I'm so pleased to see this announcement and I would like to address those individuals here at Slashdot who are familiar with software development and ask you to consider something about electronic currencies that has long been in my mind and that I've posted about here and in other places before. I'd like to draw everyone's attention to the notion of granularity.
One of the cool things about being a software developer and one of the things that makes it so addictive to those who get into it is the fact that a software developer is like a god in relationship to the program under development. This is not unique to programming, writers of other sorts share this ability to simply create things out of thin air but in software development it is a fundamental skill. You declare a variable and it exists. That's all there is to it, you imagine it into existence.
So, sometimes when you're working on developing a program and you might find that the variables you've previously defined are insufficient for some task and you need to create new ones. This isn't a problem in software, you just make it happen. And you may find that there are places in your code that can be optimized with finer control so you make the finer degree of control by simply creating it. That's what I am referring to as granularity.
Being able to optimize granularity is a very cool thing. Now imagine applying the topic of granularity as it exists in software development to the economy.
There is no such thing as a free market in our world today. What we've got in the Anglo-American system is not a free market but a market with very coarse controls. It's not the case that it is or every will be or ever has been completely free. It has controls and those controls are what is called monetary policy. Basically, the government by being the largest borrower in the market can set interest rates. There's that and then there's spending and taxes and otherwise the government is pretty much out of the economic equation. The lack of granularity means that governments have very little control over the economy once the interest rates go down to zero.
An electronic currency opens up the possibility of creating a whole new level of control. Instead of all currency being exactly the same it would be possible to create individual units of currency with different depreciation or appreciation rates. The currency itself could become not unlike the bond market.
Now why on earth would anyone ever take payment in a currency that was pre-destined to depreciate? There would be no incentive to use it right? Well, there would if it was being offered as a form of social welfare. That is, in order to make a welfare state sustainable you would avoid the classic problem of creating inflation by making payment in a form of currency that had to be spent or else it would lose its value. The money would either be used quickly to stimulate the economy in times of economic hardship or it would disappear from the ledger completely.
I've mentioned this idea before and I realize it's a hard one for many people to get their heads around but I think it's important to remember one thing about electronic currency.
Adam Smith, Karl Marx, John Keynes no economic theorist could have imagined the role of electronics and digital communications today. It simply didn't exist. So when we apply the same old 19th century ideas to our current situation we're really selling ourselves short. We are in a new era. We've been here for a several decades now and yet the predominant attitude is one of denial. It's as if we collectively imagine that we're all going to go back to the way things used to be some day like Dorthy waking up back in Kansas but I think it's time to face the fact that the world can change for the better.
We simply need to make it so.