today she might have Galt employing some sort of cryptocurrency technology with a fix ratio 1:1 convertibility to gold, since carrying significant value in gold coinage outside of a highly secure and ethical community like the Gulch would be somewhat problematic and inviting to the criminal classes.
Using state of the technology, it would make the most sense to have each person carry a biometricly secured digital wallet. It might externally look like a coin in the movie but it would have no intrinsic value to a thief.
Instead it might log intended transactions, tentatively exchanging crypto tokens representing the amount gold being transferred. This part of the system could operate independently of network accessibility, however, incoming funds wouldn't be accessible until "cleared" at a physical bank. This would make it possible to defend against a "gun at the head" attack by requiring a Passcode to be entered into the payor's wallet at the time of the transaction.
It could then be compared to an internally stored "Duress Code". Anything other than the duress code would cause the pair of wallets to commit a regular transaction, but the duress code would log both parties' identities (for accountability to preclude false robbery accusations) and an SOS Token in the payees wallet.
A payee trusting his or her payor could elect to defer clearance and accept uncleared funds stored in the wallet with the understanding that he or she might be asked to testify in back tracing any duress credits to the originally flagged criminal suspect. Thus transactions would only be be anonymous absent duress in the payment chain and would in other respects be as good as cash.
There would be no way for a criminal to know if the person he tried to rob employed a Duress Code, but he or she would have to assume that it was, creating a verifiable record of his or identity that would eventually become known to the police.
This post should be considered prior art in case anyone tries to a get a software patent this rather obvious idea.
I read a few articles a while back that suggested that some of the cryptocurrencies were designed so their creators and early adopters could acquire huge positions at steep discounts relative to late adopters. For example mining for Bitcoins becomes progressively more expensive over time (to prevent inflation), so whereas early adopters could effectively print their own money at low cost buy running their PC's for a few hours crunching easy math problems, now it would take you many orders of magnitude more effort and massive computing resources to do the same making it impossible for you to "catch up".
So the only way to really profit would be to correctly pick the next big cryptocurrency, assuming again that the world's governments don't step into to regulate these instruments out of existence.