I believe that humans need to simplify the complexity of the world. Complexity is a huge problem as it hinders straightforward decision making and instead stalls decisions. It is the one thing that makes projects succeed or fail: if the project manager is capable of "riding the wave", understanding the complexities and doing the correct abstractions, ultimately leading to correct decisions. IMNSHO, "Interdisciplinary" is just another word for complexity in this case.

If the 2 worlds collided, would the absolute size of the payments be considered micro payments? Or, in other words is the very low absolute level of e-gold's income from micro payments a result of there not being a major application for micro payments? After all, the DMC (digital metal currency) and the P2P scenes are still in their infancy.

I think DMC take off has to wait for the generational bull market in gold and silver tobe over with, plus a couple of years for gold's temporarily increase purchasing power (due to the bull market) to get back to normal after the top of the bull.

During the '70s bull gold went from $35 to $850, but its purchasing power using the PPI went up 400%. Those are "about" numbers. Good enough for illustration.

Only then will the DMC's 1.) unit of measure/account and 2.) medium of exchange elements/characteristics start to work well (when they stabilize). Of course their 3.) store of value element/characteristic is shining already, which is partly how gold and silver work and should work.

My guess is we're looking at 8-10 years. The last year or two of the bull will probably do wonders for new DMC users. Masses entering a bull near the top is normal human behavior.

After the bull, maybe, realizing a huge mass (hopefully) of DMC users existing out there, the P2P people will get interested in crossing over (getting more capitalistic). Maybe particularly after a scary economic downturn (depression). The need for survival can do wonders some times.

Currently there are still a huge amount of people who are waaaaaay too economically complacent, which could be why the tragedy of the commons idea is still being ignored by too many. We'll see.

Hello,

I was directed here, and I'm glad you found my little essay interesting.

I have thought about this a lot, and of possible solutions using payments (either virtual currency created specifically for the p2p network, or real currency like e-gold or paypal).

There are some problems though, because if you have a virtual currency, there has to be some source for it, and that source becomes a central point of failure, which something we'd like to avoid in pure P2P. Specifically, I think I'd have to have some sort of "bank" which acts as a broker for the P2P transaction.

With the real currency system, you would have problems because people's identities could possibly be revealed. I am familiar with stuff like Yodel Bank but I haven't had time to try it out yet. I suppose it depends on what level of anonymity you need...

Well, I'm going to read your FC7 paper before commenting further. Maybe some of these problems have already been solved.

Hi Nightblade,

The issue of the central point of failure is not limited to p2p. It's a core part of the evolving digital currency sphere. It gets addressed in several, evolving ways:

Firstly, there are multiple issuers. That is, multiples of the gold issuers, and multiples of the dollar issuers. Secondly, a network of exchange operators springs up to conduct cambios from one to the other. These are generally small, independent, mom&pop shops. Their life is defined by one transaction, and they come and go. (Contrast: your broker comment.)

Thirdly, the manual cambios move to automatic cambios. This requires some finesse and coding, but if you know what you are doing, it can be done. There are about 2 in current operation between the various gold currencies.

Fourthly, and finally, there has to be some convergence on a common directed payment mechanism. XML-X is the example that I and some mates put together, but it is too early to say if this will be adopted. (But this has to happen, elsewise, programmers like yourself will find your choice of coding will also dictate your choice of single point of failure.)

Once all that is in place, you will have a currency system that exhibits no central point of failure. (There are other ways of doing this, but I'll leave those for now.)

W.r.t. anonymity in money - there is a lot of misinformation about what money is, and this is one of them. The primary characteristic of money is that it is safe, and this comes before anonymity. If you can't tell if it is safe, it matters nix whether it is anonymous or untraceable.

(Oh, also, bear in mind, there is a huge difference between payment systems, and banks. The two are not the same, one moves money around, and the other borrows and lends. The fact that one might be owned by the other, etc, v.v., is something that has to disentangled by the architect.)

Keep up the happy distributed fight!

Hi Bob,

I think you may be thinking that micropayments or what you labelled as DMC are different to other payments. They are not. There is "payments" and in that you can arbitrarily draw a line between different sizes. But they are all payments.

The notion that p2p people want micropayments and not (macro-?) payments is just a non-starter. People want payments. What they really want is trades. But they'll settle for payments and then engineer the trades themselves if they have to.

Or the notion that routers that feed of each other are happy with router-feed sized payments but not with others is also a totally bankrupt way of starting an analysis. You could even offer this sort of service, a router-bite payment, and I guaruntee you that the routers will reject them, even though you get their size spot on. That's because they want payments, not micro payments.

It's like any other business. Consider Tyres. Or even Tires. Companies don't make microtyres. They make Tyres. They might end up in a successful sized segment, but any time the action starts any where else, they'll move in real quick.

Interesting article Ian. I think it might help the debate along to consider what's been happening in virtual spaces where there are no commons (eg, Everquest). As economists would have correctly predicted, because non-existent places like the world of Everqeust have secure (within the limited bounds of passwords and other such sort-of-security) property rights and a stable means of exchange (eg, platinum pieces), they experience economic growth greater than real places with no property rights (eg, much of the developing world)!

Do we want the P2P world to be more like Norrath or more like Zimbabwe?

It so happens that the I2P network has a capability called certificates, which make it possible to have payments of various sorts attached to an address ('Destination' in I2P lingo). I am going to have to find out how I can incorporate this into an I2P application I am working on.

Also, interesting comments on micropayments versus macropayments. Personally I just think micropayments would be an annoyance, for both the sender and recipient. However, what if one large macropayment was made (say $100 USD) to a P2P payment service (which could be semi-anonymous), which in turn transparently handled micropayments on the user's behalf (buying/selling network resources). There would probably have to be some kind of reasonable minimum though, like $1, otherwise it wouldn't be worth the trouble.

Nightblade,

I think you can generate hashcash tokens for the I2P network, these are not payments but "expensive hashes" which slows people down in acquiring the nice names. This is from memory. Hashcash is a resource contention idea from Adam Back that tries to stop automated abuse of free resource. It's a nice idea, however it is dominated in most practical senses by payments.

For buying resources - the automated dishing out of payments for small amounts isn't a particularly easy thing to implement. Many have tried, I've never seen any successes. To cut a long story short, marketing theory says that instead of paying per item for small cost resources, you purchase a subscription that lasts for a while. So, what will happen is that all these resources will take larger payments and give you hundreds of items or a year's worth of access.

Dave! Nice examples. Everquest - its property rights and payments are guarunteed by the over-arching power of the company and its game. Likewise, economists like deSoto (who I'm embarrassed to say I haven't read) have predicted and explained the Zimbabwe situation. The big gotcha in all this is that property rights (and payments are just an extension of that) are "provided by the government." How then to put property rights onto the Internet in large form is the question - without any government, who will surely not understand and migrate it across to some agenda item or other.

Our Ricardian Contract is one form. But we haven't really answered how to get the knowledge and infrastructure into wide enough distribution such that people can issue themselves in a p2p context as yet. The result is easy for the users, but issuing these instruments remains costly.

Re: Hashcash

I don't like hashcash. IMO, it annoys users by wasting their CPU power, and it does little to cut down on resource abuse by professional abusers. Sure, hashcash may slow down a teenage script kiddie, but I don't think it will deter a professional attacker. For example, the NSA probably has the computing power to generate more hashcash than every civilian computer in a small European country does. Hashcash also suffers from inflation as computing power increases.

For those who don't believe the NSA would do such a thing, a similar effect could be created by designing an internet worm that performs distributed hashcash generation. (Just as internet worms are created to mail spam today.)

However, hashcash is just one of the certificates I2P could use. It should be possible to have other kinds of payments.