

Strangecoin: a proposal for a nonlinear currency - djestrada
http://digitalinterface.blogspot.com/2014/03/strangecoin-proposal-for-nonlinear.html

======
A1kmm
'Basic income' which is not coupled to any expenditure (e.g. by mining) will
have a tragedy of the commons problem in a pseudonymous system.

In a pseudonymous system, I can make as many addresses / accounts as I like
(since a pseudonym is, by definition, not tied to any real identity).

Therefore, to maximise income, someone can create duplicate addresses, causing
the basic income to be distributed according to the number of addresses a
person has.

~~~
witten
While this is a valid objection to the design as stated, there are solutions.
For instance, the insight behind Bitcoin is that instead of the one-IP-one-
vote policies of previous distributed protocols and the sock-puppeting that
ensues, proof of work means that it's one-CPU-one-vote. And schemes like proof
of stake go even further so it's one-coin-one-vote.

~~~
vbuterin
Bitcoin already has a basic income distributed via one-CPU-one-vote: it's
called a mining reward. And if you distribute a basic income via one-coin-one-
vote it's called an interest rate. The whole point of BI is to be per-person.

------
hibikir
What is the motivation for this?

The big advantage of money is as a communication mechanism: An increase of
demand of pencils, though price chnges, can increase the demand for burgers in
a town where the wood for said pencils is made, even though the purchasers
have absolutely no idea, and no control, over the results of their actions.

Sending positive and negative feedback to transactions has the opposite
effect: It avoids the information hiding that is the key to making the economy
tractable, and makes what are simple decisions much more complicated, but I
suddenly have to care about what people think about the suppliers of my
suppliers.

I suspect a economy running on this strangecoin would be less effective than
one running on a regular currency, just like it's much harder to be gay in a
tiny homophobic town than in a large, relatively anonymous big city.

~~~
djestrada
Traditional money makes certain features of the economic system tractable, but
it masks other important relationships that constraint its behavior. The
question isn't whether or not the the transactions should be shaped by
feedback from the network; the question instead is which features of the
economic network do we want to make salient to agents in that network.

You might think of Strangecoin as a way of making features of the
interdependence of economic relationships salient in each transaction. In the
parlance of STDs, I'm not just trading with you, I'm trading with everyone
else you are trading with.

I'm not sure I understand your analogy to small homophobic towns, but I
suppose you mean that people with less economic support will have less
representation in Strangecoin. It's true that Strangecoin will be disposed to
preferential attachment, but I'm not sure any economic system wouldn't. It's a
feature of the system that it makes these attachment relations explicit, a
feature of the existing economy that is completely masked over with
traditional money.

~~~
jchrisa
I think Strangecoin is super interesting. I think his analogy was that with a
coin where relationships matter, you have to care how a person is connected,
when you deal with them. I think it could be a feature, not a bug, even if it
makes things less efficient.

~~~
djestrada
Efficiency isn't some absolute value. Efficiency is always relative to the
goals we have.

~~~
lovemenot
Well, it can be either depending on the perspective you are using at the time:
objective or subjective. Some kinds of efficiency hew more to the former and
some to the latter. In the last few thousand years money has done more than
perhaps anything else to generate macro-economic efficiencies. So much so that
it's hard to now imagine that it might be time for alternatives.

------
tonypace
I was always dispirited by how conservative in sentiment Bitcoin and most
altcoins were. It always felt to me that Bitcoin was mostly redundant to gold,
neglecting the inherent advantages of ecurrency. Something more ambitious
deserves to be implemented.

That endorsement aside, the inhibition transaction does disturb me. It would
seem to encourage mob-like behavior in the culture of early adopters, as
heretics of whatever sort were forcibly ejected from the system. I don't trust
the dynamics of groups enough to think this will be a good form of self
government.

~~~
djestrada
In the transactions I describe, inhibition is a two-sided transaction, meaning
it requires approval from both parties. Presumably parties won't enter into
such transactions without good reason for consent.

~~~
mst
Given the number of people confused by it, I think perhaps it needs a
different name ... my mind is blank when I attempt to come up with a better
one, though.

------
TophWells
I'm rather disappointed that in spite of promises that transactions can be
non-zero sum, on close inspection these transactions just draw money from
other accounts - usually TUA. From the description, I expected new
Strangecoins to be created out of thin air by transactions, and I wanted to
see where you were going with that design.

If money's still just flowing from accounts into other accounts, then it's
something that would be doable with dollars or Bitcoins if the people involved
signed appropriate contracts. Some of your proposed transactions have real-
world equivalents; "coupling" sounds like creating a joint account for a
married couple. Others, like "inhibition", I don't understand their
motivation.

What's Strangecoin for, exactly? Are you supposed to be buying goods and
services with it? Why have features like continuous-time transactions or free
money for all, what benefit is gained from them?

~~~
djestrada
Other comments suggest that this can be implemented with existing tools, which
I take as a virtue of the proposal.

In any case, John von Neumann proved a long time ago that any nonzero sum game
with n players can be modeled as a zero sum game with n+1 players, where the
n+1 player represents the global state. TUA is simply an implementation of
this proof.

[http://en.wikipedia.org/wiki/Zero-
sum_game#Extensions](http://en.wikipedia.org/wiki/Zero-sum_game#Extensions)

I tried to explain inhibition in another comment in this thread.
[https://news.ycombinator.com/item?id=7496858](https://news.ycombinator.com/item?id=7496858)

I give an an analogy in the proposal of the popularity of a celebrity couple
being a nonlinear relationship to the popularity of each celebrity
individually. I think our intuitive understanding of our social relationships
is nonlinear in this way generally, and I think Strangecoin can model those
nonlinear relationships well.

So, for instance, I'm imagining a family, spouses, close friends, and so on
entering into extended coupling transactions, so that as a community their
prosperity rises and falls together. I might also enter into such transactions
with certain business with whom I want to couple my activities, and these
coupling transactions might serve in lieu of direct billing or payment. A
coupling relationship with a business is effectively a contract, but with
traditional currency you need the whole legal framework of contracts to
support the transaction, and with Strangecoin the transaction is built
directly into the currency, and the interface looks almost exactly like a
point-of-sale cash transaction.

And I can enter into less serious relationships of varying degrees with other
parties. The effect is a way of managing not just financial transactions, but
also reputation, investment, and other dynamics social constraints on the
economy via the currency itself. Money is memory
([http://www.minneapolisfed.org/research/sr/sr218.pdf](http://www.minneapolisfed.org/research/sr/sr218.pdf)),
but our existing currencies only represent some aspects of our economic
activity, and therefore put limits on the memory stored in the economy. A
nonlinear coin like Strangecoin can embed that social knowledge in the
currency itself, providing a more robust memory framework on which we can
conduct our economic transactions.

I only hint at this in the proposal, but I suspect a system like this is
required to resolve the twisted legal artifice the corporate veil, because it
quantifies explicitly the role individuals have in collective economic
activity, and thereby gives a method for explicitly holding persons
proportionally responsible (in both credit and blame) for their contributions
to that activity.

But I think that's a much more radical proposal than the one I've offered for
Strangecoin, and I should probably only be defending that here. =)

~~~
spaceapple
I think you might ultimately have to explain and defend these ideas together.
Bitcoin proved that a purely digital currency could have value alongside
government-issued currencies.

To create a viable Strangecoin network, you'll need to demonstrate how a more
cooperative economy can come into being and retain value within a more
predatory, zero-sum society, where corrupting your network and exploiting it
may yield rewards in US dollars.

------
iancarroll
Strangecoin transactions can be nonzero sum. A Strangecoin transaction might
result in both parties having more Strangecoin. Strangecoin transactions can
be one-sided and can be conducted entirely by only one party to the
transaction.

If I'm reading that correctly, could I give myself infinite StrangeCoin?

~~~
djestrada
Users cannot engage in transactions with themselves. Updated the doc to
reflect this.

~~~
iancarroll
What would you do if I created another address?

~~~
whyenot
author: don't use a url shortener or HN will kill your post. For those who
don't have showdead turned on, here was his response:

From my G+ reshare, in the context of a question about account caps:

[https://plus.google.com/u/0/+DanielEstrada/posts/hQfNmirDfsm](https://plus.google.com/u/0/+DanielEstrada/posts/hQfNmirDfsm)

> I suppose one way around the cap would be for users to maintain multiple
> accounts. I have no objection to this in principle, although it has an
> impact on the networks they can develop on any one account. If I have 20
> Strangecoin accounts all coupled to and supporting each other, but are only
> receiving income through one account connected to the external network, then
> my subnet isn't going to grow larger as a whole than the one node connected
> externally. So I can't use multiple accounts to inflate just my identity. If
> I'm using multiple accounts, it's because I want to maintain multiple
> identities. Again I have no objection to this, or at least the protocol I've
> described doesn't rule it out. ﻿

~~~
infogulch
@author:

Define the "external network". What keeps a single entity from simulating a
network just as large as everyone else combined? At that point, how does one
determine which network is the "correct" one, though both are the same size
with the exact same connectedness stats?

------
gus_massa
There are many problems. I’ll try to explain two:

> _The Universal Account (TUA):_

> _[...]_

> _TUA can make a payment only in the following situations:_

> _[...]_

> _X 's account balance = 0 at t. Any additional transactions outgoing from X
> at t are drawn from TUA._

When your wallet is empty, you can continue to make payments! Perhaps you
can’t make payments directly, but pay indirectly with the other type of
transactions. I suppose this works unless TUA is empty, but in this case TUA
will be empty all the time. And there will be a lot of bots trying to empty it
just in case.

Most of the transactions can be implemented as a strange Bitcoin/AltCoin
wallet: Payment is easy. Support, Endorsement and Coupling are just a matter
of sending the correct amount at the correct time. Even the balance cap can be
implemented as a voluntary automatic payment. The strange part is the
Inhibition transaction.

> _Inhibition is a two-sided transaction over some duration t. If X inhibits Y
> over t, then X reduces the income or expenses of Y over t by some proportion
> i. By inhibiting Y, X effectively reduces the impact that Y has on the
> Strangecoin network by i over t by forfeiting that proportion of income and
> expense. To initiate the transaction, X specifies Y, t, and i, which must be
> approved by Y._

If Y has to approve it, I don’t understand why is there an X there. It can be
a 1 side transaction where Y inhibits itself. In Inhibition is bad for Y, then
it’s easier to implement using NOP, because nobody would use it.

~~~
djestrada
Good comment.

1) You are correct that the system is designed so that users can make payments
and conduct transactions even in the absence of an account balance, without
incurring debt. Strangecoin allows users to act as if they have effectively
unlimited wealth in terms of access to coin. Nevertheless, Strangecoin allows
users to judge differences in influence on the network, so they might evaluate
who they want to engage in transactions with, regardless of the account
balance each has. So X might want to trade with Y instead of Z, even though
both are able to pay the same number of coin individually, because Y's network
amplifies the transaction more than Z's, and the better overall support for Y
makes the transaction more attractive.

2) You are right that a fundamental constraint on the system is that TUA has
an available balance. As I mention in the document, the most important
constraint on all users (including TUA) is that their balance remains stable;
users want to engage in transactions that will stabilize their overall impact
on the network. TUA can adjust certain parameters to ensure a stable, nonzero
balance: the basic income most importantly, but perhaps TUA can also adjust
individual account caps and set limits on the allowable parameters of other
transactions to ensure it has a constant, nonzero balance.

This is how I was imagining TUA being a universal indicator of economic
prosperity of the network. If I see my TUA income go down, for instance, I
know that means a drop in the overall available funds in TUA, which means the
economy overall is offbalance, with more expenses than income. And I see that
global property of the network directly in my account balance, and I can use
that to act accordingly. Specifically, I know that if I increase my own income
(or even hit the balance cap), I'll be helping the overall economy by
contributing to the TUA balance.

3) Inhibition seems to be giving people trouble. Being "too rich" isn't
normally a problem for people outside of hiphop, which I think is a source of
the confusion. But being too rich in Strangecoin could be a bad thing, so I
included the transaction type to provide a mechanism for negative feedback.
This would be useful for some situations where users are finding it difficult
to maintain an stable account, and where scaling back it's overall influence
on the network might help promote stability. If I'm making more Strangecoin
than I know what to do with, this could be a bad thing for me financially
because of the penalties that might accrue, so I might want to enter into
inhibiting relationships to ease the pressure of those penalties.

------
rdl
This seems incredibly complex and described in an even more complex way, but I
think you could accomplish most of the good from this proposal by having an
infinity of potential instruments, issued by individuals, with the market
sorting out the meaning -- e.g. PG General Liability IOUs trade independently
of rdl general liability ious which trade differently from rdl newproject
equity.

------
aaron987
This is an interesting economics thought experiment, but I don't see this
working simply because it is too complicated.

Virtual currency already has a learning curve that most people haven't gotten
used to. Adding strange attractors into the mix certainly isn't going to help.

~~~
djestrada
My idea isn't so much to propose a single solution to the worlds economic
problems, but instead to ask: what else might digital currencies do?

I don't know of anything else being proposed that works in a nonlinear way,
and I don't know if the idea is even on the table as a possibility. I'm hoping
that putting it on the table might give other people who can penetrate the
complexity ideas for how to make the system work.

That said, I think the transaction types I list are fair intuitive. When I'm
going to make a purchase, I have some options: I can pay a lump sum directly,
or I can engage in an extended relationship of support, for which I can
specify the duration of time, and the amount of support I'm willing to give
it. There's different ways that support might work, but that's the gist.

~~~
evv
I agree that truly different crypto-currencies is a very exciting frontier.
The distributed block-chain technology has implications far wider than a basic
ledger. For example, I'm quite excited by namecoin, a distributed DNS. I share
your enthusiasm about extending bitcoin's technology to create a distributed,
general-purpose trust network.

However, I am quite confused about strangecoin. Maybe the whole thread is
going over my head and I'm lacking an Explain-Like-I'm-Five description of
your idea. I'd love to be a supporter, but I don't see how you can build a
trust network around something as complicated as this. Could you explain how,
even in a vague sense, strangecoin could act as a reputation system?

It seems like bitcoin itself works as a pretty great trust network. Just look
at the mess surrounding MtGox: everybody seems to have a clear understanding
that MtGox is totally culpable, despite the claims of transaction malleability
attacks. Because the block-chain is entirely available for analysis, the
financial activity of all organizations can be traced, which can reliably
verify trust.

------
thisiswrong
I think the "Strangecoin transactions can be nonzero sum" idea is flawed. But
did I understand correctly: Would this be a cryptocurrency with a money base
that expands/disappears as the 'fait value' rate goes up and down? That would
be cool!

~~~
djestrada
The way I've written the proposal, the raw quantity of coin doesn't change;
all that changes is the rate of exchange across parties. The added value is
generated by the network of transactions as an emergent property.

But there's probably other ways to do such a proposal. Again, my main goal is
to put an idea like this on the table to see what people do with it.

~~~
spaceapple
I think it's a brilliant idea, but I don't think people will be motivated to
move forward with it without a clearer picture of what they would be creating
in the real world.

We are strongly conditioned to try to "capture" value. You are attempting to
redefine value in such a way that it is no longer advantageous to "capture" it
at the expense of the overall system. But what would it look like in the real
world?

It is a genuine challenge to envision real world transactions and a society
based on Strangecoin, and even more difficult to come up with a profit motive
to create it in the first place. Does a barista "couple" herself to a cafe
when she gets a job that pays in Strangecoin? What are the effects of this vs
employment as we know it? How does she fare as a result when compared to
someone working for dollars with an employment contract?

Money serves many purposes, and one is to create incentives. Often these
incentives are coercive. They don't have to be, but there are philosophical as
well as technical challenges to overcome. When everyone is acting according to
one set of rules, it is difficult to create a competing set of rules without
some clearly defined advantage for doing so.

~~~
djestrada
We're talking about values, but I think these are ultimately empirical
questions about which system performs better under certain constraints.

I think these empirical questions can be resolved prior to implementation, by
modeling the incentive structure of employees operating under traditional
payment schemes, and employees operating under coupling transactions under
Strangecoin, and then running simulations of the two models. I suspect
traditional currencies will perform well under certain assumptions, but also
that Strangecoin will perform well under similar assumptions, and may even
outperform traditional currencies.

In particular, I suspect that an employee with a coupled Scoin transaction
with a business will have a closer relationship with that business, partly
because the transaction has direct consequences on every other transaction the
user engages in, and (by extension) has a closer association with that
employee's identity than another business offering only a weekly paycheck.

Businesses spend lots of money cultivating employee cultures so that they
identify with the business, and these aspects of the culture can be more
influential on employee motivation and job satisfaction than financial
compensation. Strangecoin builds these relationships directly into the
transaction, so we might expect it to have similar consequences.

But as I said, I think these are empirical questions that can only be solved
from the armchair if that armchair is in front of a computer model simulation.

------
msandford
From the article:

"If I give you a dollar for a burger, then I've lost a dollar and gained a
burger, and you've gained a dollar and lost a burger. Assuming this was a fair
trade (that dollars and burgers are of approximately equal value), then as a
result of the transaction we've simply rearranged who has which good, and no
additional value was created in the process. What I've lost you've gained and
vice versa, so that the total value between us has not changed after the
exchange is over."

I can see how a person would think that, but it's not really correct. If that
was true then nobody would have any reason to hold either dollars or burgers
or whatever; we'd constantly trade them for one another since they are of
literally equal value. Who cares which $10 bill they have in their wallet?
Nobody since $10 is $10 is $10. Hell, most people don't even care if it's $10
or 2x $5 or $5 and 5x $1, so long as they don't need singles for the vending
machine.

But we don't see that kind of behavior in the economy, which leads us to the
conclusion that when people exchange things they're not exchanging things of
equal value. They are of nominally equal value, which leads to there being a
price. But if they were truly of equal value then the guy selling a burger is
making $0 profit (something he is unlikely to do) and the guy buying a burger
technically isn't any better off either. Why would two people make an exchange
where neither is better off? In aggregate they wouldn't even if there are some
exceptional cases where they would.

When people exchange things they are trading something which subjectively to
them is of equal or lesser value than the thing they are getting. That also
explains why people buy just one burger instead of ALL the burgers. When
someone is hungry it shifts their subjective valuation of burgers higher and
money lower; once satisfied their preferences shift back to "normal" and they
stop buying burgers.

An economy already has value creation "baked in" because when people exchange
things they only do so when it increases total satisfaction. People tend not
to make trades which decrease satisfaction or merely hold it equal. The
transaction cost helps ensure that is the case.

Everything else equal before the trade satisfaction was X, after the trade it
was X + Y. Y is the amount of increased satisfaction that prompted one or both
parties to engage in the trade. Now obviously someone could argue that Y is
negative but that doesn't hold water. People don't buy things that are "too
expensive" or "crappy" or whatever you'd like to call it.

I will concede that my argument might seem tautological. I might even agree.
In the absence of a third party with a gun I can't see how or why two people
would choose to enter into a trade that don't benefit at least one of them,
and probably both.

~~~
dllthomas
_" In the absence of a third party with a gun I can't see how or why two
people would choose to enter into a trade that don't benefit at least one of
them, and probably both."_

Well, at least that they don't both _believe_ will benefit them.

~~~
msandford
Yeah I think you have to go with the subjective meaning. I don't think you can
talk about objective benefits, otherwise things go to hell very quickly. Where
do drugs (legal or illegal), alcohol, tobacco, sugary foods, fatty foods, fast
cars, hybrids, condoms, birth control pills, church donations, etc all fall?

It really depends on who you are. There's no way to have an objective arbiter
who determines what is actually beneficial and what merely seems to be
beneficial. At least that I know of. The problem seems intractable to me.

~~~
dllthomas
I didn't mean "the value we think they should be deriving." I meant that
people can be mistaken (or mislead) about how much they value something even
in the short term. If someone thinks they are buying a reliable car and gets a
lemon, I think it's more correct to say "they didn't get the value they
expected" then "their revealed preferences show they really wanted the lemon".

~~~
msandford
Ah yes, that makes much more sense.

------
eatitraw
> If I give you a dollar for a burger, then I've lost a dollar and gained a
> burger, and you've gained a dollar and lost a burger. Assuming this was a
> fair trade (that dollars and burgers are of approximately equal value), then
> as a result of the transaction we've simply rearranged who has which good,
> and no additional value was created in the process.

This is incorrect. I sell a burger because I value it less than your dollar,
and you buy a burger because you value it more than one dollar. Win-win. It is
a positive sum game, not a zero sum one.

~~~
aninhumer
And the article goes on to say that two paragraphs after that line.

------
djestrada
Thanks everyone for a fascinating discussion. I found this thread incredibly
productive and encouraging.

If you are interested in developing this idea further, please get in contact
on my blog or G+ profile.

[http://digitalinterface.blogspot.com/](http://digitalinterface.blogspot.com/)
[https://plus.google.com/u/0/117828903900236363024](https://plus.google.com/u/0/117828903900236363024)

------
smartwater
[https://bitcointalk.org/index.php?topic=549669](https://bitcointalk.org/index.php?topic=549669)

~~~
djestrada
For what it's worth, that's not me and I'm surprised that someone is already
trying to scam on the idea. Lol.

------
sharemywin
Anyway you could lay out what your talking about with a bunch of examples.
Maybe add a section here's the problems with the current systems.

------
maxk42
That's numberwang!

