Proposal for the reform of money by the implementation of a socially integrated value-exchange instrument In an earlier thought, the fundam...
Proposal for the reform of money by the implementation of a socially integrated value-exchange instrument
In an earlier thought, the fundamental problem of the currently used form of money was discussed. It was stated that an ideally functioning universal value-exchange medium does not carry value physically, yet can represent real existing value generically in a self-regulating manner, without the involvement of an external third party guaranteeing the value for the mediating tool in the value exchange process.
The money currently in use, controlled by the state, is in fact inadequate for this task, because the state is unfit to represent the value of money in practice. Although the state would have the means to regulate the value of money in proportion to society's ability to create value through its quantity, hence could be able to ensure the value of money, this regulation does not take place in a self-regulatory manner, it depends on the intentions of a third party, the state, and the state is basically interested in reducing the value of money, as a controlled inflation is its declared purpose.
The economy stimulating effect of a controlled currency depreciation motivates consumer spending, creates a consumer attitude of ”buy it even if you don't need it because it will be more expensive later” behavior, which contributes to overconsumption and wasteful lifestyles, and therefore contributes directly to the exploitation of resources, the human destruction of the Earth. The method in which a universal value-exchange instrument is implemented, whether suitable or not, has a profound impact on the future and destiny of humanity.
A proposed solution for this problem, the concept of cryptocurrency, which exists only in digital form, was created due to the elimination of the state's defining and influencing role in relation to money used in society. The operation of cryptocurrencies makes the involvement of a third party (state, banks) unnecessary in the usage of money, but their operation still does not provide a solution to the fundamental problem of money, which is to guarantee its value.
The value of cryptocurrencies is not fundamentally determined by society's objectively existing ability of value creation, the amount of cryptocurrencies in circulation is not self-regulated related to the society, it is not dynamic, and it remains under the control of a third party. A value written into computer code or a fixed mathematical formula, which even can be artificially manipulated by human’s intent is not a dynamic, self-regulating way of determining the quantity, hence the value of money in proportion to society's value-creating capability, as manipulations obviously been seen even in the history of the largest cryptocurrencies.
In fact, the value of cryptocurrencies is not based on the function of society in terms of its ability of creating value, it based on the subjective social judgment of cryptocurrencies, which is not guaranteed by anyone, and therefore easily manipulated, hence it basically makes cryptocurrencies unsuitable for the function of money as a form of social utility.
The function of cryptocurrencies is actually not to be money as a universal medium of exchange, but to act as an investment instrument, because they are currently not directly involved in the exchange of value, only their expected, hence primary function is to increase their value in conventional money over time. An investment instrument cannot function as a universal medium of exchange. Cryptocurrencies are not suitable for the function of money according to their current operation.
Furthermore, in no way should conventional fiat money play role in the use of a properly suitable means of universal medium of exchange because it would support the preservation of fiat money, which is an unsuitable instrument to represent value. This also means that there cannot be direct interchange between the two instruments, i.e. their values cannot be directly expressed in terms of each other, so it would be a mistake to make the two types of instruments directly convertible into each other.
A similarly inappropriate universal medium of exchange would be the use of money only existing in digital form created and maintained by the state. Such an instrument would not only perpetuate the disadvantages of fiat money, but in the hands of government -which usually not properly controlled by society- could create state’s total financial control over the members of society.
The state’s potential direct access to the money that is in the possession of a private citizen would give the holders of social power a means to effectively control the behavior of the members of society through the direct control of their existential living, which would enable the group supervising the money to exclusivity of expropriate power.
Although state-supervised digital money can make the use of money more efficient in many areas, and there are arguments to favor it, its risk is significantly greater than any advantage because it would be an ideal tool in the hands of dictators to maintain power, however dictatorship is an unsuitable governing method for human society to ensure its optimal development that requires cooperation between individuals having free will.
Can there be a form of money, a universal instrument of value-exchange created by humans, whose functioning cannot be artificially manipulated by human volition? Can money exist that does not physically carry value, but can nevertheless represent real value in a self-regulating way?
For the value of the money in use not to be artificially manipulated, the money must in some way represent value in itself, generically, and its quantity must be able to adapt to society's ability of creating value in a self-regulatory manner. The solution can be the implementation of a universal value-exchange instrument that integrates generically into society. The application of such money could be equivalent of a new Bretton Woods Agreement, but one that would fulfill the function of money without state involvement.
Money generally participates in the exchange of values created by society. It represents humanity through the value created by people. The value of money is essentially representing the value of human activity.
The value of the fiat money currently in official use, issued by the state, contrary to popular belief, is not guaranteed by the state. The state merely demands the use of the money it issues as legal tender, required by law. In fact, the real value of money is derived from the value-creating activity of the members of society in the process of acquiring it. The value of money originated from the effort people put into its acquisition.
Since the value of money is inherently linked to human activity, the existence of money should also be generically linked to people. If external influences are excluded, the value of money is originated from the society's value-creating efforts, hence the existence and quantity of money should be determined directly, autonomously, and thus in a self-regulating manner in relation to society also. The quantity and the value of money could not be artificially manipulated when its existence, the creation and disappearance of money is strictly and autonomously linked to society, when the value and quantity of money can only be regulated by processes directly linked to society.
In order to implement money that is generically linked to society, three functions need to be realized in a way that autonomously originated from society: the quantitative regulation of money, i.e. the issuance and withdrawal of money, and the self-regulation of the value of existing money.
1. Issuance of money that is autonomously linked to society
Let every person of adult age, when he or she is typically able to participate actively and responsively in the value-creating activities of society, receive, as a personal right, in the form of manner of assigned to him or her, a unit of universal exchange of value, money, and all universal value-exchange assets in society should be created in this way only.
Although it may seem unfair to create money apart from its function of mediating ongoing exchange of value, but money created as a kind of "donation" by society to its members actually represents existing value, the value of the given member of society to society. Although it may seem unfair that everyone, regardless of ability, gets the same amount of instrument of universal exchange asset, actually this is how the desired, expected and fundamentally necessary potential equality of people can prevail. This value of the member of society represented by the possessed money naturally changes in practice according to the person's ability to create value for society, i.e. according to the person’s actual activity.
2. The automatic removal of money from society
Existing money is a mediating instrument of the ongoing, incomplete processes of exchange of value and its necessary quantity is proportional to this function, and its quantity is also related to the quantity of values created by society. The quantity of existing money in society must be dynamic, ideally governed by automatic processes, and its removal can therefore be related to its use. The pursued objective can be achieved by the automatic withdrawal of unused money from society.
Money that is not in use is not needed for society, it does not need to exist in society. Money that does not take part in a value-mediating exchange process, does not act in transaction for a certain period of time determined by society, for example twenty years, should automatically cease to exist.
It may seem unfair that an asset representing an accumulated value cease, however, the removal only applies to money that does not participate in the value exchange process for a prolonged period of time, which can basically and primarily happen if the owner of the money is no longer an active member of society. Since such money inherently cannot participate in the value exchange process due to the ownership directly assigned to person, it is useful if this money does not even exist as a potential value in the financial system. By automatically removing unused money from the circulation, it makes it possible to maintain the function of money in circulation as a real value in society in proportion to its value-creating capacity.
3. Dynamic self-regulation of the value of money
The origin of the value of money is based on the value-creating effort of the individual and society using to produce the value. Since it is impossible to evaluate the value of the effort creating value objectively, the monetary value of the created values must be determined by the actual perception of society.
As is actually happening in a reality-based economy, in the process of exchange of values, each value is worth what people give for it in monetary terms. Money that exists in limited quantity which is strictly linked to society can represent the effort expended in creating value in not just a dynamic, but also in real way, based on society's real-life perception of creating the value.
No need to invent new processes for dynamic self-regulation of the value of money. The creator of the value quantifies how much money it costs to produce the value and how much he or she wants to get for it. The person who needs the value considers whether he or she can give that much money for it. If the exchange does not take place, the participants in the exchange process will necessarily modify the price, influence it, and thus automatically form an actually real price of the given value expressed in money. The process operates in a completely self-regulating manner. Temporary manipulation is possible, but it could be avoided by proper legal regulation, as it should happen in the current economy. However, when the money supply is dynamically limited and is directly related to society, the value of money representing the value of goods cannot be manipulated artificially for a prolonged period of time.
The proposed form of money is related to society's value-creating potential. Money in this form is strictly tied to the given society. Its quantity is proportional to society's potential value-creating ability, and its value is dynamically determined by society's current value-creating activity in a self-regulating manner.
The amount of society integrated money is regulated in a generic, autonomous way and does not need or require outside intervention. The value of such money does not require any external artificial guarantee, it is generically linked to the actual performance of the given society, to the value produced, and its concrete value is self-regulated by the settlements that emerge in the course of the actual exchange processes.
The humanity associated money’s actual value this way is strongly linked to the value-creating ability of the society operating under the given, respective rules, hence the real actual value of this kind of money is society-dependent. Therefore, the unit of value of the money integrated into society may differ from society to society, hence should be distinguished from each other. However, harmonizing the rules of societies operating differently also creates an opportunity to unify the money integrated into different societies. Using money that works in this way helps the integration of societies that work in different ways. Therefore, humanity associated money can be the motivator for mankind to organize itself into a unified society.
The order of size of the unit of change (the smallest unit) of money integrated into society seems appropriate to be the order of the population of the given society.
A suitable form of humanity associated money is crypto-token, which is easy to carry and durable, and its operation allows censorship-free use and trustless accounting without third parties.
The generic cost of creating a properly functioning crypto-token can be close to zero. The usual concern that the maintenance of cryptocurrencies requires an exponential increase in computing power proportional to its use is not a necessary consequence. For the exponential demand of computing power to maintain actually functioning cryptocurrencies is related to the speculative value of the given cryptocurrency, and the consequence primarily originated from the competition related to the acquisition provided to support of its administration. If the value of the cryptocurrency is not speculative, and if its issuance and administration can be avoided to be based on competition, then the computing power required for maintenance is not exponentially demanding either. The expected competition-less administration still requires a trustless form of administration, what still needs to be developed as a computation-supported process.
The implementation of money as a cryptocurrency allows voluntary and third-party independent entrance to the financial system. Anyone, at any time, regardless of age, can enter the proposed, cryptocurrency-based system and participate in the value exchange processes mediated by the society implemented money, but a person can only receive, can only be granted once with a created unit of money in the system in his/her adult life. Therefore, in operating as a cryptocurrency, it is necessary to implement a reliable process of creating money, i.e. to allocate one unit of money once to citizens in their adult life on the basis of entitlement.
Transition from the traditional fiat form to the socially integrated form (Humanity Associated tender - HAtcoin) of money
The process of transitioning from fiat money to the use of socially integrated money (HAtcoin) does not require any changes in the persisting financial system. The required transition-less independence allows the undisturbed coexistence of the two formats of money in society. The new format can exist completely independently, and can evolve and propagate when fiat money still is in use. During the coexisting period, it is sufficient if the value-creating partners contributing to the usage of the new money format indicate the price of the goods in both form of money, and it is enough to leave it up to the buyer to decide with which instrument he/she wants to pay for it. The double indication of the price allows the old and the new form of money to coexist during the transitional period. This method can actively contribute to the development of the value-exchange rate of the new asset, to the expression of the exchanges of value in terms of the amount of the new form of money.
The social adaptation of the new payment processor is helped by the circumstance that all adults have the right to access and own the asset, hence everybody can benefit from using it. Of course, as the use of the new instrument spreads, the use of old money will decrease, but the process does not need to involve damaging financial and economic changes in societies.
The method of the withdrawal of money by expiration
The accounting system of cryptocurrencies is based on time-stamped transactions, which directly enables unused money to be withdrawn from circulation. In the case of HAtcoin, it is enough to order the transaction records of the blockchain older than a certain, defined period of time invalid, hence such transaction can be considered as obsolete. This rule of operation can also realize a finite size of transaction database, which in principle does not exist for traditional cryptocurrencies, where there is no limit of the growing size of the blockchain.
The usage of value-exchange with society integrated cryptocurrency
A key feature of the use of cryptocurrencies is the non-immediate credit and debit, the non-immediate authentication of a financial transaction. Therefore, the form of socially integrated money as cryptocurrency is optimally suited to the operation of online commerce, where the goods do not have to be immediately handled over to the customer. Online commerce is clearly the inevitable destiny of trading, into which the implementation of socially integrated money as cryptocurrency fits properly.
Running the state, taxation using society integrated money
The state plays a fundamental and necessary role in the functioning of society. The role of governments is to provide services to society, which require money to operate.
The money needed for the functioning of the state, called taxes, is optimally raised by society, or, if the state is not functioning ideally, collected by the state as a required payment with force under the threat of law.
However, states do not always serve society, dysfunctional states want to dominate it, i.e. those in power use society's potential intentionally to achieve their own personal goals. Control of money is the primary means of dominating and directing society, what is appropriated for the purposes of own goals by the representatives of power. The control of money is also the means by which the dominant state enforces laws created without the consent of society by employing the state's pro-power force-utilizing organizations. When the state does not have the supervision of money, society can have relevant ability to control the governance, and society become enabled to have real social oversight of how the state functions to ensure that the state actually serves society instead of dominating it.
The use of society integrated money which exists independently of the state does not have to lead to anarchy, it does not have to cause the state to cease to exist. A well-functioning society needs the role of the state. The socially implemented HAtcoin could provide a tool, its application gives society the opportunity to control the governance, to operate a society serving state, hence provide a tool to form a democratic social settling which can represent the public interest.
The state necessarily needs money to provide public services serving the real interests of society, and if money is in the form being integrated into society, the money assigned to run the state can remain under the control of society, the state could not influence it. Since the transactions of society integrated money realized as a cryptocurrency are typically public, taxation can be made automatic with the rules written into the application that operates the cryptocurrency-based financial system created in consent with the society. In the case of cryptocurrency as society integrated money, these rules can no longer be directly influenced by state power, it can be shaped by social consensus that ensures the functioning of the society integrated financial system, what even the state as a power structure is unable to change.
A decision-making system that suitably ensures the functioning of society can determine in a consensual manner what portion of the financial transactions that exist only publicly in the financial system integrated into society should go automatically, in the form of taxes, to the operation of community tasks to be served by governments. The recording of geolocation data for transactions also allows for the automatic management of location-based taxation.
When society is able to control how much money it spends on which social task, the government's service and service-delivery functions can be made efficient and can avoid the state to be acting as a dominant power over society, which can be realized in the proposed financial system.
The operation of credit in the case of the society integrated money
Credit is essential for the operation of the economy. In the current financial system, credit as a form of loan is usually provided by banks using the method of "created" fiat money. In the traditional financial system, the operation of credit in this form has countless harmful effects, with the consequence of which - and as the primary cause - is the creation of dysfunction in the economy.
The quantitative limit of money integrated into society is an obstacle to the development of economic crises because credit cannot be provided in the form of created money. With socially integrated money, credit can be created in a much safer form, in the form of crowdsourcing by the community.
This crowdsourcing form of providing credit is a method that is actually working effectively, and it can be generalized in the case of the application of society integrated money, which can generically ensure the efficient, loss-free, value-retaining application of money under the attention of society, instead of the frequent loss, inefficient use and waste of loans provided in traditional money.
The implementation of the loan with community support also eliminates the catalytic effect of the created money in the growth of social inequalities.
Personal consumer loans serving non-value-creating economic activity do not need to be institutionally supported by the financial system of society integrated money. The one unit of money given to all adults and the value-creating activity accumulated in the form of money by a given person can and must replace the role of the institutional personal loan. Consumer credit cannot have a social function in an economy using the proposed financial system with limited quantity of money. Personal consumer loans cause over consumptions, hence, better to avoided, even if it supports economic activity, because economic activity serving needs of non-value creation is unhealthy for society, and should not be supported officially, yet still can be safely function privately.
Crime related to economic activity
A common way of artificially manipulating the value of money is the abuse of economic power, for example by forming cartels. This kind of problem cannot be solved by money integrated into society, just as no other financial system can solve this kind of problem on its own. The problem does not originate in the actual financial system, but it originates in human nature, and therefore needs to be regulated by legal supervision, which can be more effectively implemented in a well-functioning society, supported by socially integrated money.
Crime related to the use of money
A similar problem is the link between money and crime. Money - primarily properly functioning money - is not the cause of crime, still its tool of that. The proposed socially integrated money, implemented as cryptocurrency, its functioning, the publicity of transactions, the absence of physical money can deter crime linked to the use of money and help to fight money-related crime, even if, as is typical of cryptocurrencies, transactions do not carry information that would allow direct identification of the persons involved in the transactions.
Conclusion
A humanity associated money implemented as a cryptocurrency (HAtcoin) could be a suitable form of universal medium of exchange, which, unlike fiat money, is not an obstacle or a limiting means to the development of society requiring integration, it can act as its motivator.
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