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First, An ordinary thumb drive wouldn't enough for such a system. Encryption doesn't telepathy. You copy data from Bob. You and Bob show up at the bank with the same data. What is the bank supposed to do? Encryption-based money systems require either a smart card or a central repository.

But even more, just assume that a "wealth transfer system" could be created by a bunch of random individuals who create N unduplicable units of value. Why should I accept particular units of value. I'd be better off doing the same thing myself - then it would be mine.

I think the lack of understanding of money-dynamics in these schemes comes from people reacting morally to it rather than rationally.




You say it can't be done!

1. Create 100 trillion units of wealth in some kind of software system, generate keys with a strong algorithm.

2. Completely destroy the private key, give everyone the public key. So everyone can find out if a key is one of "the original" wealth units, and not one created after the fact by nefarious entities.

3. Give everybody in the world, equally, these 100 trillion units.

4. Let them exchange them for goods and services. If you want more of them, you have to acquire it from someone who has them.


A. If a "unit of wealth" is just a number, why can't I give ten identical copies of this number to ten people? The way encrypted exchange has been envisioned and really how it has to work is that the values are kept on smartcards and smartcard's possessors don't know all the information on the card and can't change that information at will. But a smartcard system is clearly far from the "utopia" you envision.

B. Assuming the impossibility that an encypted number would be enough, What "algorithm" could prove you've the destroyed the private key anyway?

C. Why couldn't someone else do the same thing and so why should we work with Bob's system when Mary's seems just as appealing? If Bob is German and Mary is French, it's logical to expect the German's to go with Bob's system and the French to go with Mary's. If human beings suddenly became massively more cooperative than they are today, a system of this sort might conceivably be organized - but in that case why bother since any money inherently adverserial. If everyone in the world is cooperating, they can just organize society in that fashion. If not, we'll muddle along with our current currency system as we muddle along with everything else.

D. An economy with only a fixed amount of value units actually doesn't work that well. Think about it. There is more and more valuable stuff produced each day for a larger and larger population. So with a fixed amount of value units, those units become more valuable each day. That is call "deflation". It creates a disincentive to buy stuff since your money will buy more tomorrow. That tends to cripple economic activity in the infamous "deflationary spiral". And, yes, the Gold standard did have this problem. The economy was not well served in the days when people actually carried gold (bank deposits representing are something different).

-- So yes indeed, seven ways from Sunday it can't be done and probably shouldn't be done. What could be done is returning to the gold standard but that still shouldn't be done (and certainly won't be done since it would require the acquiescence of the world's governments who stand to lose by it, not that many people would win from it).




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