The Blockstack Will Reign Supreme
Before we get into today’s prophecy, make sure you read yesterday’s issue so you’re up to speed.
Historically, the only enduring alternative to currency trading has been gold, which combines a measuring stick of interest rates across time with a measure of monies across national borders. A vertical and horizontal tool, gold has succeeded because it served ultimately as a measure of the universal passage of time.
The time to mine an incremental ounce of gold has not significantly changed in thousands of years.
Today, a giant automated mine takes 10 years to bring on line. But it can deliver ounces of gold no faster or more cost effectively on average than a panhandling prospector by a stream during the California gold rush.
In other words, unchanged over the centuries is the time-price of gold, defined by Gale Pooley and Marian Tupy as the number of hours and minutes a worker must spend to earn the money to buy goods and services. No matter how abundant grows the world endowment of goods and services, time remains scarce at 24 hours per day, equally distributed to every economic agent.
To make bitcoin an appropriate money and guide for entrepreneurs, a form of digital gold, Satoshi made it scarce. Imposing a cap of 21 million units by the date 2141, he rendered bitcoin a deflationary currency which would grow vastly more slowly than the world economy. By limiting possible units, he made it a volatile speculative asset rather than a reliable measuring stick of value.
But where did Satoshi err in his creation of scarce money?
Governing the Expansion of Knowledge and Learning
True money is tokenized time. While Satoshi understood that money must mimic the scarcity of time, he ignored the other crucial feature of time, its infinitude. A successful money must combine these two features of time as paradoxically both scarce and infinite.
A successful money must impose no rigid limits on its total supply. It must be governed ultimately by the expansion of knowledge and learning. Gauging these gains is the willingness of entrepreneurs to assume the risks and possible downsides of business projects, and the willingness of lenders and investors to fund them.
These constraints govern the level of real interest rates, measured not in the idiom of central bank fiat, but in actual time-prices accepted by entrepreneurs and their investors. These rates cannot be guaranteed by governments. A guaranteed loan is not falsifiable and does not generate real growth and collateral.
Just as important as preventing excess issuance of money is provision of needed funds for entrepreneurial activity. The crash of 2000, for example, was caused not by excessively abundant money in a tech “bubble” as identified by Fed chief Alan Greenspan. Following the Asian financial crisis, the tech crash was caused by a noose of monetary scarcity during a tech boom.
While Greenspan cut back on dollars, the dollar’s value was gaining in value 57% against gold. Measured by time-prices, the dollar was in a massive boom as the productivity multipliers of the internet economy all moved toward fruition.
Money must expand in proportion as it is needed to conduct transactions, perform experiments, and launch projects. It must be an infinite as the entrepreneurial imagination and as limited as the 24 hour day that defines the dynes or time-prices required to conduct business.
The blockstack is a new crypto network can finally lead the way to a Real-Life After Google.
You can’t have security, anonymity, protean addresses, know your customer (KYC), safe transactions, and personal data all at the same time.
The problems of the current generation of cryptocurrencies will give way to a blockstack that efficiently stores unique device identities, unique user pairing by biometrics, public key addresses, and private key identities.
Reserving the blockchain for critical storage functions and identities, the blockstack can eliminate all third parties and create a blockchain that fulfills the distributed promise of Satoshi’s dream.
In the current cue ball world, where everything is frictionless and transparently hackable, anonymity rules with its inevitable partner of paranoia. The US thinks it has to keep Chinese eyes and routers away from US IP addresses, which it thinks it owns. At the same time, China is erecting a new great firewall against the rest of the world.
As telecom pioneer Dan Berninger explains, this is all ridiculous. We invented IP addresses to enable wide area communications between computers. Now they are being given to watches and heart monitors, kitchen appliances and treadmills.
What has been invented by engineers can be replaced by the new inventions of the next generation of engineers.
In this pursuit, the new blockstack will replace IP addresses controlled by governments with public keys controlled by the holders of the private key, which means you and your biometrics.
This system of public and private keys will emerge during the internet reboot as a bottom-up foundation of security first.
The cue ball will give way to a blockstack.
The porous pyramid run by monopolies and politicians will succumb to a bottom-up architecture — anchored in the immutable timestamped ledgers of the new improved blockchain.
Indispensable to an internet of things (IoT), billions of 5G antennas, autonomous cars, global virtual worlds, global money, or international trade and harmony will be an immutable blockstack of trust and security and real identity.
Editor, Gilder’s Daily Prophecy