•   almost 12 years ago

Programmable Digital Currency

I've written several articles on websites about an idea I have, it's called 'programmable digital currency'. It's a concept for creating digital currency units that can be programmed by the user. Programming a digital currency unit involves adding 'tags'. These 'tags' restrict how the digital dollar can be spent. For example, suppose a man has a teenage son, and he wants to give his son an allowance. He is afraid that his son will buy cigarettes with the allowance, so he programs the money with anti-tobacco tags before he gives the money to his son. After his son gets the money, he takes it to a store and tries to spend it. The anti-tobacco tags ebbedded in the money would be recognized by the cash register at the store, and the cash register would refuse to sell tobacco to the boy, since the money has anti-tobacco tags in it. The digital dollars could be tagged to prevent the purchase of alcohol, tobacco, @#$%, and so on.
Of course, tagging currency to prevent juveniles from buying forbidden items is only one of the capabilities of programmable currency. It may also be possible to use programmable currency to establish and enforce economic boycotts.

Let's consider the 'Occupy Wall Street' movement. They claim that they are protesting against the big 'Wall Street' banks. If we create programmable currency, we would be able to program our digital dollars so that our dollars would 'avoid' or boycott certain companies,organizations and institutions.

For example, suppose we wanted to boycott a bank. Our digital dollars would be 'tagged' with 'tags' that prevent our dollars from being spent at a certain bank, or at any of it's subsidiaries. This would establish an effective boycott of the bank. A boycott of a company or corporation may be established democratically, through a process of voting. A group of people may circulate a petition, and the petition would call for a certain company to be boycotted. If the petition has enough signatures on it, then the 'tags' that would establish a boycott would be put into the digital dollars. The tags woulddo nothing more than limit how and where the money could be spent. There may be several classes of tags. Some tags would be permanent, others would be temporary. The temporary tags would be erased after one transaction.

  • 1 comment

  •   •   over 11 years ago

    This is not an impossible evolutionary direction for currency. We must consider incentives if it is to be done. What body, in our current monetary system, has a significant incentive to implement such a scheme, and the power to implement it?

    I submit none, and so think it cannot yet happen. I think a necessary first step would have to be a move away from centrally-issued currency and a return to multiply-issued currency, as we had here in Canada before we adopted central banking.

    We had competing issuers and competing currency and competing banks for hundreds of years here in what we call Canada. It works fine, better than what we have now, a fiat currency with an somewhat-arms-length publicly owned central bank who issues perhaps 5% of the money supply directly, the rest created by the private banks.

    In a competitive-currency environment, I can imagine the competition amongst players to drive towards this kind of innovation. Lacking an organic, competitive market for currency, the innovation you seek cannot occur.

    The Mint's idea is interesting, but is basically a digital wallet and rules for transactions. It may be secure, or it may have holes. We will have to wait and see. But your idea requires more.

    I would like to see a bigger bandwagon behind basic currency reform, as this this is a necessary step not only to get us out of our current financial mess, but also to allow the kind of innovation you are talking about.

    The first step is to de-centralize currency and banking, so we can move on to these other more interesting ideas. And that requires independent issuers, and gold backing to ensure stability and prudence from those issuers. All the digital innovations can still occur on top, but without competing gold-backed currency, I am afraid interesting market-driven innovations like yours will not see the light of day.

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