I genuinely believe that the biggest value of bitcoin is that it is a commodity with intrinsic value that is electronically transferrable. It takes all the benefits of gold, silver other precious metals in terms of its value yet allows for global, peer-to-peer transfers without any delayed settlement.
Bitcoin is the first digital commodity per se. Nothing compares.
What is interesting about decentralised mining (the transactional consensus system for bitcoin) is the fact that everyone can (or could) participate. It’s harder now, but the key point is at the beginning everyone had the chance to use and produce the digital commodity.
I like distributed ledger/blockchain tech and ‘Ripplesque’ credit based systems. There is a massive role for blockchain technology, but an area of personal interest is the building of premium ‘democratic’ digital commodities.
What I have in mind is taking three principles: digital commodity with intrinsic value, inherent electronic transferability and immediate settlement and democratic participation in the production of the digital commodity. Based on those three principles I would love to see more digital commodities emerge.
The fourth principle would be one that should add premium to the digital commodities created: ‘market context’. What do I mean by that?
Let me take a few examples of digital commodities that could be built.
First is ‘solar coin’. You ship portable solar panels with integrated mining units so that when it is not charging someone’s phone it is mining solar coins. Those coins have a premium value due to the use of renewables. You could even envision a market, similar to carbon credits, where corporations purchase solar coins to demonstrate their commitment to renewables.
Second is ‘aquapoints’. You uberise water production using home distillation units with integrated mining equipment. A portion of the energy used to distill water is used to mine aquapoints. The aquapoints become the de facto currency to purchase the distilled water and they, like carbon credits, may end up on corporations’ balance sheet to demonstrate their commitment to sustainability.
Basically, you take any ‘nudge’ based activity; encouraging people to waste less, or use renewable energy or exercise more and that activity produces value by way of mining.
That value is a premium on a standard digital commodity due to government healthcare, environmental or other policy targets and the ‘market context’ surrounding those policy objectives.
Let’s take brain training for instance. Neurodegeneration is a global issue that governments, palliative care services and pharma companies are investing in. Brain training is viewed somehow as a mitigation approach to neurodegeneration. I had a chat with Max Keiser about this and he said ‘Think and Grow Rich’. That is exactly right. If you are able to capture brain training activity to produce a digital commodity, neuropoints, then the same points can be used within the brain training market to purchase goods/services. One idea I had was to simply add a small device to a musical instrument (playing an instrument has benefits for brain development) that records activity, the activity record equals an amount of neuropoints and so on.
The possibilities are limitless but the main point is: once you have created premium digital commodities then it is more likely that their value will be more stable as it is the ‘market context’ that will stabilise the value. The renewables market stabilises the value of solar coins; the neurodegeneration market stabilises the value of neuropoints; the sustainability market stabilises the value of waterpoints.
This is also an interesting segway for IOT and digital currency. IOT devices become the sensors recording stuff (whatever that may be) and digital currency becomes the result. When I head back to HK I will definitively be wanting to spend more time in Shenzen building stuff.
By the way, in the future, Know Your Miner (KYM) and the issues with terrorist financing won’t be so much of an issue. The distribution of the mining devices used to ‘mine’ the digital commodities can be done via verification of identity, just in the same way Uber does due diligence on Uber drivers, Aquapoints Limited will do due diligence on its water producers. So here comes the additional premium: not only is the water local, sustainable and clean but aquapoints are 100% AML/CTF compliant, that must be an additional premium that even diamond mining has trouble achieving.
If you are interested in or are already building a premium (fully compliant) digital commodity please get in touch adam(AT)diacle.com.