Ken Suzuki — PICSY : Proposing a New Currency System Using Social Computing, Introducing “Plural Money” from Japanese Complex System Researcher
I was deeply impressed when I was invited by Glen Weyl to attend the Plurality Research Network Conference at UC Berkeley, where they discussed cutting-edge technologies like cryptocurrencies in a grounded, academic context. This was a striking experience for me, as someone who started a company during high school and continued to work as a crypto entrepreneur without going to university.
Inspired by this experience, I organized a conference called Plurality Tokyo in Japan, the place where I was born. Since then, I have been working as an entrepreneur, conducting research and implementation at the intersection of society and technology. However, during this journey, I realized that there are things that are “appreciated in the Japanese-speaking world but not well-known elsewhere” (undervalued).
Various factors contribute to this, including a lack of motivation to actively expose oneself to the world after gaining recognition in one’s home country, language barriers, or simply a lack of time and resources to keep up with cutting-edge discussions. But I believe that by writing articles myself, I can bridge this gap. Additionally, I want others to feel that “if you can’t do it yourselves, younger individuals like me will seize those vacant positions.” In the context here, there is a generational competition.
This article introduces Matt Prewitt, the President of an organization like a think tank that disseminates information and organizes conferences on topics such as democracy, markets, data economics, commons, identity, and upgrades through RadicalxChange. He wrote about pluralism, equality, community, decentralization, and other topics through the upgrade of democracy, markets, data economics, commons, and identity, as well as through RadicalxChange. This article was influenced by his work.
In addition, I will introduce a Japanese philosopher named Ken Suzuki. He wrote a book called “The Smooth Society and Its Enemies,” which is one of the social system theories based on mathematical thinking. It could also be explained as “institutional design.”
Personally, I think Suzuki’s work is incredibly cool because it not only deals with cryptocurrencies but also demonstrates how we can change the world by designing the social infrastructure called “currency.”
The Notion of Plural Money
Before introducing the currency devised by Suzuki called “PICSY,” let’s first discuss the term “Plural Money.”
In Matt’s article, he touches upon how money can be viewed as a form of communication technology. This concept aims to create a richer and more complex world that differs from traditional paper currency or Bitcoin.
I largely agree with these articles; the way we measure value should be more pluralistic. Additionally, we are living in an era where money is programmable, thanks to developments in blockchain technology and other factors.
Let’s Use New Forms of Money to Commit to Our Communities
We are a community of activists, artists, entrepreneurs, and scholars committed to using mechanism design to inspire…
About Ken Suzuki（鈴木健）
Ken Suzuki is CEO and co-founder of SmartNews, the global leader redefining information and news discovery. Ken co-founded SmartNews Inc. in 2012 with the mission of “delivering the world’s quality information to the people who need it.” He is responsible for the vision and strategy of SmartNews, which entered the U.S. market in 2014. Ken graduated from the Department of Physics at Keio University in 1998. He received a Ph.D in Complex Systems and Artificial Life from the Graduate School of Arts and Sciences at The University of Tokyo in 2009. He has also authored several published works such as “Namerakana Shakai to Sono Teki (The Smooth Society and Its Enemies)”.
The concept of “なめらか” or “smooth”
The concept of “なめらか” or “smooth” that Suzuki uses is an intriguing one. To put it in English, “smooth” seems to be an appropriate translation.
300年後に「なめらかな社会」をつくるには：鈴木健,森田真生 | 記事 | 新潮社 Foresight(フォーサイト) | 会員制国際情報サイト
The idea of separating oneself from others is quite profound. If we were to attempt to illustrate it, imagine a sharp division between oneself and others, like a clear-cut wall (see Figure 1). In mathematical terms, this could be referred to as a “step function,” representing a state where the boundary between self and others is sharply defined.
Conversely, if we were to completely eliminate this wall, it might look something like this, where self and others are seamlessly connected, and distinctions vanish (see Figure 2). I refer to this situation as “flat.”
“Smooth,” on the other hand, represents a state where it’s neither a step nor flat. It’s a condition where oneself and others are “separate but connected.” In mathematical terms, it could be likened to a “sigmoid function,” but in visual terms, you might imagine a curve like this (see Figure 3).
When we say “smooth,” it’s intuitive to think of this curve. It signifies understanding the world not in binary oppositions but recognizing that everything exists as something intermediate. Moreover, this state is continually changing, evolving moment by moment. To express this ongoing change, the term “smooth” and its temporal connotations seem fitting.
About PICSY (Propagational Investment Currency SYstem)
The human society in which we live is indeed characterized by a variety of distortions. At the root of such distortions is the thought that places phenomena that are originally continuously related into binary oppositions and divides them into self and others, and from there, disconnection is born. Ken Suzuki’s “Smooth Society and Its Enemy” examines how to smoothly reshape the structure of the disconnection underlying society by examining each subject, such as the market economy, voting system, and military, and proposes a mathematical model for each alternative governance.
This currency system, the Propagational Investment Currency SYstem(“ PICSY”), in which values propagate through a transaction network. The network of transactions in PICSY is expressed as a matrix, and an eigenvector of the matrix means a contribution to the society
In order to imagine a world with PICSY (Propagational Investment Currency SYstem), let’s start with a simple example. Consider the issue where “doctors profit from overmedicating patients.” It’s better for patients to get healthy with fewer medications, but regardless of whether the patient becomes healthy or not, doctors profit from prescribing more medication.
This is a problem rooted in the asymmetry of information, where doctors have specialized medical knowledge that patients lack. Patients find it difficult to evaluate a doctor’s prescription accurately. Moreover, when they can evaluate it, i.e., after they have recovered, the payment (settlement) has already been made, and the doctor-patient relationship has been severed.
In PICSY, the goal is to prevent this severance of relationships. If the patient becomes healthy, returns to society, and starts working, the doctor’s income will fluctuate (propagate) based on that individual’s income.
Let’s say the patient’s occupation is that of a ramen chef. When the patient becomes healthy and starts selling ramen, a portion of their income flows through the patient (ramen chef) to the doctor. If the patient doesn’t become healthy, this flow doesn’t occur.
By introducing such a mechanism (income propagation), doctors would be motivated to prescribe treatments that lead to quicker recovery. Conversely, doctors who prescribe unnecessary medications and don’t contribute to the patient’s health would not make as much profit in the world of PICSY.
In PICSY, this kind of mechanism (where income propagates) is built into the currency from the beginning. Currently, the currency that people are familiar with is the banknotes issued by the Bank of Japan. However, recently, there has been growing interest in currencies that circulate only within private organizations or local governments. These are known as local currencies.
For example, in a village, if you pat an old man on the shoulder, you receive 1 point. You can use that 1 point to have someone else take care of a baby. The person who took care of the baby can, in turn, use 1 point to learn how to use a computer from someone else. This is how the currency circulates.
Many local currencies have the characteristic of not accruing interest, which is not a feature of the current Bank of Japan notes. When envisioning a new currency like local currencies, we can incorporate features that are not present in Bank of Japan notes. With the prevalence of computers, we can create complex currency systems that were previously unimaginable. If computers manage individual wallets or accounts and handle complicated payments automatically, it becomes possible to create currencies with intricate income propagation mechanisms. Using mobile phones, even payments in the city can be made easily.
If we consider providing a service as “contribution,” then both the doctor healing the patient and the ramen seller are considered “contributions.” Since the patient, who is now healthy, can provide ramen services, the “contribution” propagates. The propagation of “contribution” and the propagation of income go in opposite directions:
- Propagation of Contribution: Doctor -> Patient -> Ramen customer
- Propagation of Income: Doctor <- Patient <- Ramen customers
With these arrow directions in mind, let’s continue to visualize the propagation. First, the doctor treats the patient (contributes). Then, the doctor presents a price, saying, “The treatment fee is 0.2 points.” The patient pays to ensure that the doctor’s account increases by 0.2 points.
The patient, now healthy, sells ramen to customers. The patient (ramen seller) sets the price at “0.03 points per bowl” for the customers. Using a mobile phone or something similar, the patient makes the payment to ensure that the ramen seller’s account increases by 0.03 points. However, a portion of that payment flows through the ramen seller to the doctor. Fortunately, these calculations are handled by computers through mobile phones, making it less cumbersome.
The following section contains an English translation of this paper
In the normal monetary system we normally use, to make a transaction means to sever a relationship. For example, completing a transaction is called settlement, which is defined as the dissolution of a loan or borrowing relationship. In PICSY, when a seller sells a commodity to a buyer, it is equivalent to investing the commodity in kind, which propagates a value from one person to another, and the relationship is not severed, but the subsequent effects are fed back to the buyer. This has the interesting property that the effect is fed back.
The sum of the history of transactions from each person to each person is represented as a probability matrix.
Since its Frobenius root is 1, the eigenvector and matrix have the following relationship.
This Euclidean norm is 1. Let us call the vector c, which is this vector multiplied by a constant 1 so that all the elements of the vector add up to N, the Contribution Vector. In other words, the contribution vector is as follows.
Each value of the contribution vector can then be considered as an indicator of each person’s contribution to society as a whole.
To make this available as money, we introduced the concept of transactions and constructed a dynamic model. The diagonal matrix components are considered as budget constraints for each person, from which payments are made to sellers.
Although the budget constraint decreases as transactions are made, transforming the matrix in the following way will periodically increase the budget constraint for all members, since the contribution vector remains unchanged.
In addition, the following transformations do not change the contribution vector even when the number of members is increased.
Furthermore, the concept of fixed price and purchasing power was introduced by allowing people to pay a fixed amount of the value of an eigenvector moving at the time of a transaction.
This alone, however, would result in a people-only economy in which no legal entity exists, and modern and complex economic activities would not be possible. Therefore, we introduced the mechanism of company, which enables organization, and showed that the extended matrix including company can be converted into a people-only matrix (virtual dismantling).
In addition to the self-assessment method described above, the central bank method and the virtual central bank method, together three methods, were compared actuarially, leading to the conclusion that the virtual central bank method is superior in general.
PICSY is expected to cause effects such as increased fairness, virtualization of organizations, and transformation of communication dynamics. On the other hand, several issues remain, such as false registration, credit creation, and individual freedom, and some are inconclusive, such as productivity and the gap between rich and poor.
PICSY is such that every individual issues his or her own shares and trades with them; the value of his or her shares is automatically determined from the trading network. The budget constraint corresponds to a treasury stock. Therefore, it could be interpreted as a social calculation engine that works as a global personnel evaluation system that transcends organizations and nations simply by trading, and could potentially reduce international disparities. However, it will take several hundred years for PICSY to become an international currency due to its relationship with the ecosystem of social subsystems; it will take time to use PICSY as a national or international currency, but relatively immediate practical examples include in-game currency, internal personnel evaluation systems, and application to information materials. PICSYs can be used as a national or international currency in a relatively short period of time.
Problem of Implementation
This case of younger programmers attempting to implement PICSY while drawing inspiration from the work of senior philosophers demonstrates the fascinating intersection of philosophy and cryptography. It’s a great example of how the cryptocurrency field often benefits from the collaboration of different generations and areas of expertise. It will be intriguing to see how these discussions and implementation efforts progress in the future.
Let’s explain roughly in below, and you can see the text in Japanese:
PICSYを実装する際の課題と展望 — nameteki
PICSYの実装を試みた際の問題点を列挙する。 実装に当たって気づいたことがある者は、ここに追加していっていただきたい。 1．パーミッションフルの改善 2．計算量の改善 ikkun パーミッションフルの改善…
Let’s break down the two main challenges you mentioned:
- Improvement of Permissioned (Permissionful) System
- Improvement in Computational Complexity
1. Improvement of Permissioned
In PICSY, you mentioned the need to calculate an N×N matrix representing the interactions of all participants in society. However, the virtual central bank law assumes a “social minimum” from the central bank to prevent double-receiving basic income.
The challenge here is to accurately determine the population of people participating in PICSY or to modify the design of the social minimum itself.
0xikkun proposed moving away from the concept of a “social minimum” and transitioning to a permissionless structure in the core system of PICSY.
They suggested setting the evaluation from the virtual central bank (society) to person i as C_i / N, eliminating the need for an accurate population count.
This approach sets evaluations from the central bank to individuals in proportion to their contribution to society. Those who contribute more to society receive PICSY more favorably. Even if someone receives PICSY through multiple accounts, it is considered that society has appropriately evaluated each of their personas.
One potential issue with this approach is that it may lead to the rich getting richer. Newborns might not receive enough. To address this, it’s suggested that individual entities like countries or companies implement social minimums or welfare programs.
2. Improvement in Computational Complexity
PICSY requires calculating the eigenvector of a large N×N square matrix every time a transaction is settled.
The successful reduction of the time required for eigenvalue calculations from one week to just one hour on the supercomputer “京（kei）” for a 1 million by 1 million matrix is indeed a significant advancement. This achievement opens up new possibilities for the practical implementation of PICSY, given the challenges associated with handling large matrices on blockchain platforms like Ethereum.
The idea of introducing “Proof of Useful Work” (PoUW) is intriguing. PoUW’s concept of confirming whether a vector c is an eigenvalue of matrix E with a single calculation aligns with the characteristics of PoW (Proof of Work). This novel approach suggests using the computational resources dedicated to PoW for PICSY’s matrix calculations.
To adapt this concept effectively, it would be essential to carefully adjust the difficulty of the calculations and explore how PoW computational resources can be efficiently utilized for PICSY’s matrix calculations. This innovative thinking could contribute to the redesign of data structures and the optimization of PICSY’s implementation.
Overall, these developments represent promising steps toward addressing the technical challenges associated with PICSY and making it a practical and efficient currency system.
nishio’s comments provide valuable insights into addressing the challenges of implementing PICSY and optimizing its efficiency:
- Parallel Computing for Eigenvalue Problems: Nishio rightly points out that solving the eigenvalue problem for dense matrices through parallel computing might be a challenging endeavor. Achieving notable improvements over the O(N³) complexity, as demonstrated by the supercomputer mentioned earlier, is a remarkable feat.
- Scaling Considerations: Nishio suggests that if a 1 million-sized matrix can be processed in just one hour, a matrix of size N=10,000 could potentially be processed in approximately 4 milliseconds. This indicates the feasibility of PICSY handling thousands of users per instance, given the relatively slower time resolutions at which current cryptocurrencies function.
- PICSY of PICSY Concept: The idea of creating a “PICSY of PICSY” system where multiple PICSY instances interact and exchange value between them is intriguing. This approach could lead to a network of interconnected PICSY instances, potentially reducing costs at higher layers and facilitating more efficient value exchange.
- Localized Transactions: Nishio suggests that human transaction networks tend to have localized transactions rather than being entirely random. This observation could be leveraged in the design of PICSY’s transaction network to optimize its performance.
- Web3 Concepts: The idea of applying concepts related to the “exchange of value between different currencies” from the context of Web3 to PICSY is worth exploring. This could help bridge the gap between different currency systems within the PICSY ecosystem.
Incorporating these considerations into the development and implementation of PICSY could lead to a more robust and efficient currency system that addresses some of the technical challenges posed by its unique design. It’s important to continue exploring these ideas to make PICSY a practical and effective solution for its intended purposes.
These challenges are indeed significant, and the proposed solutions involve transitioning to a permissionless system and finding ways to optimize the computational complexity of PICSY. These efforts will likely require collaboration from various fields, including cryptography, economics, and computer science, to make PICSY a feasible and effective currency system.
In conclusion, PICSY presents an innovative approach to currency systems, emphasizing the propagation of value through transactions and aiming for a more nuanced understanding of economic interactions. While it faces challenges in terms of permissionful design and computational efficiency, the suggestion of adopting concepts like PoW and exploring localized transactions within a network of interconnected PICSY instances opens up exciting possibilities for its implementation. PICSY has the potential to reshape how we perceive and engage with currency systems.