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Money is for Sharing

A thought experiment about a better kind of money

8 min readJan 23, 2023

TL:DR;

If you are on Discord and want to play, follow these steps to create an experimental digital currency that you can try in your server:

Ask to add your discord server with the form at fairshare.social
/join to ask server group members to let you in (once you are in you get a daily income)
/endorse to let a new person into your group.
/send to pay someone for something.
/vote to control your economy by balancing daily income and transaction fees.
/exchange_add to create a bridge between your server and another server.
/transfer to pay someone on another group’s server.

In a nutshell, this experimentally turns your discord server into a tiny country with it’s own currency and a monetary policy that you control by voting. You can buy and sell goods and services from people in your own community, and you can also setup bridges to other server’s currencies at a mutually-agreed-upon exchange rate.

By voting directly on monetary policy and distributing newly minted currency directly and equally to everyone, you get to play with taking over the process used by real-world economies. IRL, governments create money and then give it to banks and social programs with the goal of it eventually getting to you. But that process is (to put it kindly) — often viewed as inefficient and/or unfair.

For more about the idea, keep reading:

Is your Economy Democratic?

Is the money you are using every day fair? There is a simple way to test that, at least as a thought experiment: Imagine a big red button that says “Reset” in front of everyone using your currency. If a person presses that button, they are voting to have all the money in circulation collected and then equally distributed to everyone. Would you press the button? Would a majority of people press it? Would 90% of people press it? There is a point at which the general consensus is that too many people are getting rich who don’t deserve to be, and too many people are poor who don’t deserve to be. As discussed more later, money tends to eventually up in the hands of people who already have a lot of it, even when everyone has good intentions.

Now, imagine an economy where that button actually existed, and most people didn’t push it. That is the goal of this design: to provide a mechanism that lets a group of people democratically manage their own currency directly in a way that keeps most people happy most of the time.

Desert Island Money

Another way to make the same point is to imagine what would happen if a thousand people found themselves on a lush and seemingly deserted continent with no hopes of ever leaving, and wanted to create some sort of money app for their smart phones so that people could spread out, specialize, and then trade with each other. What sort of mechanism could they all agree on? It seems likely that after experimenting and debating a bit, they would find the fairest idea to be something like the mechanism described here — with everyone getting an ongoing income funded by a transaction fee.

Money is for Sharing

Money — portable tokens of well-understood value that people can give to each other — has a number of different uses, such as saving for the future (aka “store of value”) or keeping track of things (aka “unit of account”). But by far the most important use for money is that it enables us — as collaborative social animals — to share with each other by facilitating trade. Specifically, money enables fair exchange with people you aren’t likely to meet again. We don’t need or want money to share with friends and family and other people we see a lot, like business acquaintances. What money is most important for is to enable fair exchange between people who aren’t likely to meet again, and therefore have no other means to establish fairness — that they are giving each other things of equivalent value. For example:

You meet a nice person in an airport, and they could use your old laptop (your new one is coming tomorrow). But they are about to board their flight, and have nothing of equivalent value to give you in return. How do you share with them? Money.

Money always becomes unfairly distributed

But when even well-intentioned people buy or sell things from each other, things slowly but surely become unfair. We often use the expression “the rich get richer” as another way of saying it. It turns out that this is a very general phenomena that will happen for just about any sort of economy we can establish (see the appendix below for some more scholarly links to read if you like):

Even if you start out with everyone having the same amount of money and doing nothing but buying and selling stuff from each other (no banks or taxes or anything other than free-market trading), if you wait long enough, a few random people end up with almost all of it.

It is important to re-read that last sentence and think deeply about it: It turns out that even under conditions where everyone has EXACTLY the same skills and opportunities, random chance will make some of them rich and others poor. This is one of those red pill kind of moments, because most of us are strongly conditioned to believe that the reason some people have more money is because they are smarter or have rich parents or were born beautiful or whatever. The reality, however, is that money will also randomly make people rich simply because they got the tiniest lucky break and got a tiny bit ahead. Once you are ahead, having more money than the next person helps keep you further and further in the lead, without you needing to do anything.

And — if you haven’t already had the thought — crypto makes this problem worse, not better: Low-friction free-market transactions with a finite number of tokens (crypto) actually maximizes the rate at which things become unfair. The wealth inequality of crypto wallets, for example, is worse than the inequality of most fiat currency holdings.

Fairness is Very Important

As collaborative, interdependent animals dependent on social bonds, we are evolved to demand fairness in exchange. Even if everyone is doing OK, fairness is incredibly important to us. This is the reason why inequality is a toxic problem even if overall welfare is increasing. And we see this problem in non-human primates too:

Fixing the Problem

The good news is that we can address this problem of unfairness by building a digital currency that has a built in mechanism to stabilize inequality at a level that everyone is comfortable with. Unsurprisingly, the mechanism replicates what successful countries already do with their own currencies, which is to let people buy and sell stuff freely while also having some way to continuously redistribute money from where it is piling up back to where it is needed.

The Fairshare mechanism does this by letting a group vote continuously on two ‘knobs’ to control their currency:

A daily income which everyone receives (this creates new money).
A % fee on every transaction (this deletes money).

By voting on these two numbers, a community can control inequality. If if feels like too many people are getting rich, you can increase both income and fees. If it feels like it is too hard to get rich, you can decrease fees. If it feels like the poorest people don’t get enough, you can increase the daily income, and so on.

Why not just use Crypto?

Because crypto is a new kind of asset, not a new kind of money. Die-hard crypto maximalists will agree — HODL! It should really have been called something else — maybe ‘cryptogold’ would have been better than cryptocurrency, but alas we are stuck with it. Buying and holding crypto is a bet, like buying a stock. If it goes up, you win. It doesn’t make any more sense to buy groceries or pay rent with BTC than to buy those things with shares of a stock you hope will go up.

If you use the crypto to buy your Lambo now, you risk being ridiculed when you could have bought a G6 with those same bitcoins later.

Crypto is intentionally designed to go up in value as it becomes more popular because it’s monetary ‘policy’ is fixed scarcity… only a finite amount will ever exist. So as more people get interested and want to get some, the price goes up and up. And this is the whole idea of crypto — the smart people who got in early get rich and get to brag about it to all the ones who get to fight over the few coins left over. Because, contrary to the rhetoric… W(Not)AGMI.

But, as any economist will tell you, the goal of a currency that enables trading is different — the price needs to remain stable, and everyone needs access to it. If you are needing to enable sharing between a bunch of people and recognize that everyone has ongoing value to each other, you need some mechanism to redistribute currency back to people after it is used. This is what governments try to go with taxes and programs, but when they do it badly it can make you so frustrated you’d rather they didn’t do it at all… which is how we got crypto in the first place.

There are many other reasons not to use crypto for money — one of which is that the model for reasonable privacy isn’t right… your transactions on a blockchain are visible for everyone in the world to see. It might be OK (any important) for at least a few other people to have access to all your financial data, but certainly not everyone in the world.

Notes for Developers

The cryptography experts out there will (hopefully) recognize that at a high level this could be implemented as a simple, decentralized system in which each individual using a specific currency keeps a signed ledger of their own transactions (each transaction being signed by themselves and the counterparty). The rules for minting currency are static (daily income at a fixed rate) and therefore members have no incentive or need to engage in competitive mining. In the event of a disagreement over a person’s balance, the signed transactions of other community members can be audited/summed to see whether they agree with the person’s own accounting. Groups have direct control of their membership through voting, meaning that group members cannot take actions that would result in their expulsion (for example creating multiple accounts). Between group currencies, exchange rates will be set by balance of trade, meaning that a sybil attack by creating a large unproductive group of bots will be ineffective. What are we missing? Thoughts welcome, and if you are a cryptographer interested in this space with time to contribute, I’d love to hear from you.