At The Giraffe Crypto Conference

History is the study of dictatorship, organized violence, murder, and theft. It is threaded with accounts of vainglorious leaders whose conquests redrew the maps and disrupted the lives of millions. In the modern world, we cling to a belief in the “civilized behavior” of countries brokered by the United Nations. Nevertheless, it is worth remembering that the UN was established in the wake of a half century that boasted two world wars and established historical records for destruction.

The Economics of Conquest

The “science” of Economics, with its fiscal mechanisms, trade balances and currency fluctuations, is a Johnny-come-lately thing. It grew out of the industrial revolution from seeds planted in the European mercantile economies that spawned it. In prior history, a different economics prevailed — the economics of conquest. There have been prosperous merchants since before the Silk Road, but in times past, if you wanted to be as rich as Croesus, you had to be a king, like Croesus. And if your particular kingdom wasn’t awash with wealth, invading your neighbors was the natural path to greater riches. Such kings were the entrepreneurs of ancient economies.

Military conquest and enslaving the conquered was an economic strategy that kept Rome in business for a thousand years. Genghis Khan, undergoing a mid-life crisis perhaps, became an imperial entrepreneur in his forties. In the years that followed he established the largest land empire in history, thoroughly earning the title of “the richest and most successful mass murderer of the millennium.” Sure he had competition from Hitler and Stalin, but they couldn’t outdo him. The British conquered an even larger land mass than the great Khan, as the ultimate winners of the once-popular European game of “colonization by military subjugation.”

The industrial revolution moved the goalposts on all of that. Wealth could be created more efficiently by machines than by slavery and exploitation.

Into The Age of National Currencies

The invention of paper money and national currencies gradually shaped nation-sized businesses with names like America, Germany, Great Britain, France, Russia, with national currencies called: dollar, deutsche mark, pound, franc, ruble. It worked rather well when it worked. But unfortunately, politicians had control over these fiat currencies. The average Joe and Flo simply couldn’t expect the currency to be well-managed at all times. Rampant inflation, devaluation, arbitrary taxation and many other economic inconveniences were inflicted on them.

This system of national currencies proved practical, if not ideal, for a few centuries. Even today there are millions of people who profess a strong belief in such currencies and even assume that they will persist forever. They won’t.

In 2009 someone with the pseudonym Satoshi Nakamoto invented a wholly new technology for a currency, through the application of digital cryptography. The first child of this dramatic invention was Bitcoin. There are now many other such children, some of whom may turn out to be even more precocious than their eldest sibling. Bitcoin is not yet ten years old, and it has already changed the world.

Why A Cryptocurrency Beats A Fiat Currency?

Let me count the ways:

If properly designed and implemented, it cannot be subverted because it is widely distributed and there is no single point of failure. It is a better payment technology than exists anywhere with fiat (i.e. cheaper, faster). It is so effective that it can be used to do micropayments (of less than a dollar) — which is beyond the capability of any fiat currency. It is International and hence cannot be subverted by any of those nation-sized businesses. It can be trusted because software logic is exposed to view (i.e. open source) and its transactions can be audited. It provides a foundation for automated auditable contracts and hence is a foundation for a truly sophisticated use of payment technology. It can work at a much lower granularity than a national currency. It is possible for businesses (like Permission.io, formerly Algebraix) to issue cryptocurrencies with relatively low circulations and restricted areas of application compared to a national currency.

Can People Subvert A Cryptocurrency?

Because I work for a business (Permission.io) that is in the process of implementing a cryptocurrency (the Permission Token, ticker: ASK), I have been involved in many discussions about what a cryptocurrency can be and what our specific cryptocurrency ought to be. Here are some of my notes:

Who owns a cryptocurrency? The answer is not so simple. Consider Bitcoin.

With Bitcoin, you can argue that those who hold the cryptocurrency (the Hodlers) collectively own it. If they all abandoned it, its value would drop to zero.

You can also argue that the Bitcoin Miners own Bitcoin. If they cease to mine it, the currency will cease to work. (Bitcoin is designed so that miners are likely to remain incentivized to mine the coin).

Finally, you can argue that it is the developers who own it since they can (by making changes to the code) change its mode of operation. But, as last year’s Bitcoin Cash fork demonstrated, if developers disagree about how the coin should function, a fork can be created, and the two coins can fight it out.

No-one owns a cryptocurrency, or can ever own it, if it is designed to be fully distributed. It’s like a bee hive. The bees behave both as individuals and as a collective organism.

So our approach:

Users of the ALX token will have no confidence in it if there is any possibility that human beings will be able to manipulate it.

We choose to have a fixed supply of tokens and print them all at once. So if we ever attempt to increase the supply, users will know (from blockchain stats) and will immediately lose confidence in the token.

We choose not to have a mining-based currency. We prefer proof of stake to proof of work. It requires less computer resource (more efficient so less expensive).

With proof of stake, users can become stakeholders if they so choose.

Transparency of all processes must be a design feature of the ALX platform.

In respect of the future direction of Permission.io, we’re taking a consultative approach. We are designing feedback loops to our customers to ensure that there are channels. Stakeholders and users will be consulted about future design decisions. We have not yet determined how the network will be governed. There are reasons for this, and I’ll cover them in a later blog post. A crypto business is more complex than it may appear from the outside.

Robin Bloor Ph D. is the Technology Evangelist for Permission.io, author of The “Common Sense” of Crypto Currency, cofounder of The Bloor Group and webmaster of TheDataRightsofMan.com.