Energy as the ultimate currency (was: Re: Ripple)

WARNING: This thread is somewhat off-topic for this mailing list. It's
speculative, we are not working on this at all. The only reason I'm
diving into it here is to give people an idea of the sorts of thought
experiments we've carried out in this area in the past.

Only read it if you're intellectually curious about the area of the
"ultimate currency". This email has almost no bearing on the work we're
going to be doing here over the next 2-3 years since the technology or
infrastructure to accomplish what's outlined in this email doesn't exist
yet.

On 11/20/2013 03:32 PM, Patrick Logan wrote:
> "Ultimately, I think humanity will settle on "energy" as the unit of
>  direct exchange since that's the only really stable currency over 
> the long term."

Arthur Britto wrote:
> We did not consider energy. That's an intriguing and elegant 
> thought.

Patrick Logan Wrote:
> Absolute naive lurker here... any recommendations for reading about 
> this? I could be completely misunderstanding what this means.
> 
> My first thought is, how could that be? Currency is virtual and can 
> be exchanged virtually for relatively little energy.

I think Joseph has provided a few links, but it'll take you quite some
time to go through the literature. I'm going to try and summarize the
thinking in this area in the rest of this email. None of it originated
in my head, I'm merely summarizing the thoughts of other people that are
much smarter than I am.

This line of reasoning came out of the physics and mathematics
communities. Everything boils down to physics and mathematics at the end
of the day. :P

Ultimately, there is only one currency that holds its value throughout
time and that is energy. It's the only thing you can store that will
keep its value over billions of years.

1 megajoule of energy is going to do the same thing at 1 billion years
from the big bang as it does at 10 billion years from the big bang. The
best way that humankind has dreamed up to store energy over long
timescales is storage as antimatter.

Energy per unit mass:

Anti-matter: 9   × 10^16 J/kg
Fusion     : 6.3 × 10^14 J/kg
Fission    : 8   × 10^13 J/kg
Gasoline   : 4.4 × 10^7  J/kg

The technology to store antimatter at a large scale does not exist yet
(and may never exist). Putting that aside, there are less dense ways
than antimatter to store energy over long periods of time that doesn't
invalidate this theory.

Now for the leap of faith: Assume a readily available machine and energy
grid that is capable of producing, storing, and retrieving anti-matter
over very large time scales. If that's too much of a leap of faith for
you, assume a mechanism for generating, distributing, and retrieving
hydrogen gas (which does exist today on a small scale, and could be
ramped up to become a global energy distribution mechanism if the
economies are there to do so).

The way that you earn this energy currency is by directing energy into
the system (creating anti-matter or hydrogen gas), and the way that you
spend the energy is by transforming it into work of some kind ("burning"
the anti-matter or hydrogen gas to heat a home, power a car, etc.).

So, that's the ultimate currency, but in order for the ultimate currency
to be of use to humankind, you must create liquidity and to do that, you
must virtualize it in some way. So, you store the reference to the
amount of energy you have generated in the Internet in the same basic
way that Bitcoin does, as a proof of work. Except in this case, the
proof of work isn't the "amount of energy you have burned to create 25
Bitcoins", it is the "amount of energy you have stored in the global
energy network".

Imagine a power plant where you lease some of the power generation
equipment (anti-matter traps, solar-powered hydrogen gas generators,
etc.). You'd buy energy generation capacity at the plant, which would
then credit your energy account for energy it creates and feeds into the
global system. There would be a cryptographic protocol used (much like
what Bitcoin, Ripple, or PaySwarm currently use) to assign the energy to
your Internet-based energy currency account. So, after a few years, you
could see something like this:

Energy Account Balance: 62,342.75 MJ

That number is as stable as you get as far as a currency is concerned.
Since it's extremely stable, it would end up becoming the reserve
currency for the world. It will always be worth the same amount today as
it would be worth 2 billion years from now. Ultimately, this is where
humanity is headed.

This is not to say that there won't be other currencies. Humans love to
speculate and take short-cuts to wealth creation. Other currencies will
also need to exist to model or drive the sort of behavior we'd like to
see. For example, we are still going to need to drive societies to do
things (like work/save/spend) by inflating or deflating a currency like
we do with fiat currencies.

Like I said in the beginning of this email, this is an interesting
thought experiment. We are nearing the point at which the Internet can
support a global cryptographic energy currency. This could provide a
universal stable currency for humankind.

The piece that is missing to enable energy-based currencies is an
equitable, global, uniform energy creation, storage, and retrieval
mechanism. Until that happens, we're going to see people approximate
energy-based currencies.

Bitcoin proof-of-work is such an approximation, albeit as an accidental
side-effect of the mining algorithm. So is the research that Joseph
Potvin and his colleagues are doing on the Earth Reserve currency
(measuring solar energy densities per unit mass of land).

-- manu

-- 
Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
Founder/CEO - Digital Bazaar, Inc.
blog: Meritora - Web payments commercial launch
http://blog.meritora.com/launch/

Received on Thursday, 21 November 2013 16:11:50 UTC