Beyond Earth: The Future of Currency in a Solar System Economy
From Bitcoin to Solar: A New Currency for a New Frontier
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Let’s run an observational experiment.
Read slowly: Focus and ponder for 5 seconds on the title of this post.
Beyond Earth: The Future of Currency in a Solar System Economy
Now read the following paragraph, from yesterday’s news:
Politicians on both sides of the aisle harped on what they see as the dangers of government-backed CBDCs (Central Bank Digital Currencies): Democratic presidential candidate RFK Jr. again raised the specter of a CBDC being used to spy on Americans, while Florida governor Ron DeSantis (a presumed Republican presidential candidate) once more hammered home his view that such digital dollars would amount to "woke politics."
Do you see it?
Humans are pieces of contemporary art. Even more so now, after the cataclysmic entrance of AI into our lives. So I won’t try to interpret this experiment for you. You all will have an answer to my question. I just hope it made you wonder.
Intro
Let’s imagine that we have settled the issue of where to build multiple space colonies, and we actually have inhabited a few.
What currency will we be using by then?
This is a salacious question that has been provoking me for a while. It is part of a broader topic I am exploring, which I’ll write about in my next piece:
The Rise of the Machines: Could Sentient AI Expand in the Solar System and Create a New Economy with its Own Cryptocurrency?
Here, let’s just focus on the currency.
Premise: This is a semi-serious exercise to try and imagine the future. It might be seen as a futile pastime, but in my view, this is helpful in shaping concepts that can inform the current thinking around the next evolution of the existing cryptocurrencies.
The Solar coin
When we humans conquer the solar system, the need for a new form of currency will become absolutely pressing. You won’t want to flash USD bills in zero gravity while UV radiations break down the cellulose fibers that make up the bill, will you? A gold bar would probably be easier to handle in such a scenario, but it wouldn’t necessarily be an optimal solution.
Moreover, what I allude to here is a standard reserve currency, which everybody in the solar system will accept. That does not mean that local planet currencies won’t evolve in parallel: they will.
So. With different colonies and outposts spread across the galaxy, a decentralized, permissionless currency* that can be easily transmitted and used in different locations will be crucial for economic and social development.
*see my explanatory note at the end of the post about what decentralized and permissionless mean and why they are crucial.
What could be examples of potential currencies?
Cryptocurrency: If you have been reading me for a while, this is not a shocker to you. Given the decentralized nature of some cryptocurrencies (the opposite of CBDCs, which are centralized) and their ability to be transmitted digitally, it could be a very fitting option for use in a solar system economy. Digital currencies such as Bitcoin or Ethereum could be used to facilitate transactions between different colonies and outposts, without the need for physical currency. Crypto is also programmable, which is an evident advantage when used universally in the solar system.
Physical Resource-based currency: In a solar system economy, different colonies and outposts may have access to different resources, such as water, minerals, or energy sources. A resource-based currency could be created, where the value of the currency is tied to the availability and demand for certain resources. This would provide a more tangible and practical currency for use in a space-based economy. The question is, what would be a scarce resource out there in space? It won’t be gold, that’s for sure. By then, we will have mined an unlimited number of asteroids rich in yellowish metal. Energy? Maybe. But maybe not: if fusion becomes easily available as technology and cheap, energy would probably become also too abundant to be used as a base. In short, we would need to agree on what that resource would be. In either case, the currency linked to it would still need to be decentralized and permissionless to make sense for everybody.
Knowledge Resource-based currency: Resources can come in different forms and shapes. They can be material and immaterial. Apparently, in The Simpsons world companies have started paying in Awareness.. That is maybe a stretch too far, but what about linking the cryptocurrency to knowledge, an IP, or a standard that everybody will be using (for instance, units of quantum computational power)? We would again need to agree on what that resource would be and again it would still need to be decentralized and permissionless.
Time-based currency: A universal currency that is accepted across all colonies and outposts could be based on a metric such as time. For example, a currency based on hours of labor could be used with the value of the currency determined by the amount of time required to produce or acquire goods and services. This, of course, assumes that we would still use the hour as the basic measure of time, which is definitely not a given. But if not in hours, it could be in whatever will come next to measure time. I don’t see this as a particularly good currency design though, more so similar to basic barter. It might work on limited geography though, ie on one single planet.
AI-controlled currency: This is the scary part. In a solar system economy, an AI-controlled currency that can operate beyond human comprehension could also be a potential option. With advanced analytical and processing power, AI could design a currency that operates more efficiently and effectively than any human-designed currency. Possible? Yes. Scary? You bet.
Explanatory note.
With different colonies and outposts spread across the galaxy, a decentralized, permissionless currency* that can be easily transmitted and used in different locations would be crucial for economic and social development.
What are decentralized and permissionless currencies?
Decentralized and permissionless are two key concepts in the world of cryptocurrency and blockchain technology, and they are often used interchangeably. However, they refer to different aspects of how a blockchain network operates.
Decentralization refers to the distribution of power and control in a blockchain network. In a decentralized network, there is no single entity or authority that controls the network or its transactions. Instead, control is distributed among many different nodes or computers that participate in the network. Each node has a copy of the blockchain ledger and can participate in the verification and validation of transactions.
Permissionlessness, on the other hand, refers to the open and public nature of a blockchain network. In a permissionless network, anyone can participate in the network without the need for approval or permission from a central authority. This means that anyone can create a wallet, make transactions, and participate in the validation of transactions on the network.
In contrast, a permissioned network requires users to obtain permission or approval from a central authority or consortium of authorities before they can participate in the network. This can provide additional security and privacy measures, but it also means that the network is more centralized and controlled by a select group of entities.
Overall, while decentralization and permissionlessness are related concepts, they refer to different aspects of how a blockchain network operates. A decentralized network can be permissionless or permissioned, and a permissionless network can be centralized or decentralized.
CBDCs are examples of permissioned, centralized crypto currencies.
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2. Water!