Author: Techub News
Written by Christopher Goes, Co-founder of Anoma
Compiled by: Tia, Techub News
“Trump’s issuance of meme coins has opened up a window for us to see the issuance of personal tokens. Let’s use our imagination to imagine what a possible future utopia would look like if everyone issued tokens.”
I've been reading about anthropology lately. Usually, some classic economics assumes that primitive economies were based on barter, and that money emerged to solve double-coincidence-of-wants. This assumption is taken for granted in many places ( the Anoma vision book is no exception ), but if you look at the history, as David Graeber does, it's obviously nonsense.
Early societies, and small societies today, don’t trade cows for chickens (at least not most of the time), and they don’t invent coins to solve the coincidence of double wants, because they don’t need to. Instead, they use credit. Credit solves the coincidence of double wants in a beautiful and elegant way, and further integrates it over time.
If I'm a butcher and you're a baker (I may not need bread right now, but I certainly will in the future). If we live in the same town and you happen to be nearby recently, we can simply keep track of who gave what to whom and when, and settle accounts regularly. Of course, this requires enough repeated interactions and enough trust. But in a small community, both conditions can be met.
Still, there is a need to distinguish between goods. Thus, communities often choose a particular good as a unit of account and measurement (but actual exchange is not in that particular good). It can be said that the “store of value” function of money is mostly virtual, not physical: while some farmers may have more cattle or grain than others, the most important asset held by residents is often the trust of the community, which allows them to get what they need when they need it, so that shocks to supply can be dealt with more easily. This trust is a form of credit that anyone can issue (but if they start asking for too much without offering anything in return, their neighbors may no longer be willing to accept their credit). The accounting of this credit is virtual, tracked not precisely by spreadsheets and central banks but rather crudely by observation and gossip, and it is scale-free in that anyone (individual or institutional) can issue credit regardless of the scale of their operations, so there is no monopoly.
Most of us no longer live in a world of free-scale credit money for a simple reason: in a world where money is physical, this kind of trust accounting cannot scale. In a broad economic network, most interactions are with strangers who people will never see again. So we now live in a world of fiat credit money. In a world of fiat money, money is issued by only a few (hopefully) trustworthy institutions, such as governments and banks, and what people trade in their daily interactions is not personal credit, but debts issued by these institutions. This solves the trust accounting problem between strangers, because strangers only need to trust the accuracy of the same institution and accounting mechanism, they do not need to trust each other.
But fiat currency, as a collaborative mechanism, has two fatal flaws.
First, fiat currencies centralize trust and thus lose fault tolerance. Due to the network effects of units of account, stores of value, and media of exchange, the difficulty of establishing appropriate accounting mechanisms, and the tendency of bellicosity states to make stupid laws, the issuance of money is limited to a very small number of people. Control of these institutions becomes a primary point of competition. It is possible that a small number of people who put their personal interests above the public interest will become controllers of the money supply mechanism and use part of the currency for their own private purposes. Perhaps they do not succeed in doing so, and the negative externalities caused by the elites' struggle for control of the money supply will also pollute the discourse field with "alternative facts" to the point that the normal mechanisms of social feedback and collaboration no longer work at all. Only trust is decentralized to achieve fault tolerance.
Second, fiat credit money currently relies on measurement. In order for us to use debt instruments to make payments without trusting each other, we must agree on a trusted third party and an exact payment amount so that we can walk away from the transaction with confidence and never expect to compensate each other again. This is a poor way to measure if the main benefit of the good paid is easy to estimate and limited to the party buying it and itself in the present (such as a sandwich), without the need to estimate its future value, but it is absolutely a poor way to measure if the benefits obtained will increase gradually over time (such as knowledge).
I think many of the dystopian elements of today’s world can be traced back to these two fatal flaws. The roots of war, climate change, nuclear proliferation, lack of public education, pollution of the information commons, and similar phenomena stem largely from poor decisions made by elites vying for government positions or the resulting propaganda (e.g. convincing citizens to pay for it) that results from this centralization.
In contrast, free-scale credit money decentralizes trust and shifts the metric toward the future. My credit is valuable to you if and only if you expect me to be able to pay you back in some form, because I can’t offer anything right now. While parties exchanging debt can walk away, parties exchanging credit (which may be heterogeneous) have a mutual interest in each other’s future success. If I teach you something and you owe me money, I don’t care if what I taught you is right or wrong, I just want to convince you to pay me more money. If I teach you something and you pay me with credit, I probably want to teach you something right and useful so that your credit is valuable to me in the future.
In our world today, fiat credit money, trust, and money are misaligned, so much so that they have turned upside down. To realign them, we must realign control and trust over money issuance and return to a world of free-scale credit money.
What is a world of free-scale credit money?
What would a world of free-scale credit money look like? In our world, the issuance of money is tightly controlled, usually only for governments and specific entities they authorize (e.g., banks). If money were to become credit, reunited with trust, then these restrictions would make no sense, since trust is distributed and credit is personal, so let’s change some of the basic assumptions. Assume that everyone can print money whenever they want, as much as they want (though they can voluntarily limit their ability to do so), and send it to whomever they want. Assume that new denominations of money are constantly being created by individuals and institutions around the world, now and in the future. We also assume that denominations of money are content-addressed: money is identified by who (cryptographically) currently holds it, who (cryptographically) can issue it, and how much they can issue and under what conditions (with self-limitation). The local name system and consensus algorithm handle human-readable mappings and temporal continuity.
In this hypothetical world, money is not actually useful for collaboration so far because everyone is using a different currency. How can these heterogeneous instruments function as a store of value, unit of account, or medium of exchange?
Let's think about this a little further. Agents who print money are not just individuals, they can also be institutions that want to provide their constituents with functions such as a store of value, unit of account, and medium of exchange in certain areas of space (whether digital or physical). But in this world of free-scale credit money, competition for money is fierce, because anyone can switch the currency they use at any time, so institutions that want to issue money must develop an initial allocation and issuance schedule for their potential users. In such areas, a currency selected by a group of people can serve as a store of value, unit of account, and medium of exchange if the group can reach a consensus on the currency. But what if the institution starts sending money to places that people don't like? Because others can simply join in and issue another money, copying (and possibly changing) the allocation and changing the recipients.
You might object that conversion costs are not zero. Imagine re-pricing all the items in a supermarket. That would be very costly. In a world where money is mostly physical, conversion costs are high, but not in a world where money is mostly digital. In a world where money is digital, stores of value, units of account, and mediums of exchange can be easily decomposed through automatic price conversion and swapping.
In this world of free-scale credit money, new money is constantly being created, and most of the potential money does not exist in the present, but in the future. The competition for value in the present is not based on scarcity, but on the potential future allocation of retroactive funds. Since funds are competitively selected, what is expected to be included in future retroactive allocations is based on the value that future people and institutions believe contributors in the past (our present) ultimately provided to the present (our future).
Now, you might ask, how do we keep track of scarce physical goods in a world with infinite money? Physical goods are expensive to produce, and (at least compared to digital goods) tend to provide most of their value to private parties in the near future. The current payment accounting system does a decent job of organizing the production of physical goods, so regular old payments upon receipt seem like a reasonable solution to me. Individuals and organizations that produce physical goods can operate in this world as normal, simply accepting the credit of parties they trust rather than sovereign debt.
Payments for physical goods also benefit from the stability of the unit of account. In this world of free-scale credit money, the option of a currency with self-issuance control can provide the necessary stability. The institution that issues the currency can impose its own limits on the issuance rate, so that the issuance cannot exceed a few percentage points per year (compared to the central bank's existing target), thereby maintaining the rationality of the unit of account.
Now, you might have a question: how do we interact with untrusted parties? Traveling, interacting, and trading with distant places is great — do we need to give that up in a world like this?
It’s time for some mechanics magic to come in handy. Let’s assume that there is some liquidity in the credit markets, such that any currency issued is freely convertible into any other currency as long as someone wants to create some liquidity. Now, if I want to pay you, but we don’t trust each other, all I need to do is find a path in the liquidity graph between us. We no longer need to use the same unit of account, store of value, or payment method to interact with each other - all we need is a connected path. Of course, not all paths are equal - if there is a lot of liquidity between us, I can pay you a lot without much change in price, but if there is little liquidity, I can only pay you a little - but this is exactly what reflects the density (and directionality) of trust!
But the skeptics among you might object that this does sound like a world of mega-financialization. Imagine everyone’s credit being traded — shouldn’t we be winning the usage war through an endless game of self-marketing? I think that free-scale credit money greatly reduces the network effects of money compared to today, because it removes the need to reach consensus on which specific currencies are used in any particular interaction, but some network effects will still remain. Also, there are clearly a lot of new forms of money at the moment (just look at the list here ), and they do seem to be spending a lot of time, energy, and money (somewhere, there’s a catch here…) competing with each other.
This is my last bit of mechanic magic: the promise of a future airdrop. Airdrops are already a common mechanism in blockchain circles, they are often used to try to spread a new form of money, but as currently deployed they have a fatal flaw: time centralization. Airdrops target a specific token snapshot at a specific point in time, which creates a discontinuity in the incentive space: holding tokens before the airdrop snapshot date is valuable, but suddenly becomes less valuable after the airdrop snapshot date. I suggest a slight modification: instead of taking a snapshot in time, take a snapshot over time.
Future retroactive funders, through point airdrops, encourage parties who wish to receive airdrops to buy the relevant points early (and support the relevant parties to do actual work), so even if the price fluctuates, the amount of points will be higher over time. Block airdrops can be safely committed in advance without causing strange discontinuities in the incentive space, and can even be repeated to continuously adjust incentives. As expected, complexity is greatly simplified because if you are right about what is valuable, the best strategy is to buy and hold.
Currently, in today’s world, money and trust are anti-correlated, because control over the issuance of money is controlled by actors that almost no one trusts. I guess, for this reason, it took me a long time to understand the points made in this blog post, and because I hate dealing with money so much that I was very hesitant to design any system that uses money (especially when it involves a lot of measurement ), I initially tried to avoid it (bad idea, it turns out that this only leads to more measurement complexity…). However, once you combine money and trust, even just abstractly in the design of socio-technical systems, the dominoes magically start to fall into place, as if it was all preordained .
A common problem in cryptocurrency systems is the key recovery problem. Cryptographic keys are strange things, strings of characters created out of thin air, and most people forget them or lose the pieces of paper (I certainly do). The design of social key recovery systems suggests that we tag specific combinations of friends who are allowed to recover our keys, and while better than no key recovery at all, this solution requires a lot of awkward manual interactions to specify and update this trust graph, and it's hard to know exactly how to choose the right people anyway, because who people trust changes over time.
However, if we combine keys, trust, and money, a solution naturally emerges. Key recovery requires trust, so we must choose one or more people to trust. Who better to help me recover my keys than the people who hold my credit? Our incentives are very well aligned - they want me to do well so that the credit they hold has value in the future if I can access my account (which holds many other credits, and allows me to post more)! All we need is a threshold, 2/3 directly from the distributed system, which ensures that the parties involved can safely reach consensus on my new public key, even if less than 1/3 are offline.
Another pair of much-sought-after hypothetical protocols are those that enable universal basic income and proof of humanity. I mention them as a pair because I think they both concern the same question: what does it mean to be human? It is impossible to devise a test that can distinguish humans from other things, because humans have no essence: I am human only if you think I am. At various points in history, laws have classified certain groups of people as subhuman, even assigning them numerical scores that would seem abhorrent to us today. Accordingly, I argue that the idea of a universal basic income is equality, and equality in the eye of the beholder requires both parties to agree.
These desires are two sides of the same coin, because there is no test, only equality, and equality based on human nature must be determined by humans. We could each keep a list of everyone else's public keys and pay each other an equal amount of our own free-scale credit currency every second, but this would require too many interactions, would not provide any future predictability (which would be the main benefit of UBI) and would fail to exploit the human property we assume : that they carry information, identity, and encryption keys in time.
Instead, I propose a small modification based on this dual foundation of bilateral tests of humanity and future continuation of humanity: heterogeneous UBI . We only need one ingredient: trust (and some cryptographic signatures). You and I meet in person, decide to trust each other, and cryptographically sign a commitment to continuously create one of our respective credit tokens per unit of time. These tokens can be sent to each other, but I think there is a better solution that creates some "trust liquidity" immediately and allows for future revocation: deposit both tokens into a multisig account, which in turn locks them into xy=k (or similar) automated market maker curve. This allows others to trade through us, and allows us to use human relationships to balance other inequalities in the network.
Each party can unilaterally sign a message to the multisig account which will cause it to withdraw liquidity and burn two trust tokens, so if you decide in the future that you no longer trust me, you can revoke that trust, but if others still trust me, I will still have "trust liquidity" with them.
Of course, anyone can create a non-human crypto identity and start printing money with it, but unless they can convince other people to trust it, they won't gain any additional liquidity, because all paths in the liquidity graph must go through them. No one wants to commit to a fake identity in exchange for their credit, because they have no reason to expect anyone else to want it! An attacker can bribe other people to trust it, but they have to bribe enough people to make it worthwhile, so they end up paying UBI only to the bribees themselves.
From this currency network, we can perform a proof-of-humanity test on any two parties (because it is relative, of course) by proving that there exist many different individually valid bilateral signature chain paths on these commitments (with no overlap of member public keys except at the beginning and end), which do not exist for isolated network subgraphs (because, as mentioned above, they are expensive to create).
Free-scale credit currencies and heterogeneous UBIs can be issued using existing protocol primitives, roughly as follows: smart contract accounts for each issuer (since they may still need keys on multiple devices with different spending limits, key recovery is only invoked when absolutely necessary), smart contract accounts for bilateral human-tested liquidity locking relationships, Uniswap-style AMMs for facilitating swaps, multi-hop exchange routing for finding paths through credit liquidity graphs (such as Circles UBI ), a blockchain for ordering transactions and preventing double spending, and recursive ZKPs for tracing credit airdrops.
It is important to note that privacy is critical for free-scale credit money. If trust is not private, then it is possible to threaten someone just because they trusted someone else. To provide the necessary privacy, all of this must be implemented on a fully private basis, perhaps including ZKP for individual accounts and some threshold FHE for batch swaps, liquidity provisioning, and trust-minimized private cross-chain.
With some misappropriation of Foucault , we could call this world of free-scale credit money a heterotopia . For Foucault, a heterotopia is a place outside of all places, a real place, but one where the normal workings of society and culture are inverted—cemeteries, zoos, and fairs are all heterotopias. What I mean by heterotopia is not quite a heterotopia, which conceptually demarcates precisely those places that offer a temporary interstitial gap from the rules of everyday cultural places. Rather, what I feel is a heterotopia that is both complete and fragmented.
The brothel and the colony are two extreme types of heterotopias, and if we think of the ship as a floating piece of space, a place without a place, existing independently, closed in itself and at the same time endowed with an infinite ocean, from port to port, from nail to nail, from brothel to brothel, it stretches to the colonies in search of their most precious treasures hidden in their gardens, you will understand why, from the sixteenth century to the present day, the ship has been not only the great instrument of the economic development of our civilization (which I have not spoken of today), but also the greatest reserve of imagination. The ship is the heterotopia par excellence. In a civilization without ships, dreams dry up, espionage replaces adventure, the police replaces piracy.
Modernity no longer has any ships—not only because there are fewer treasures to plunder—but those former "heterotopias par excellence" have been instrumentalized into costs per kilogram-kilometer and transport APIs, organized and regulated in terms of dollars. The heterotopias I am talking about are heterotopias of value , tracked and organized in a purely virtual space, itself fragmented into a fractal Venn diagram of partially overlapping subspaces. Foucault's heterotopia implies that there is a set of dominant cultural practices and a set of dominant spaces, which are semantically opposite, but the heterotopia of value assumes no particular spatial order, just a plurality of differences.
We are not living in a heterotopia right now - we are living in a world heading towards dystopia. A heterotopia is not a utopia - people will still disagree, accidents will still happen, broken hearts will still hurt - but I think it is better than this one because it changes the cultural and technological basis of money to suit the future interests of humanity. A heterotopia is not just about the mechanics of money - money should be a small and insignificant component of culture, society, activities and traditions - and our current form of money is not that, so I will focus here on the mechanics of monetary transformation.
Some people might be concerned about states, since they have (only) strictly controlled the issuance of money in recent history, and might react strongly to the possibility of heterotopias. While I share my fear of state violence, I think this fear is easily overstated. While the state’s monopoly may appear physical, it is in fact purely conceptual: once we stop believing in it, it disappears. Heterotopias smash this monopoly into bits (there is nothing but bytes). Who in the future would want money handed out by an organization that rounds up people across the map and sends them to camps, employs armies of consultants to propagate its supposed constituency, and keeps the world under nuclear threat for decades? If they want to survive in heterotopias, states had better stop locking people up and start producing some public goods instead. Some governments might try to prevent heterotopias by exerting coercive force, but in heterotopias, money is just information, and information is always a moving target that no bureaucratic mechanism can keep up with.
I think heterotopias are possible. Information systems tend toward more stable states, and our world today is not stable at all, largely because money and trust are so inconsistent. Countries that work together better may be more stable. But that doesn't mean that transitions won't be turbulent. In particular, the existing communications infrastructure, which lacks a sound foundation for identity encryption and a network of trusted relationships, is highly susceptible to propaganda, and the construction of meaning can be drowned out by malicious noise . "Artificial intelligence" (fancy statistical models) may have excellent uses in artistic creation, but its role in propaganda is rapidly exacerbating this problem.
The rest of this article is devoted to hypothesizing about heterotopia—if it ever comes, what can institutions do to mitigate the turbulence of transition?
First, institutions must collaborate to create the necessary technological foundation — research, protocols, interfaces, open source software, and hardware — to make the heterotopia of free-scale credit money possible. Existing blockchain/cryptocurrency protocol designers and organizations are well-equipped (good candidates include Aleo , Anoma , Celestia , Cosmos , Ethereum , Osmosis , Penumbra , etc.), but they need to collaborate and help enable decentralized systems like end-to-end encrypted messaging, properly distributed social media, local-first apps, and self-sovereign and privacy-preserving apps (good candidates include Ink & Switch , Mastodon , Scuttlebutt , Signal , Urbit , etc.). Open source and verifiable hardware is still far away, perhaps accelerated by strategic acquisitions and then applying free software principles similar to those articulated by the FSF to relevant hardware IP. Crypto funds often have a lot of money and should use it to achieve this goal, rather than pouring money into Uniswap clone subsidy programs or sponsoring Formula 1 ads. Of course, hardware companies can also strike first on their own in the hope of receiving retroactive funding in the future.
Second, but no less important, institutions must provide stability. Even in a better world, today’s path to dystopia will be accompanied by wild swings in exchange rates, rapid changes in monetary policy, and overreaching of state power. Institutions can mitigate shocks to their constituents by hedging these risks: holding multiple currencies, promising to adjust wage payments inversely to inflation or to the actual cost of living, funding legal defense for individuals targeted by the government, and so on. Institutions that successfully provide a buffer against these shocks can expect retroactive distributions to include them in the future, so they have reason to try. In general, existing legal structures are already designed to allow institutions to take risks (“limited liability”) and hold assets, so existing institutions should be able to easily assume this role.
Institutions that are able to transform expected future value into present value by issuing credit money as described above can then sell the credit money into existing money (especially fiat money) to fill institutional coffers and increase the institution’s ability to buffer shocks.
Institutions can establish bilateral trust relationships with other institutions for the purpose of heterotopia collaboration. It is important that these trust relationships are publicly verifiable, as this enables parties operating within or otherwise aligned with these institutions to collaborate more efficiently (e.g., de-duplicating work). This is very similar to how the heterogeneous UBI proposals above function, but rather than setting (not natural consensus in this case) and committing to redefine future issuance schedules, institutions can periodically agree to mint some of each other’s tokens and locks.
Institutions operating on heterotopia concepts should also selectively pass on trust to existing legacy institutions. The conceptual frameworks and reputations of existing institutions are deeply embedded in existing society, and cooperation may dampen the turmoil that this transition will bring. However, this trust (and currency) should not be extended unconditionally. Many existing institutions directly or indirectly fund weapons, propaganda, and coercion. Incumbent institutions issued a lot of currency, but lost a lot of trust, and must earn it back if they want their currency to have value in the future. This is incentive-aligned because free-scale credit currency is a win-win - it only needs to work against those who work against others. Incumbent institutions that cooperate can expect retroactive funding in the future, while uncooperative incumbents cannot expect any funding at all.
Certain existing institutions could easily restructure themselves to rapidly accelerate this transition, as their skills and assets can act as force multipliers to incentivize the shift. Venture capitalists, hedge funds, and other private equity firms that retain direct decision-making over their capital allocations need only optimize for the provision of public goods. Alternatively, they could issue their own funds in anticipation of future retroactive financing, but retroactive financing can also be issued to owners of existing stock, equity, etc. through an interface mechanism, so this is not critical.
For existing capital allocators, this is incentive compatible once they anticipate the heterotopia, because optimizing for private value capture is a poor strategy from the perspective of capital efficiency in the provision of public goods. Public goods are, by definition, nonrival and nonexcludable. Existing schemes for converting public value into privately accessible value are to impose artificial exclusion mechanisms, such as paywalls or intellectual property laws. Such exclusions limit potential future value and the corresponding expected future retroactive funding, because fewer people can benefit from it or be thankful for it in the future. Because every use must be tracked, the more users a good product has, the greater its potential future value, but the more expensive such tracking is. Optimal capital efficiency in the provision of public goods is more likely to be achieved with infrequent measurement, just the amount needed to measure demand and collaborative production strategies, rather than for every interaction. Thus, after the transition to the heterotopia, capital allocators who change their decision calculus early are expected to do better (in terms of retroactive funding) than those who do not, because they will have created more public resources.
Allow me to end on a more poetic note. To quote Mao Zedong:
How to interpret the word "soon" in the so-called "rapid climax of the revolution" is a common question for many comrades. Marxism is not a fortune teller. It can and should only predict the general direction of future development and changes, and it should not be possible to mechanically determine the date. But what I mean by "the Chinese revolution is about to come" is by no means an empty promise that has no action significance and is out of reach, as some people say, "it is possible that it has already come." It is like standing on the coast and looking into the sea, and already seeing a ship at the tip of a maple pole; it is standing on the top of a high mountain and looking into the east, and already seeing the radiant sun about to burst out; it is a baby whose flame is about to mature in the mother's womb.
I won’t translate this, because it wouldn’t do the text justice, but suffice it to say that the light of heterotopia has begun to shine through the cracks in the surface of modernity. If you start looking, you’ll find it everywhere, from “Game B” to the explanation that social media dystopias may have no cryptographic basis , to economics’ category-theoretic treatment of how to prevent “ceteris paribus” decision-making arrogance, to an overheard conversation in a Mexican restaurant in Kreuzberg about the dysfunctional real estate market caused by speculation. In fact, you have already encountered it, and it may even have appeared in your life. It was not invented by me, but by countless of you. All I did was give it a name. Even the name was not given by me.
But once we decide to do this, utopia is inevitable.
