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Democratic Value and Money for Decentralized Digital Society

by   Bryan Ford, et al.

Classical monetary systems regularly subject the most vulnerable majority of the world's population to debilitating financial shocks, and have manifestly allowed uncontrolled global inequality over the long term. Given these basic failures, how can we avoid asking whether mainstream macroeconomic principles are actually compatible with democratic principles such as equality or the protection of human rights and dignity? This idea paper takes a constructive look at this question, by exploring how alternate monetary principles might result in a form of money more compatible with democratic principles – dare we call it "democratic money"? In this alternative macroeconomic philosophy, both the supply of and the demand for money must be rooted in people, so as to give all people both equal opportunities for economic participation. Money must be designed around equality, not only across all people alive at a given moment, but also across past and future generations of people, guaranteeing that our descendants cannot be enslaved by their ancestors' economic luck or misfortune. Democratic money must reliably give all people a means to enable everyday commerce, investment, and value creation in good times and bad, and must impose hard limits on financial inequality. Democratic money must itself be governed democratically, and must economically facilitate the needs of citizens in a democracy for trustworthy and unbiased information with which to make wise collective decisions. An intriguing approach to implementing and deploying democratic money is via a cryptocurrency built on a proof-of-personhood foundation, giving each opt-in human participant one equal unit of stake. Such a cryptocurrency would have both interesting similarities to, and important differences from, a Universal Basic Income (UBI) denominated in an existing currency.


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1 Introduction

Today’s nominally democratic capitalist socioeconomic structures are failing in numerous critical ways: failing to engage and empower citizens in democratic processes, failing to offer citizens with trustworthy information sources, resistant to data-driven foreign and domestic propaganda campaigns, failing to drive political dialog toward consensus and away from polarized tribalism, failing to manage the corrupting influences of wealth on political decision, failing to offer citizens opportunities and economic empowerment in the face of ubiquitous automation, failing to control growing inequality sufficiently to maintain confidence in the fairness or stability of the system, and failing to generate the collective wisdom or power of action to address existential global challenges such as climate change, These ongoing failures cast increasingly-widespread doubts about whether democratic self-rule is up to the task, and leading large populations toward following ideologues with offering quick and easy answers and scapegoats.

This paper makes the case that the problem is not that democratic self-rule is inherently flawed or inadequate, but that the current embodiments of this concept are merely engineered insecurely and inadequately, and in fact are not democratic enough to offer sufficient security, stability, or equitability in the conditions of today’s digital age. In particular, a key problem is that the principles of democracy are traditionally applied only to one tiny slice of society’s operation – namely elections for public office – leaving other key institutions that democracy ultimately depends on, such as economic activity and information dissemination, operating in fundamentally flawed and non-democratic structures. Democracy is a technology for self-organization, and like any fundamental technological idea, there are any infinity of ways it can be inadequately, insecurely, or incompletely implemented. If a toaster electrocutes its user or a bridge collapses, we do not question the fundamental utility of toasters or bridges, but instead ask what went wrong in their engineering or manufacture and attempt to make the next toaster or bridge stronger and safer.

This paper attempts to sketch a ground-up, “first-principles” reconsideration of how democratic self-organizing systems can or should be designed, in light of both the technological capabilities now at our disposal and the painful lessons we have learned from the many failures of our prior toasters, bridges, and democracies. Beyond serving as merely a philosophical thought-experiment, this redesign sets the goal of leveraging the present-day opportunity for in-practice “permissionless innovation” and deployment, afforded by the popularization of decentralized systems such as cryptocurrency, distributed ledger, and blockchain technologies. In short, while we make no pretense that established democratic systems would readily or willingly make structural changes as deep or fundamental as the ones suggested here, but instead observe that today’s decentralized systems technology is becoming mature enough to give us the tools to “grow” a next-generation system of democratic system of self-organization gracefully alongside the existing gradually-failing ones, coexisting peacefully in the technological innovation space without requiring either the support or even explicit permission of the currently-prevailing authorities.

The focus of this paper is primarily on identifying a set of guiding design principles for next-generation, technology-driven systems for democratic self-organization. An important secondary goal is to identify particular implementation challenges and security risks, and to sketch and point to potential solutions to them. With this in mind, we first outline the general principles and goals we wish to be embodied pervasively in a self-organizing system design, then subsequent sections will focus on the key operational components of information-gathering, decision-making, and incentives/economics.

Everything in this paper should be considered a work-in-progress: the proposed principles are probably neither complete nor as well-formulated as they could be, and the technical approaches suggested are merely examples with no claim that they represent the best possible design. But then, any healthy democracy must also consider itself always a work-in-progress as well, evolving to meet new challenges and fix flaws and vulnerabilities, as we will explore later in Section 


1.1 Summary of Core Principles

We propose that a truly democratic self-organizing and self-governing community must embody the following principles pervasively throughout its design and operation:

  1. People as the foundation of power and value: Democratic power and wealth ultimately originates in people (humans), regardless of how it might subsequently flow. Similarly, any legitimate democratic measure of value – of ideas, candidates, property, services, anything – must be founded in the value of these things to people.

  2. Equal opportunity over population: All humans living at any given time must have an equal right to participate and must wield an equal fundamental power share in all self-organization processes, regardless of individual characteristics such as age, gender, skin color, etc. Only people (humans) enjoy this fundamental right of equal opportunity: legally or technologically constructed entities such as corporations and botnets do not.

  3. Equal opportunity over time: All humans living at any time must have equal participation rights and fundamental power share with respect to their predecessors and ancestors. The successes and mistakes of prior generations cannot dominate the power, opportunity, or maneuvering room of their descendants.

  4. Democratic governance: All decisions governing the community’s operation and evolution are made through democratic deliberation and decision processes ensuring that no one is disenfranchised from the right to participate – including those who for innumerable reasons may have limited time or ability to participate.

  5. Democratic economy: Participants must have a viable basis for everyday commerce, investment, value measurement, and value creation that is compatible with the above democratic principles of equality. This value basis must not devolve into economic aristocracy over time through the gradual confinement of individual and collective power to ever-smaller shares of the world’s total wealth and economic power.

  6. Democratic information: The processes of gathering, filtering, curating, and disseminating the information needed for well-informed democratic self-governance must be likewise secured through democratic processes, ensuring that no internal or external actors can obtain and wield democratically disproportionate influence on the perceptions, decisions and collective actions of the community.

This paper focuses for now primarily on the problem of rethinking and redesigning the economic notions of value and money for consistency with democratic principles, while only briefly touching on the equally-important problems of strengthening the democratic foundations and processes for governance and information-gathering. This initial proposal is thus intended to represent only a seed to be expanded in the coming months (and perhaps years) into a more complete theory of democratic self-organization in the digital age.

We therefore first develop a democratic notion of value in Section 2, then build on this a concept of democratic money in Section 3, and explore its application to wealth and property ownership in Section 4.

Note: only Sections 1–3 written so far; the others may be relegated to separate papers, and the above intro will need to be narrowed accordingly.

2 Democratic Measures of Value

Man is the measure of all things.


Money, in the form of innumerable types of currencies, are a technology that for millenia have served as a society’s primary mechanism to measure value, as well as to incentivize and reward production of value, including both physical goods and non-physical services and information. But while money and its capitalistic uses have rightfully held a culturally-accepted central role in the evolution of democracy and political theory, the principles underlying money and finance have largely followed a separate, parallel track from politics and democracy: separate technologies playing different roles by vastly different rules, though with well-studied, complex, often problematic interactions. But is this strong separation between the theories of democracy and finance fundamentally either necessary or desirable?

2.1 People-Centric versus Thing-Centric Value Bases

We explore here whether more tightly intertwining fundamental principles of democratic and economic theory in the right fashion could substantially benefit both, each helping to address traditional limitations in the other. Democracy is founded on a people-centric foundation of value: that all citizens or eligible voters should have equal rights and equal voting power, at least as a starting point in a process of political decision-making, and that those who obtain and exercise unequal power in this process (e.g., elected officials and the bureaucracies they supervise) should ultimately serve and be accountable to the entire citizenry as a collective. The accepted democratic measure of the “value” of a candidate or party platform is based on the number of citizens or voters supporting them.

Money, by contrast, traditionally embodies a thing-centric foundation of value, originally based on the scarcity of materials such as beads or precious metals, and gradually transitioning to a state-managed notion of scarcity and value – a transition that Nixon completed with the abolishment of the gold standard. Even after this transition to fiat currency, whose value ultimately depends entirely on collective belief in its value, money is still viewed, measured, and analyzed in terms of the things that money can buy or assist in manufacturing through capitalistic investment.

While the people-centrism of democracy’s value basis is still widely and rightfully accepted as a social good, the flow of political power in today’s democracies occurs in extremely coarse-grained, illiquid units enabled by periodic elections, which are in practice so disconnected from citizens’ daily lives that elections often fail to persuade even half of the citizenry that participating is worth their time. On the other hand, money is extremely liquid and in ubiquitous use all the time, especially in its modern electronically-facilitated forms, but the utility and legitimacy of its thing-centric basis of value is increasingly questionable in an age where automation rapidly decreases both the scarcity and hence value basis of physical goods and human labor in creating them, and digitalization and AI similarly undermines the scarcity and hence the value basis of white-collar human labor in administrative and professional services.

In short, democracy gets the people-centric value basis right, but its utility and relevance is undermined by its clunky and illiquid dependence on periodic elections, while money is liquid and ubiquitous but its thing-centric value basis but appears to be increasingly disconnected from the needs of the people using it. Can we combine the most important elements of each to create useful “currencies” – measures of value – that embody both the people-centric value basis central to democracy together with the liquidity and utility needed to make them useful to people all the time in their everyday lives? We next sketch one potential approach to answering this question.

2.2 Traditional Elections as an Ephemeral Democratic Currency

In economics, money can in principle be anything that generally serves as a medium of exchange, a unit of account, and a store of value. Government-issued currencies, designed to be “legal tender” within a given jurisdiction, are obviously the most commonly-used form of money today. But other things – such as gold or Bitcoin – can arguably serve as money to varying degrees depending on the extent to which they satisfy these properties of money.

Taking the definitions of money and currency broadly, we may view traditional democratic elections as a highly constrained and ephemeral form of currency. An election in effect issues each voter a single quantum of a currency that springs into existence for that election alone, and ceases to exist in any useful form after the election is concluded. The government creates this democratic currency by issuing each voter a single currency unit, taking the form of a ballot instead of a banknote, which the voter may then “invest” by casting it for a candidate or position of his or her choice. This ephemeral currency acts as a unit of account because cast votes serve as an explicit, quantified measure of the democratic value a given candidate or choice has to the voting population.

The utility of this ephemeral currency as a medium of exchange is extremely limited, of course: it is generally unaccepted and often illegal to trade votes for money, goods, or services. Instead, votes are traditionally “tradeable” for only one thing: the chance, however uncertain it may be to materialize, of placing a preferred candidate into power or deciding an issue in the way the voter prefers. Finally, votes serve as an extremely short-lived store of value, namely from the time they are cast until the time the election’s results are decided and formally announced.

Despite these considerable restrictions, we can argue that elections already inherently and essentially share key properties of currency, being most importantly a democratic measure of value or “unit of account,” secondarily a medium of exchange (of votes for a chance at influencing power), and finally an extremely short-lived store of value during the election. Accepting this connection between elections and currencies enables us to explore more deeply whether and how it might be useful to bring democratic measures of value – in the “one person one vote” sense – into the traditional realm of currencies. We also wish to explore on the other hand how to bring more of the useful properties of traditional currencies – namely less-restricted utility as a medium of exchange and less ephemeral store of value – into the realm of democratic self-organization and decision-making. Can we design democratic currencies retaining the fundamental egalitarian value basis of elections while providing greater liquidity and utility to make flows of democratic value more explicit, transparent, fair, and sustainable?

2.3 More Liquid Foundations for Democratic Value

A conventional election typically serves the purpose of deciding one particular question at a time, independent of all other decisions – such as which candidate(s) to elect to a certain governmental role or whether to approve a particular initiative. This decision-making structure builds on the implicit premise that by some other means it has been decided that it is time to hold elections to fill these particular positions or to involve the voters in a particular decision: e.g., because the constition demands such elections at a given frequency, because a current government has ceased to function and needs a fresh mandate, or because a threshold of voters have signed a petition to bring an initiative or referendum up for popular vote. These are all different, and all relatively illiquid, approaches to prioritization: determining what activities or issues are worth spending the voter’s and government’s time and resources on.

There are precedents for more liquid, currency-like approaches to democratic prioritization, however. One rather common and intuitive such approach is cumulative voting, in which each voter is given more than one vote – but still an equal number – to allocate to available candidates, positions, or priorities as they see fit. Suppose an election is held whose purpose is to prioritize the allocation of the community’s time, funding, and/or other resources among several perceived problems to be addressed or directions for development: e.g., between investing in education (), environment (), or economy (). There may be no question that all these are important problems worthy of attention; the question is only one of prioritizing and allocating scarce resources between them. One classic approach to democratic prioritization is to give each voter, say, 10 votes to allocate as they prefer. Thus, a voter who cares most about eduction, a little about environment, and not at all about the economy might cast six votes for choice , four for , and none for . There is of course plenty of room for debate – both in electoral theory and in practice – on whether and in what contexts cumulative voting is a “good” way to make prioritization decisions such as this.

For our purposes the point is that cumulative voting offers one intuitive, widely-used, and easily-understdood precedent for more liquid, currency-like approaches to democratic prioritization and decision-making. And if it is democratically legitimate to give each person 10 votes in a prioritization decision, then is there any fundamental reason we could or should not make such prioritization decisions even more fine-grained and liquid, for example by giving each person 100, 1000, or 10,000 votes, as long as votes are equally distributed? Subdividing voting power into more fine-grained units in principle enables people to express more subtle preferences across a wider range of potential choices, and makes it possible to assign quantifiable measures of democratic value not only among some preselected “top few” choices but instead perhaps among a relatively open-ended set of choices that anyone might propose.

2.4 Time-based Foundations for Democratic Currencies

Both supply-side and the demand-side factors in the thing-based economy tend to vary drastically over time. The currently-fashionable mix of goods people demand, the prices of those goods, the costs to produce and distribute them, the human labor involved in this production that is inexorably giving way to automation, all amount to different flavors of quicksand if we seek any stable (let alone democratic) measure of value.

Many have observed, however, that time itself – or specifically the time of any given person – might offer a fundamentally more stable and democratic basis for measuring value. All people inherently have access to the same universal supply of time, which we all consume at approximately the same rate, ignoring for now the plight of people traveling close to the speed of light. For this reason, person-time has significant appeal as a democratic measure of value: a measure that can be said to be just as “fair” as votes in the sense of equality of power and opportunity over population, but significantly more fine-grained and liquid than conventional votes.

This observation has formed the basis of time-based currencies globally, such as that first suggested and put into practice in Japan by Teruko Mizushima [35], in which people can bank and trade hours of effort helping each other. Analogous time-based community currencies have been explored in the US and elsewhere, such as Time Dollars [6], Ithaca HOURS [23, 24, 26], and most recently in highly-experimental cryptocurrencies such as Nimses [39, 32].

Mizushima’s conception of time-banking held to a strongly-egalitarian principle that everyone’s time has equal value. This principle may help foster community spirit and may be practical where the type of work being traded and the level of expertise required for that work is relatively homogeneous, as in the caring-centric work that Mizushima’s time-bank focused on. Other time-banking systems such as Ithaca HOURS, however, have adapted a more weakly-egalitarian model in which one person-hour of currency is intended only to be a nominal or average guideline for pricing and trading services, recognizing and explicitly accepting that skilled professionals might reasonably charge several HOURS per hour of their highly-demanded time.

3 Democratic Money and Currency

Having reviewed several precedents for more democratic, people-focused notions of value, we now turn toward developing a notion of money intended to serve in the traditional roles of money – namely as a unit of account, a medium of exchange, and a store of value – but ideally grounded more firmly on democratic values and principles. We then explore technological means by which we might establish democratic currencies that could make democratic money explicit, tangible, and useful in practice.

3.1 Key Principles for Democratic Money

We first briefly summarize several key principles we would like a democratic currency to embody, then subsequently delve further into these goals and potential ways to achieve them. These principles intentially reflect the broad principles proposed earlier in Section 1.1, but focused specifically on their application to democratic money.

  • People-centric value basis: A democratic currency assigns value to goods and services only to the extent that they are demanded by people. Constructs such as corporations can only transmit, not create, real value.

  • People-centric money supply: Just as democratic political power originates in people and flows into representative government via elections, economic power in a democratic currency originates in people and flows into the economy via money. Only people create money; governments and banks are at most tools in this process.

  • Equality over population: Just as each voter in an election wields equal voting power, each participant in a democratic currency must have an equal share of fundamental economic opportunity with respect to peers.

  • Equality over time: Participants in a democratic economy at any given time must must have the same fundamental economic power and opportunity as those coming before and after. In particular, one generation’s economic opportunity must not be dominated by the winnders and losers of prior generations.

  • Entrepreneurship: Within the above constraints, all participants have equal opportunity to benefit and profit through excellence, innovation, wise investment, thereby potentially becoming unequal in outcome.

  • Stability: The value and purchasing power of the currency should be stable and not swing too rapidly, widely, or unpredictably, at least with respect to essential commodities such as food and clothes that themselves embody moderately-stable needs of people.

The bulk of traditional economic research and innovation for the past century has been dominated by the singular goal of stability, attempting to fix the perennial boom-and-bust cycles of capitalism. While stability is undoubtably important, we propose that stability should be only one of several fundamental goals that we should be designing our money and economic theories around. We might wonder, in fact, whether in its nearly-single-minded focus on stability as the sole end-goal, traditional macroeconomics could be falling into a trap analogous to the beginning driver who focuses on the car immediately ahead, or the beginning pilot chasing a desired altimeter and airspeed reading, resulting in a wobbly and potentially dangerous ride. Both the seasoned driver and the experienced pilot know to keep their attention on the horizon – where they’re going – and use their instruments only to calibrate and confirm the details of their long-distance trajectory. Could our inability to achieve economic stability be in part be in part precisely because we are endlessly preoccupied with reactively chasing short-term economic instrument readings without having sufficiently meaningful far-horizon goals to keep our eyes on?

3.2 A Reference Design for Democratic Money

Given the above basic goals, we now briefly summarize a reference design for democratic money, intended to satisfy the combination of the above principles, and to be potentially implementable in the form of a modern permissionless cryptocurrency we call Popcoin. We then subsequently elaborate the reasoning behind this reference design.

  1. Whenever new currency is created, it is distributed not to banks but directly to all human participants as a basic income, in equal portions, to ensure equality of opportunity over population in foundational purchasing power.

  2. Democratic currency represents a limited-term power to spend, invest, and enjoy the rewards of fruitful investment in one’s lifetime, but not an aristocratic right to economic power to be passed across generations. Currency therefore has a nominal lifespan of 50 years, calibrated to approximate the working lifespan of a modern human.

  3. At any time there is a value space of finite size representing the sum total of all money that exists or could exist.

  4. Each year, all existing currency is first devalued by the reciprocal of its nominal lifespan, i.e., by one-fiftieth of its current value in the reference design. New money is then created to fill exactly the corresponding portion (i.e., 1/50) of the total value space and distributed in equal measure among all human participants.

  5. Because these distributions are the only way Popcoin is created, the basic income’s purchasing power is defined not by policy but implicitly as a share of the total useful utility the currency is providing its users collectively.

  6. This constant-rate devaluation and distribution ensure a stable balance between scarcity and a renewing supply of money, ensure equal opportunity over population (within a given year), ensure equal opportunity over time (across years and generations), and incentivize the circulation of money for productive use.

  7. At any time we define the value of one Popcoin to be the size of the total value space, divided by the number of participants in the most recent distribution, divided by the average number of days per year (365.25). One Popcoin is thus a stable representation of a one-day share of one person’s basic income.

  8. When participation rate increases faster than devaluation, participants in earlier distributions receive a larger slice of that distribution, since each distribution divides a fixed portion of total value space. These larger slices reward early adopters and incentivize participants to join early and to sign up others. This early adopters reward is transparent and self-limiting, however, tapering off smoothly as participation approaches total population.

We now explore and further develop the principles for democratic money, and how the reference design satisfies them.

3.3 Equal Opportunity over Population in a Democratic Currency

Perhaps the most fundamental principle of democracy is that all first-class participants or citizens are presumed to wield an equal share of fundamental power in the collective (e.g., one vote), even if varying choices can lead to different effective power outcomes (e.g., serving in public office versus remaining a private citizen).

Reflecting this basic principle, we define a democratic currency as a measure of value that has most of the liquidity of traditional money, such as fungibility and divisibility, but is founded on a people-centric rather than thing-centric value basis. In a democratic currency, value, like voting power, ultimately originates from all the individual participants in equal portion, “one person one vote.” In a democratic currency, whenever and however new money is created, it is not distributed to a centralized hierarchy of banks, who further loan it out to people or businesses the banks judge deserving. Instead, newly-created money is distributed directly to all the individual participants (citizens or voters), in equal share, at the time of creation.

After creation and initial distribution in this democratic fashion, however, individuals are free to trade this currency for goods or services, invest it in anticipation of a future profit, or employ it for any of the traditional uses money serves. This use of the currency can of course produce winners and losers, and indeed should, to incentivize participants to use and invest their resources carefully, and to reward those who produce value in other forms tradeable with the currency. Ensuring that participants have both equal opportunity or starting position, and equal “opportunity to become unequal” through subsequent action, is already thoroughly accepted not only in capitalist economics but in the practical operation of modern democracies, which offer privileged and decidedly unequal levels of power to reward political candidates who successfully convince voters of the value of their abilities or platforms.

3.4 When and How Often to Create Democratic Money?

As a naive starting point, we could consider creating a democratic currency in a “one-shot” fashion. Like the ephemeral currency that a traditional election effectively creates, as discussed earlier in Section 2.2, the government could at some particular moment launch a brand-new currency by printing a certain number of new banknotes and distributing an equal share to each citizen. Unlike votes in an election, however, citizens would be free and encouraged to trade these new banknotes for goods and services, and/or to use them as a short- or long-term store of value. These banknotes would take on some value based on their scarcity, utility, and the population’s confidence in the government create them (e.g., trust in the government not to cheat or devalue the currency by secretly printing and distributing more banknotes than should exist according to the total population and fair-share amount per person).

Such a “one-shot” currency distribution could obviously be said to be “fair” or “equitable” only with respect to one particular moment, however, leaving out anyone born or reaching age of eligibility after this one-time money creation event. As a result, it seems clear that creation of democratic money should be a continuous or periodic process. In traditional elections, people are generally eligible to vote periodically throughout their lifetimes after reaching some voting age. A democratic currency should similarly offer regular benefits to all members of a relevant population throughout their lifetimes. Thus, as with elections, money creation in a democratic currency should probably occur periodically. In principle, this process could even occur at the same time and with the same registration mechanisms, eligibility criteria, etc. Whether such a close alignment with elections is actually desirable is a more complex question we do not attempt to address at the moment.

As with the right to vote, we expect the currency-distribution benefits of democratic money to terminate upon the person’s death. Just as it is considered unacceptable to cast a vote for a dead relative, it is equally unacceptable to draw on a dead relative’s share of basic income: the survivors must make their way on the basis of their own incomes, basic or otherwise.

Important differences between the properties we would want from democratic money versus voting in elections are greater fungibility and at least moderately longer-lived utility as a store of value. In particular, as mentioned above, unlike votes in elections, it should be both allowed and expected for people to trade their democratic money for arbitrary goods and services. Further, democratic money should be fungible, in that people should not have to know or care which periodic money-printing “batch” a given coin came from: democratic money should be more-or-less the same whether a participant received it in this year’s distribution event, last year’s, or indirectly from someone else through a trade or investment. Finally, democratic money should be useful as a real store of value – not just for an ephemeral duration as in the time period between when votes are cast and an election’s outcome is announced – but at least long enough to support normal commerce and investment. How much and how long-lived this store of value should be gets into questions of fairness and equality over time that we address in the next section – but at the very least, it seems clear that democratic money should offer significantly more long-lived value-storing capacity than the ephemeral votes cast in a traditional election.

3.5 The Ancient Principle of Equal Opportunity over Generations

In addition to the principle of equality over population, democracy also typically embodies an often-implicit principle of equality over time: namely, that voters in one periodic election should have essentially the same power of choice as those in prior or subsequent elections – or as prior or subsequent generations of voters. The policies one elected government institutes, the next elected government can change or reverse, according to the evolving will of the people.

Envision, to the contrary, a democratic system of government in which newly-elected governments could only at most add to or refine existing laws, but had no power to repeal them; could add new spending items to the budget but not cancel prior ones; could impose new taxes and/or new tax exemptions but never clean the slate and simplify the tax code. The policies of successive governments would effectively be squeezed into a tighter and tigheter policy space, its democratic decision-making power gradually crushed under the weight of the decisions, good and bad, made by the representatives of past generations. Such a “democratic” system would fail to ensure equality over time, by effectively allowing the ghosts of past generations to dominate and subjugate the democratic power of this generation. In fact, it has been pointed out that some democratic processes, such as popular initiatives that overly constrain the elected legislature, can have precisely this deleterious effect over time, rendering democratic government progressively more gridlocked and dysfunctional [47, 9].

However, such a tendency for past generations’ successes and mistakes to progressively dominate future generations’ opportunities and effective power is a central tendency of modern capitalist economics, as has been observed by innumerable scholars and definitively quantified in the work of Thomas Piketty [43]. The winners of past generations find ways to use their existing advantage to protect and increase their share of wealth, conveying these advantages to their lucky heirs, while leaving the children of the less fortunate to fight over ever-smaller pie-slice of global wealth. In short, “the rich get richer.” Notwithstanding the (substantial) flaws of current democratic structures, today’s economics unquestionably fails to ensure that successive generations have the same economic opportunities as their predecessors, and often fails even to offer a pretense that equality of opportunity over time and generations should be a central economic principle.

This was by no means always the case: economic renewal through periodic cancellation of debt (and freedom from debt-induced slavery) was a basic and pervasive economic principle for thousands of years in antiquity [25]. Sumerian, Assyrian, and Babylonian rules throughout Mesopotamia, including the famous Hammurabi, regularly proclaimed acts of general manumission, cancelling all consumer debts and freeing debt-slaves, in part to protect their own despotic power from encroachment by internal economic aristocracies, and in part as a military tactic to ensure a ready supply of peasant infantry and limit the tendency of debt-slaves to defect to the armies of neighboring agressors.

Misharum acts released cultivators from the threat of debt-servitude resulting from financial arrears. This gave them a stake in the society whose boundaries they were fighting to extend. [25, p.21]

After the power of central palaces gradually gave way to economic aristocracy in this region around the first century BC, Jewish reformers such as Nehemiah and Ezra embraced this Babylonian tradition of periodic economic renewal in the written law that they were codifying in largely its current form. Beyond being a miltary tool for palace rulers to employ at their discretion, however, these Jewish reformers extended the principle of periodic economic renewal to a populist religious covenant in the form of the periodic “year of jubilee” – a fixed 49- or 50-year cycle of freedom from debt and debt-servitude – which in principle was to be an inviolate law of God that not even a ruler had the authority to neglect. Jesus, in his sole act of physical violence recorded in all four Gospels, drove the bankers and money-changers out of the temple of Jerusalem as an act of cleansing, in attempt to reconfirm and reestablish the cultural and religious tradition that people had a basic right to protection from unrestricted economic domination by the wealthy. In short, the tradition of periodic economic renewal was a fixture of Babylonian, Jewish, and early Christian culture lost only in modern reinterpretations of those traditions.

Few Christians today recognize that when they pronounce the word “Hallelujah,” they are repeating the ritual term alulu chanted to signify the freeing of Babylonian debt-slaves, a rite followed by anointing the manumitted individual’s head with oil. [25, p.30]

Of course, the Babylonians’ tool of economic renewal through periodic debt-cancellations would be disruptive to the smooth functioning of modern economies, to say the least. It would undoubtably be difficult for anyone to obtain a home loan shortly prior to a (scheduled or anticipated) act of misharum, for example. Periodic debt-cancellations or jubilee years would also ensure fairness and equal opportunity only over the long term, across generations, and not over shorter periods: a person who falls into extreme debt shortly before a jubilee year would obviously be much luckier than a person who does so just after one. While in some sense economic disruption – for the purpose of renewal – is in part precisely the point, and some short-term unfairness may well be tolerable in the interest of long-term stability, nevertheless there are probably alternative ways to achieve periodic renewal – and protect a principle of equality over time and generations – that do not inherently require a global economic “hard reset” every 50 years.

3.6 Achieving Equality Over Time with Leprechaun Gold

These ancient principles lead us to the obvious question of whether the principle of equality over time and economic renewal can be embedded into a modern currency embodying the useful properties we generally expect money to have. We will focus for now purely on monetary wealth, leaving other forms of property such as goods or real estate to address later in Section 4.

Recognizing that periodic economic resets such as jubilee years would be difficult to reconcile with modern economics in numerous respects, we first examine a straw-man alternative, which we might describe as leprechaun gold: a hypothetical form of currency in which each individual “coin” created has a limited lifetime, after which it silently evaporates. The fundamental idea here is that however money is created, distributed, and utilized subsequently, it should confer its holder a temporary share of economic power in apportioning goods and services and prioritizing society’s endeavors. That is, such a leprechaun coin should confer a share of economic power that lasts long enough to allow any individual to reap rewards from prudent behaviors and wise investments within his or her lifetime, but should not translate into a share of aristocratic power that can be passed down across unlimited successive generations.

On this basis, if we were to pick a particular lifetime for such leprechaun gold, then the Biblical jubilee period of about 50 years might be a quite reasonable choice, in that it happens to correspond roughly to the working lifetime of a (modern, not Biblical-era) person. There is nothing magic about these specific numbers, however, and we can probably expect a fairly wide range of values to work fine as long as they are globally fixed and within reason.

Combining the leprechaun gold idea with the principle of equality over population from Section 3.3, a democratic currency based on leprechaun gold would be created periodically in batches (e.g., once a year or once a month) and handed out in equal measure to all individual participants alive and eligible at that time, then remain usable and hold their value for the coin’s lifetime. Each year, a portion of the previously-existing coins – namely those that have exhausted their lifetimes – would suddenly vanish or otherwise lose all value, effectively “making room” in the economic value space for the latest batch of newly-minted coins. At any given moment, the total economic value space would consist of a “window” of fifty one-year batches of coins, as illustrated in Figure 1. This approach would by design guarantee (monetary) equality over time by ensuring that the money newly-minted and distributed each year always represents a fixed, one-fiftieth share of the total economic value space represented by all extant currency, while allowing for overall economic continuity without requiring synchronized global hard-resets.

Figure 1: Illustration of the lifetimes and value space of “Leprechaun Coin”

With conventional monetary technologies such as minted coins and banknotes, one obvious problem with the “leprechaun gold” approach to economic renewal would be simple technical impracticality. It is unlikely to be easy or cheap to manufacture a coin or banknote that literally vanishes at any time, let alone after a precise time period not readily manipulable by the holder(s) of the currency. Coins could simply be engraved with an expiration date, of course, but people would no doubt find it inconvenient to have to read and check the expiration date of every coin or banknote they are handed. However, these technical impracticality issues vanish in the post-Bitcoin era: it would be readily feasible, and in fact technically quite trivial, to create a cryptocurrency similar to Bitcoin except with a built-in set of rules making coins become unusable after a globally-agreed-upon time period.

The more fundamental problem with leprechaun gold is that it would compromise the fungibility of the currency. Older coins with closer expiration dates would always have less effective value than newer coins with longer to live. Sellers of a good or service would demand more coins of a given nominal denomination if they are older and fewer if the coins are newer. Everyone would effectively have to treat the fifty extant batches of currency at any given moment as fifty separate currencies to be juggled, an obviously impractical task from a usability perspective.

3.7 Democratic Monetary Policy: Equality over Time via Currency Devaluation

While leprechaun gold is thus clearly no more practical for a modern currency than reinstating Biblical jubilee years, it does suggests a simple principle for implementing equality over time in a democratic currency: namely, that the new money minted and evenly distributed in one year should always represent a fixed (e.g., one-fiftieth) proportion of the currency’s total economic value space after the minting. Leprechaun gold implements this principle by making all coins suddenly vanish after a 50-year lifetime, but this is by no means the only way to implement the principle.

Another simple approach, which ensures economic rewewal while preserving the fungibility of the currency, is simply to compress the previous economic value space each year to make room for the newly-minted currency. In this approach, old coins never vanish or lose value entirely, but instead smoothly and gradually lose their value over time with respect to the value of newly-minted coins. Suppose we stipulate that the democratic currency should have a 50-year nominal lifetime like the leprechaun gold above, roughly matching the working lifespan of a modern human. Then each year we could simply print and distribute an amount of new money that sums to exactly one-fiftieth of the value of all existing or potentially-existing coins in the prior value space.

Figure 2: Illustration of value space of constant-inflation democratic currency

In modern economic terms, this simply amounts to imposing a fixed yearly rate of monetary devaluation, in this case 2%, resulting in a corresponding rate of inflation of the prices of anything purchased in the currency. While other factors such as the size of the population using the currency and changes in the way they use it will also in practice affect the currency’s value and the prices of goods, if all other such factors were held constant the currency would experience a fixed 2% inflation rate over time. This built-in inflation rate may alternatively be viewed as a periodic tax on the value of all existing coins in the currency to pay for the regular minting and distribution of fresh currency.

It is interesting that in this currency design experiment, we seem to have arrived at a target inflation rate precisely matching the consensus that central bankers and economists have arrived at in recent decades for conventional economies – though in pursuit of a different goal, namely the pragmatic objective of ensuring that economies have enough monetary “fuel” to avoid negative interest rates and deflationary spirals, not not so much as to cause hyperinflation and bank runs [16, 40]. We might speculate as to whether central banks have effectively “discovered” through practical experience a rule-of-thumb target inflation rate that in fact works well for some more fundamental underlying reason: such as (for example) because a 2% inflation rate effectively causes money to retain its value over a nominal lifetime roughly matching a modern person’s working lifespan, giving individuals the monetary tools to invest and reap rewards in their lifetimes while ensuring that subsequent generations have access to enough money to enjoy similar economic opportunities. On the other hand, it is unlikely that there is anything magic about the value 2% in particular, and strong arguments have been made for higher inflation targets, such as 4% [1].

3.8 Value and Supply Stability in Democratic Currencies

In a democratic currency operated as described above, at any given moment there is a limited supply of currency, although its total supply obviously increases over time with each successive distribution of new coins to the population. Provided at least some participants also find the currency useful in some way, for buying and selling certain goods and services for example, there will be some level of demand for the currency. Because participants must hold some amount of the currency in order to use it and its supply is limited at any point in time, the currency will have some effective value at any time, determined by the amount of physical goods (or money in other currencies) participants are willing to trade one unit of the democratic coin for. Provided there are at least some participants who believe in the value of the currency and want to use it for something, its effective value will be greater than zero, though not necessarily large.

Because the supply of new democratic currency is fixed and readily predictable, the demand, and hence value, of the currency will depend on its use. If participants initially use the currency for one niche special purpose (e.g., to buy and sell virtual curiosities like cryptokitties [34]), then its demand and hence collective value will initially be quite low. However, if participants then find additional uses for the currency, demand increases while the rate of supply remains fixed, thereby increasing the scarcity and effective value of the currency, as measured in goods or other currencies for example. Thus, while we have reason to believe a democratic currency formulated this way would eventually offer considerable long-term stability, we are expressly not setting price stability as the primary end-goal, but are instead allowing the value of circulating currency to vary with, and effectively be defined by, the collective use the population makes of it.

Because the supply of the democratic currency grows at a stable rate, human population does not change that quickly, and the ways and amounts in which the population uses the currency is likely to be moderately similar and “average out” over the population once the currency is widely deployed, there is reason to believe that the currency’s value may be moderately stable over the long term (though, once again, not necessarily large). In traditional fiat currencies, money supply is controlled indirectly by central banks through money-printing and the interest rate of central bank loans, but its effective supply is ultimately dependent on the economic sentiments of a relatively small, elite group of bankers making decisions on loans and investments.

A democratic currency effectively short-circuits these financial intermediaries by distributing new currency directly and evenly to the entire population, thereby inherently spreading the basis for its value and stability across a much larger and by definition more decentralized population. While one or a few individuals may change their currency-using behavior drastically over a short period, it is much less likely or common that huge populations do, except in response to a severe shock of some kind – and such traditional economic shocks usually propagate from the financial world to the larger population, not vice versa. The democratic currency also by design ensures that no one needs to worry about their supply of currency drying up entirely since everyone always has a constant supply of basic income, whatever it may be worth at present in terms of purchasing power.

3.9 Relationship to Stamp Scrip and Accelerated Money

The idea of regularly devaluing circulating currency is hardly new. In the early 1900s, Silvio Gesell proposed a monetary system he called “free money” (Freigeld), in which the holders of banknotes must buy and affix stamps to banknotes each week to maintain their validity over time [21]. Gesell’s purpose for this “carrying tax” was to incentivize the productive use of money as a medium of exchange in commerce and penalize hoarding – effectively by making banknotes like “hot potatoes” that the current holder wants to pass on as quickly as possible. Because loans in this hot-potato currency would transfer the carrying tax to the receiver of the loan for its duration, holders of excess money would be incentivized to loan it interest-free to a worthy cause instead of holding it themselves.

In several small-scale experiments where it was implemented as intended, such as Schwanenkirchen and Wörgl, these stamp scrip currencies indeed seemed to accelerate local economies almost miraculously, until in most cases the experiment was squashed by central monetary authorities [8]. Subsequent stamp script attempts in the US were less successful, in part because they incorrectly used stamps to implement a transaction tax rather than a holding tax, incentivizing the exact opposite behavior as Gesell’s design. At least one community currency based on Gesell’s ideas has stood the test of time, however: WIR Bank was founded in Basel in 1934 to create an accelerated community currency complementary to the Swiss franc, and remains in operation to the present, although it has evolved into more of a credit network for interest-free barter without the stamp scrip mechanism [11, 49].

Gesell also strongly influenced John Maynard Keynes, whose macroeconomic theory adopted the explicit devaluation idea for the same purposes of ensuring circulation and avoiding “liquidity traps,” though using the mechanism of deliberate monetary inflation instead of stamped banknotes [27]. In this way, Gesell’s ideas have indirectly entered the basic modus operandi of inflation-targeting central banks [16, 40].

The constant, explicit devaluation we propose for democratic currency clearly bears close relationship to the Gesell and Keynes tradition, and we expect its adoption could have a similar acceleration of commerce effect on the use of democratic currency. However, in our case neither the acceleration of commerce, nor the stabilization of purchasing power that Gesell and Keynes also sought, are the primary motivating end-goals, but only desirable side-effects. In democratic money, the essential purpose of fixed-rate devaluation is to provide a systemic guarantee of equal opportunity over time, by ensuring that the fresh democratic currency distributions each year always represent an equal-size “slice” of the total monetary pie at that time, and that the economic successes and failures of past generations always make room for, rather than gradually strangling, the economic opportunities of their successors.

Since we intend to implement a democratic currency initially as a cryptocurrency, it is worth contrasting with Bitcoin [36], which is hard-coded with a strongly deflationist monetary policy. Bitcoin exponentially decreases its fresh money supply over time so that no more than 21 million Bitcoin will ever be created. Since Bitcoin can and regularly is lost or destroyed in various ways, the amount of circulating Bitcoin can only decrease in the long run, which has strongly incentivized its use mainly for speculative investment or “HODLing” (Holding On for Dear Life) in the cryptocurrency culture, eventually to the near-complete exclusion of productive uses as a medium of exchange. As a result, Bitcoin has become more comparable to a collector’s item than a currency: a curiosity not unlike a painting or a cryptokitty [34], whose price rests entirely in its scarcity and what collectors are willing to pay for it. As finance expert Alexander Lipton observed, “Bitcoin has no value, hence it can have any price!” [33] In contrast, we want a democratic currency to be a working currency whose value and price support is primarily in the commercial utility it is providing the people using it. Fixed-rate devaluation in the tradition of Gesell and Keynes support that purpose together with our primary ultimate goal of providing long-term assurance of equal opportunity over time.

3.10 Relationship to Universal Basic Income

The idea of universal basic income or UBI has recently been attracting widespread interest, as a way to simplify the governmental tax and redistribution mechanisms embodying a social “safety net.” The idea of UBI is for the government to give each citizen a flat basic monthly income, with no regard for how much they need it or how they use it. Part of UBI’s appeal comes in the form of eliminating the complex governmental mechanisms for evaluating need, and closing the loopholes enabling abusers to extract undeserved rewards by manipulating the system and claiming need falsely. Another appeal is that UBI eliminates the disincentives to productive work that current safety net schemes often accidentally embody: e.g., by disqualifying a person for unemployment benefits if they hold any job, and hence penalizing them for taking a job whose monthly income would be less than what they obtain through unemployment. Since a UBI is not affected by employment status, a currently-unemployed person would always see their total income increase, and never decrease, by taking on any job regardless of salary. Small-scale UBI experiments are underway in Finland [29, 12] and California [52], and an initiative for large-scale implementation was recently proposed via initiative in Switzerland but defeated at the polls [2, 51].

As with many governmental tax-based redistribution schemes, two of the most problematic questions surrounding UBI are how much should the benefits be? and where should the money come from? Plausible answers to the latter question typically require eventually cancelling a variety of existing social safety-net programs and redirecting their tax revenue to the UBI: otherwise, the claimed simplification benefits of UBI obviously would not materialize. However, cancelling even one existing safety-net program, let alone many, is fraught with enormous practical risks and political quagmires, starting with the question of how effectively a UBI would actually substitute for existing safety-net programs it is meant to replace.

3.10.1 How to Decide the Amount of Basic Income?

A perhaps even more fundamental challenge with UBI, however – and a problem that would not disappear even once the practical and political transition hurdles are surmounted – is answer the question of how much the UBI should be. Too little, and the UBI will inadequately serve its safety-net function; too much, and it could impose an unsustainable cost on the economy or incentivize too many people to stop seeking traditional work entirely.

And by what principle should the UBI be adjusted over time? Leaving it at a fixed face-value amount in a traditional currency will allow inflation to erode the UBI’s purchasing power and effectiveness with inflation over time. Keeping the UBI inflation-adjusted might solve that one problem, but would fail to account for other types of social and economic evolution. For example, its practical effectiveness could still gradually lose synchronization with society’s quality-of-life expectations, and with the abstract basket of goods and services that people in practice consider “basic” and “essential.” For example, Internet access was until recently considered a luxury but now is generally considered essential, and the ad-driven evolution of the Internet ecosystem increasingly makes many Web sites and applications effectively unusable to anyone without sufficient bandwidth or a powerful smartphone [44].

Perhaps worst of all, an attempt to define and maintain through policy an explicit basket of goods and services from which to define the UBI’s value could a policy free-for-all as every special interest whose product isn’t in the basket of “essentials” tries to legislate it there (the equestrian society claiming that every child has a basic right to a pony, etc.), as every special interest whose product is in the basket inflates the prices of its products as the US medical industry has done (because, after all, someone elsei.e., the public – is paying for them via UBI), and as the slowly-inflating UBI basket of products with slowly-inflating prices gradually consumes the economy like a slow-boiled frog.

A key advantage of the proposed democratic currency approach is that no policy decision is needed to set, or maintain, the level of UBI, in terms of either face-value, purchasing power, or lifestyle expectations. The democratic currency has a floating universal basic income, defined indirectly as a fixed percentage of the total value the currency is collectively providing those who are using it. If the currency is being used by only a few people for little of importance, as will inevitably be the case initially if launched as a cryptocurrency, there will at first be little demand for it aside from speculation, and the value of the floating basic income denominated in goods or other currencies may well be extremely small. That is fine, as long as a few people find some utility in it and we avoid setting unrealistic expectations. As people find more uses for it, demand for the currency grows while supply remains a steady flow in terms of person-hour-coins per year. The value of each person-hour-coin thus increases in purchasing power, and the effective value of each person’s floating UBI grows correspondingly. The democratic currency’s floating UBI promises neither a free lunch nor any particular standard of living, but instead defines a UBI that a society can sustainably afford – as precisely the fixed slice of collective value-space by which the currency is devalued each year to feed economic renewal in ensuring equal opportunity over time.

The size of that fixed slice, in turn, is calibrated to a fundamental property of humans that so far remains extremely stable and slowly-changing by economic timescales: namely, the typical “working lifespan” of a person, and the respective “nominal lifetime” of coins distributed to people, which we take to be 50 years in the reference design. The correctness of this calibration metric could of course be disrupted if anti-aging science comes to fruition and people start living hundreds of years – but let us worry about crossing that bridge once it is in sight.

3.10.2 Cross-Border Effects and Migration Incentives

A further hazard arising from implementing a basic income at government level is that it will inevitably not be truly “universal,” but at best universal only within the jurisdiction of the country, state, or city that (first) implements it. Even when neighboring governmental jurisdictions both enact a UBI, the policy-determined amount of the UBI will almost certainly be different. Richer countries or cities will want to set their UBI high enough to satisfy the high standard-of-living expectations of their citizens, while their poorer neighbors will have to make do with a lower UBI at best, due to being unable to afford a higher one if nothing else.

These variances in the existence and amounts of UBI are likely to create strong migration incentives toward districts with a (larger) UBI, which are after all handing out money to anyone who can “prove” residency. One likely silver-lining benefit of the sheer complexity of current safety-net programs provided by governments, and the many frustrating administrative hoops one must often jump through to demonstrate need and take advantage of them, is that not

too many people are probably tempted to pick up and move to the next city, state, or country just to free-load on more-generous and well-funded safety-net programs there (though no doubt some do, such as Americans who travel or move abroad in part for more affordable healthcare or other safety-net services [5, 48]). But once the value of one jurisdiction’s safety-net programs has been transformed into completely liquid, no-questions-asked handouts of unrestricted cash, the benefit from being a resident of a high-UBI district – or even “proving” residency in several UBI districts at once by obtaining fake IDs or other trickery – will be much more clear and compelling to anyone even a bit “morally flexible.” The citizens of the high-UBI jurisdictions will naturally perceive this influx of invading UBI-seekers negatively, fueling even more anti-immigrant sentiment and fortress mentality than we already have.

By implementing a floating basic income in a democratic currency as described here, in contrast, the UBI by definition be the same anywhere in the world the currency is used, would be associated with the currency and not any given jurisdiction, and would be defined by the currency’s fixed devaluation-and-renewal rate instead of varying policies tuned to reflect varying expectations. People and communities anywhere in the world would be free to adopt it as much or as little as they see fit (and as their respective governments permit them). Those that do adopt and use it contribute incrementally to demand for the currency, and hence to its total value as denominated in goods or other currencies, thereby incrementally increasing the value of the floating basic income – for everyone using it at once.

The migration incentives resulting from a democratic currency’s floating basic income will likely, in fact, flow in the opposite direction as for conventional UBI: namely toward poorer jurisdictions rather than richer ones. This is because while the currency will provide the same UBI for all users, as denominated in other currencies tradeable with it, the effective purchasing power of that basic income will be higher anywhere the cost of living is lower. Thus, anyone substantially relying on basic income from Popcoin will be incentivized to to move to poorer regions or countries where that income wields more power to purchase the necessities of life. If widely adopted, a democratic currency could thus help counteract and perhaps even reverse some of the migration pressures that are currently stoking anti-immigrant and strong-border attitudes globally.

3.10.3 Cold Hard Numbers: Guesstimating Basic Income from Current Economic Statistics

Accepting that Popcoin’s basic income will not and is not intended to guarantee any particular purchasing power or quality of life, can we estimate what this basic income

might amount to if the currency were to become widely-adopted in some context? Performing a detailed and rigorous economic analysis or forecast would be nontrivial to say the least and is outside both the scope of this paper and the domain of this author’s expertise. However, we can use readily-available data to produce a few ballpark estimates under admittedly loose and perhaps wildly optimistic “thought-experiment” assumptions.

Suppose hypothetically, for example, that Popcoin were in widespread use today, as the primary money supply in circulation, either globally or within particular countries of interest. We make the simplifying assumption that this widespread use of Popcoin does not significantly change the size or behavior of the economy other than by producing a basic income fed by fixed-rate devaluation. This simplifying assumption is of course unrealistic, as adopting a significantly different monetary system would obviously have many far-reaching and difficult-to-predict impacts. We hope and expect that the balance of Popcoin’s impacts would be positive, e.g., making the economy larger and more active due to the monetary acceleration effect and the fact that everyone would have a minimal purchasing power base matched with need to spend on the essentials of life. But other factors would of course cause effects in the other direction: e.g., currency devaluation higher than current interest rates could incentivize transfer of value away from money to other forms of wealth, thus reducing the amount of global wealth held in circulating money, especially if provisions for the incorporation and gradual devaluation of property-wealth are not also made as described in Section 4. However, acknowledging the large uncertainties involved, let us pretend that these effects did not exist and that today’s global economy was based on Popcoin.

Basic Income Official
M1 Money Population (USD/Year) Poverty Line
Region (USD Million) (Thousands) 2% rate 5% rate 10% rate (USD/Year)

36,800,000 7,630,000 96.50 241.00 482.00 694.00
Switzerland 657,000 8,540 1,540.00 3,850.00 7,690.00 26,900.00
United States 3,660,000 327,000 223.00 560.00 1,120.00 11,800.00
India 440,000 1,350,000 6.51 16.30 32.60 172.00
Nigeria 30,200 196,000 3.08 7.70 15.40
Table 1: Ballpark basic income estimates based on M1 money in today’s global economy

Table 1 shows ballpark estimates of what a Popcoin basic income might look like, denominated in today’s US dollars, if Popcoin were aready in use globally or in a somewhat-arbitrary selection of countries.111 We use recent statistics for M1 “narrow” money supply, which includes immediately-accessible money such as banknotes, coins, and checking accounts, but excludes less-liquid forms of money such as savings accounts. This choice reflects the intended implementation of Popcoin as a cryptocurrency similar to Bitcoin, in which banks, exchanges, or electronic wallets can neither create nor destroy currency but can only hold it on behalf of users. Like Bitcoin, Popcoin would thus behave as a full-reserve currency [13, 3], in which the contents of immediate-access checking accounts or digital wallets would be directly subject to the currency devaluation and democratic distribution processes, but less-liquid, loan-based accounts would not be directly affected. Based on these statistics, we estimate what Popcoin-derived basic income would amount to yearly in USD, for three different comparative rates of devaluation and democratic redistribution: a conservative 2% rate representing a nominal currency lifetime of 50 years, a more aggressively-accelerated 5% rate closer to the suggestion of Silvio Gesell [21], and an extremely-accelerated rate of 10% on the boundary of what economists would call “galloping inflation.”

These estimates make it clear that we should make no pretense of expecting a basic income derived solely from circulating Popcoin, even if ubiquitously adopted globally, to offer a satisfying quality-of-life in developed countries or to replace their existing safety-net programs. The basic income Popcoin provides might be hardly noticeable financially to the average resident of the developed world, in fact. However, when compared to the UN’s official global poverty line of $1.90 per day or $694 per year, the basic income derived from a globally-deployed Popcoin could cover a significant fraction of the distance toward eliminating global poverty by this definition, if not quite achieving it. In fact, the Popcoin basic income at the Gesell “Freigeld” rate of 5% would be sufficient to overcome the current official national poverty line of India, which is well below the UN’s global poverty line. Viewed in this light, the basic income Popcoin could in principle be meaningful to the finances and quality of life of a large percentage of the world’s population, if by no means a complete solution.

Of course, basic income level that might be expected from widely deploying Popcoin within a particular country would of course vary widely based on how rich or poor the country is, as illustrated by the estimates based on the M1 monetary supply and population of particular countries in Table 1. If ubiquitously adopted in Switzerland, one of the world’s richest countries per capita, Popcoin’s basic income would be the envy of much of the developing world – but would appear quite unimpressive in Switzerland itself, reaching only a small fraction of the way up toward Switzerland’s national poverty line. If a poorer country such as India or Nigeria adopted Popcoin internally, the results might be similarly less than satisfying with respect to the global poverty line. These estimates thus clearly underline the need for Popcoin to be ultimately deployed “across boders” – among large populations in rich and poor countries alike – before we can plausibly expect the basic income it furnishes to offer financially significant purchasing power to a significant portion of its population of users. These numbers also underline the huge risks inherent in trying to implement conventional basic income ideas at policy-defined amounts corresponding to national quality-of-life wishlists, both in terms of the internal affordability and sustainability of such programs, and in terms of the intense migration pressures from poor to rich countries that such programs would inevitably exacerbate.

Since widely deploying Popcoin across borders involving both rich and poor countries would clearly create a significant wealth redistribution flow from the former to the latter, why might we expect the residents of rich countries to be willing to adopt an international democratic currency like Popcoin voluntarily? Two main plausible reasons present themselves. Potentially appealing to the more socially-conscious members of rich populations is the simple argument that it’s the right thing to do, in the interest of addressing global inequality problems and establishing a more sustantiable global economic foundation, and would represent a readily-affordable cost to the residents of rich countries. Potentially appealing to the more inwardly-focused members of rich countries with strong anti-immigrant sentiments, in contrast, is the argument that Popcoin would help counteract the global migration pressure on the rich countries – even incentivizing less-well-off people to move in the opposite direction toward poorer countries where their Popcoin-derived basic income would be exactly the same but their cost of living much lower. Thus, there seems at least hope that a basic income derived from a properly-implemented and widely-deployed Popcoin could appeal in different ways to both the more left- and right-leaning populations alike in the richer countries.

3.11 Implementing Democratic Money as a Cryptocurrency

A government’s central bank could in principle issue a new currency – or even revise the monetary policy and distribution of some existing currency – according to the above principles to create democratic money. A government-initiated rewriting of monetary principles this fundamental is unlikely to happen any time soon, however, not only due to the momentum of conventional economic thought, but also because such a transition would represent a huge and risky transition in practice if taken suddenly.

The emergence of digital cryptocurrencies such as Bitcoin, however, offer the opportunity for the relatively “safe” redesign and deployment of new currencies embodying new principles at small scales. Creating a new cryptocurrency requires only that a fairly small group of people consider the idea for the currency interesting, and invest their time and energy into its development and deployment. A new cryptocurrency effectively creates a new metric of value which can gracefully coexist with all the existing currencies and quasi-currencies such as frequent flyer programs and such, without needing the permission of any existing organization or government, apart from conformance to the currently-emerging regulatulatory regimes applying to cryptocurrencies.

The design of currently-deployed cryptocurrencies such as Bitcoin, as well as emerging proposals designed to improve their scalability [31, 15, 30, 22], privacy [46, 45, 37], and functionality [38], should in most respects be sufficient to support the technical requirements of a democratic currency as described here. Bitcoin, for example, already has a particular fixed monetary policy embedded in the software that all the miners and users run: namely a strongly deflationary monetary policy, where exponentially less new money is created by the miners over time such that at most only about 21 million Bitcoin will ever exist. Bitcoin’s monetary policy obviously comes nowhere close to satisfying our principles of equality over time and constant economic renewal, and its deflationary model strongly incentivizes speculative investment in it over any productive use as a working currency. But the arbitrary monetary policy Bitcoin encodes in its software can readily be changed to a different monetary policy in a different, democratic cryptocurrency.

3.11.1 Membership and Stakeholder Models for Cryptocurrencies

A key technical challenge to implementing a democratic cryptocurrency is to enforce a membership or stakeholder model securely in which each human participant can obtain one, but only one, equal share of cryptocurrency minting or mining power. The fundamental problem is that today’s digital systems have no secure way to distinguish between two (or a thousand) real people, and two (or a thousand) fake identities held by only one real person.

Bitcoin attempted to solve this fundamental technology challenge through Proof-of-Work, in which participants compete to solve cryptographic puzzles in order to win temporary membership rewards and create new currency. Bitcoin’s Proof-of-Work model, as well as most other proposed foundations for cryptocurrencies such as Proof of Stake [28, 22], Proof of Space [14, 42], etc., are all investment-proportional membership and reward models: anyone who can afford to invest more in the system reaps at least proportionally greater rewards. In fact, due to the economies of scale and the many competitive advantages available to the biggest players in current cryptocurrencies, larger investors in cryptocurrencies can typically obtain disproportionately larger shares in power and rewards, which has rapidly re-centralized mining power and profits into the hands of a few large players [20, 19, 50]. In short, because their mining power and reward models are investment-proportional rather than population-proportional, today’s cryptocurrencies fail either to “decentralize” or “democratize” money reliably, and instead merely reproduce the “rich get richer” principle of unconstrained capitalism in the guise of new technology.

3.11.2 Enforcing “One Person One Vote” via Proof-of-Personhood

Thus, a democratic currency would actually have to address and solve the fundamental technical challenge of distinguishing real people from fake accounts. One obvious way to do this would be for a government or other organization to manage membership in the cryptocurrency by checking government-issued IDs or taking biometric samples of participants and checking them against a master database to make it difficult for one person to obtain many accounts or memberships. This approach, while plausible, embodies problems of security (e.g., it is not in practice that difficult or expensive to obtain fake IDs), centralization (we must trust some authority to check biometrics and maintain the database), and privacy (the master ID or biometric database becomes a prime target for hacking or leaking).

A potentially more decentralized and privacy-preserving alternative approach is via pseudonym parties [17], or real-world events run by local or regional communities in which people can show up in person and obtain pseudonymous tokens. Pseudonym parties enforce “one person one vote” equality over population on the basis of physical security and the fact that real people still, for the moment, have only one body and therefore can be in only one place at any particular time. The use and adaptation of pseudonym parties as a basis for cryptocurrencies has already been proposed as “Proof of Personhood” [4]. Development and experimentation with this model is ongoing, but we leave the details of this important technical challenge out of the scope of this paper. Another alternative approach being explored, similar in end goal but pursuing a fully-online mechanism, is Proof of Individuality [41]

, in which participants verify each other’s apparent humanness through video conferencing. It is unclear how long such “online Turing tests” can plausibly remain secure, however, given that today’s audio, visual, and artificial intelligence technologies can already synthesize fake humans that trick a real human into believing they’re conversing with another real human 


3.11.3 Cryptocurrency Accounting in Popcoins and Poplets

We have so far described Popcoin’s economic principles in terms of an abstract value space, neglecting details such as how accounting is done in this value space. We now descend slightly into these details.

We take Bitcoin as a reference cryptocurrency, in which money never has any physical embodiment, but purely takes the form of information on a distributed ledger or blockchain. As in Bitcoin, Popcoin defines rules coded into software implementations for how and when money can be created, and how money may be transferred, based on transactions entered on this digital ledger. Both transactions that create money (coinbase transactions) and those that merely transfer money (payment transactions), when validated and successfully committed to the ledger, create unspent transaction outputs or UTXOs that subsequent transactions may spend by “consuming” as inputs.

Satoshis versus Poplets:

Leaving operational details aside, the important question for now is how to represent the value of these transaction inputs and outputs in Popcoin ledger entries. Bitcoin represents the value of inputs and outputs as an integral number of Satoshis, the smallest atomic unit that can be transferred, defined as a hundredth of a millionth () of one Bitcoin.

Following Bitcoin’s example, we find it convenient to represent transaction values in integral multiples of some atomic unit of value, which we will call Poplets. Like Satoshis, Poplets will be indivisible, one Poplet representing the smallest nonzero transfer that can be made, enabling us to avoid the complexity of floating-point and the management of roundoff errors in value accounting on the ledger. We want Poplets to be small enough to allow sufficient accounting precision for practical use and subdivision as needed even in the hypothetical “worst-case” scenario in which the entire world population of 7.6 billion people immediately adopted Popcoin as the single global currency and the unit of value in which all currency and noncurrency wealth is measured.

Taking total global wealth currently estimated at 280 trillion USD [10], we convert this into Iranian Rial (IRR) – currently the weakest official currency globally at about 42,000 IRR per USD [18] – to arrive at about IRR as current global wealth measured in the most fine-grained modern currency unit that anyone might plausibly wish to transfer. Since this just below the convenient binary integer (about ), we define Popcoin’s initial total value space to be exactly Poplets in size – enough precision to accommodate comfortably today’s entire wealth economy, denominated at IRR granularity in this value space, in the fairly unlikely event that we should need to.

While Bitcoin’s deflationary monetary policy limit its value space forever to about 21 million Bitcoin or Satoshis, the size of Popcoin’s value space grows gradually over time without bound. This gradual expansion, of the number of Poplets representing the value space, enables us to implement Popcoin’s periodic monetary devaluation and redistribution without ever having to update the Poplet-denominated account balances in accounts or unspent transaction outputs (UTXOs) on the Popcoin ledger. At the 2% devaluation rate corresponding to 50-year nominal currency lifespan, this means that each year we multiply the total value space size in Poplets by a factor of 50/49, then create and distribute new currency amounting to 1/50th of the new value space denominated in Poplets. For example, starting with a year 0 value space of Poplets, at year 1 the value space expands to Poplets, at year 2 it expands to Poplets, and so on.

Bitcoins versus Popcoins:

Bitcoin defines a fixed “exchange rate” between its minimum-granularity unit of value (the Satoshi) and its “face value” unit intended for user consumption (one Bitcoin, or 100 million Satoshi). If we similarly define one Popcoin to be a fixed number of Poplets, then Popcoin will suffer the same mild but annoying flaw in “user experience” (UX) as all modern Keynesian inflationary currencies, namely that the face-value of the currency is worth less over time. All product prices, salaries, etc., must be periodically raised to account for this loss of face-value, and economists must constantly inflation-adjust prices to make useful comparisons of value across historical timelines. While we have been living with and could no doubt continue to live with this UX flaw, the flexibility of cryptocurrencies – in which the only face-value amounts users ever see are computed dynamically by digital wallet and payment applications anyway – gives us the opportunity to fix this flaw without introducing other UX inconveniences such as Gesell’s stamped banknotes [21].

We therefore define one Popcoin as equal to a time-varying, rather than fixed, number of Poplets. In the tradition of time-based currencies, we define one Popcoin to be equal to one day’s supply of one person’s basic income, whatever that may be worth in terms of purchasing power. That is, at any given time, one Popcoin is equal to the number of Poplets of money newly-created in the most recent year’s distribution (i.e., 1/50 of the total current value space size), divided by the number of participants in the most recent distribution, divided by the average number of days per year (365.25). This way, if and when use of Popcoin stabilizes in some user population, in terms of both number of participants and their typical usage patterns, one Popcoin in one year will represent similar economic purchasing power as one Popcoin several (or many) years in the future, requiring no inflation-adjustment of face value over time.

The minor downside of this time-varying definition of Popcoin with respect to Poplets, of course, is that the face-value balances of account balances denominated in Popcoin will suddenly change at yearly devaluation and redistribution events, as a result of the increase in total value space size and any year-to-year changes in participating population. Account balances will remain the same when counted in Poplets, but will change year-to-year when denominated in Popcoin. People are already accustomed to their electronic bank account balances changing more-or-less automatically from month to month and year to year, due to charging of fees, depositing of interest, etc., so such occasional face-value changes in account balances seem workable. A question for further study is whether it would be beneficial, or problematic, to “smooth” these account balance changes by adjusting the Popcoin-to-Poplet ratio gradually throughout a year rather than in one more-noticeable step each year.

3.12 Population and Participation Changes and Adoption Incentives

So far we have assumed that the number of participants using Popcoin is relatively stable and fixed, but of course this is not the case in practice. In the long term, once a democratic currency is widely adopted, its population of users might eventually be relatively stable and slow-changing, since human population increases at a limited and relatively slow rate in comparison with economic timescales, and rarely decreases rapidly except due to catastrophic wars or disasters. However, if democratic currency is introduced as a cryptocurrency operating alongside traditional currencies, as seems most practically feasible and experimentally safe, then the currency’s user population will start out tiny and grow as people learn about and start using it.

In defining Popcoin’s distribution and devaluation mechanisms, we have made no special provisions for changing population, other than requiring that each distribution of new currency be divided equally among the population participating at that time. To analyze the effect of this design, first consider the long-term situation when the currency is widely adopted and the user population is changing slowly due to human births and deaths, and also that the ways in which the population is using the currency – the types of goods and services they are selling and buying with it – is also relatively stable. Suppose that in some year , a population of one million uses Popcoin, and that twenty years later at , the population has doubled to two million. At years and the same fraction (1/50) of the currency’s total value space is reclaimed through devaluation and distributed equally, among 1M people at and among 2M at . Thus, each person’s basic income slice at will be half the size, measured in percentage of the total currency value space, as each person’s basic income back in year .

Does this mean each person’s basic income at will have twice the value as at ? Definitely not, because the overall economy using Popcoin has also grown in the meantime. Again assuming the people at year and use Popcoin in roughly the same amount and fashion, at year there will be twice the number of people needing to buy and sell about the same amount of food, services, etc., thereby doubling the effective demand for Popcoin, and hence doubling the total commercial value that Popcoin’s value space represents as measured in products, services, or another currency with stable value. Thus, if population changes gradually while other factors remain fixed, each person’s basic income may be expected to have about the same purchasing power at year and at , despite each person’s slice of the yearly pie having been cut in half. And because of the currency’s regular devaluation, people at year will probably have long ago spent or invested their incomes (basic or other) by the time rolls around.

Consider now, however, what happens when user population changes rapidly, e.g., as a cryptocurrency originates in a small group and “catches on” as more people discover and voluntary adopt it. Suppose, for example, the user population doubles in just one year, from to . In this case, the basic income pie-slices at year are twice has large as those distributed at year , and have devalued by only 2% in the meantime. Thus, the users who participated at , and held onto most of their basic incomes, see a near-doubling of their account balances as measured against the basic incomes distributed at .

Whether this effect is good or bad depends on goals and tradeoffs. On this upside, this effect creates a potentially strong early adopters’ reward, and incentivizes those early adopters to help sign up more users, since the reward materializes only if and to the extent user population grows. Since it seems both unlikely and risky in practice to try to introduce a currency as unconventional as Popcoin all at once in any large existing society, its success will ultimately depend on growth based on voluntary adoption, and appropriate early-adoption incentives may be essential to the currency achieving critical mass.

On the other hand, one clear potential risk is that of Popcoin appearing like a Ponzi scheme. It is not, because the early-adoption rewards are both fully transparent and gracefully self-limiting. Anyone can trivially calculate the remaining potential early-adoption reward – the factor their first basic income distribution could be multiplied by if they join now – by simply dividing the total population of the world (or of those countries that might plausibly allow Popcoin to be widely adopted) by the current user population. If and when Popcoin is successful and nears saturation among some relevant population of potential users, the early-adoption reward factor gradually and smoothly drops to one, i.e., no reward. Conveniently, that is also precisely the point at which adoption incentives are no longer needed.

A secondary risk is that his early-adoption reward is likely to encourage hoarding and speculative investment in the short term, in the same way we have observed in other cryptocurrencies such as Bitcoin. This short-term effect is thus precisely the opposite of what Gesell, Keynes, or we, would probably want in a stable “working” currency. However, in contrast with classical macroeconomic economics in which stability is the primary goal, for us stability is only one of our goals and not necessarily the most important in the short term, as discussed earlier in Section 3.1. We are willing to sacrifice some short-term stability in the interest of enabling adoption of a monetary system that may promise to be much more fundamentally sound, sustainable, and ultimately stable, in the long term. Like a pilot caught in the eye of a growing hurricane, we find it far preferable to tolerate the bumpy and difficult ride that might be necessary to get out, than to circle in place in pursuit of short-term stability alone until we run out of fuel and crash.

4 Property and Ownership in a Democratic Economy

In preparation.

5 Securely Democratizing Information

In preparation.

6 Decision-Making

In preparation.

7 Innovation and Self-Evolution

In preparation.

8 Related Work

In preparation.

9 Conclusion

In preparation.