Getting through the ARCC Whitepaper Part 2: The Abstract
This abstract was rewritten about 15 times before it came down to this over a period of 18 months. For every new version of the whitepaper, the abstract had to be revised and so this represents the final overview of the entire project. It is extremely dense but it essentially breaks down the entire project without going into details. It is the first text you will encounter in the whitepaper and it can be daunting.
I do have a background in political science and economic development, and how this whitepaper is fundamentally different from most crypto projects is that the focus is on how cryptocurrencies can be applied to economic development. The feedback from many of the crypto developers that I have gotten to read the paper is that they don’t have much to say about it as it isn’t really a technological project but much more of an economic one. So for many of you who are well versed in the crypto space, I think you will find this is a fresh angle as we really tackle things from a macroeconomic monetary and productivity standpoint.
In all my years of business, I never would have thought that I would be applying my business experience to a macroeconomic issue, simply because macroeconomics is well outside the applicable scope of management strategy. But with the advent of actually being able to issue a decentralized cryptocurrency or any decentralized structure for transactions, this field of crypto-monetary economics is simply brand new, opening up questions and solutions that normally would only have been reserved for central banks. So I hope you’re as excited as I am to get into a totally new field of study and innovation! Likely not, but to take this moment seriously, I think it will go down as a turning point in history for how our socio-economic system is organized. Not this particular project, but this entire moment in time, as it will be the involvement of all disciplines, from economics to art to communications, that will make crypto a benefit to humanity, not just the areas of finance and technological development.
Shall we take a stab at it together and make some history?
ARCC Whitepaper Abstract page v:
Bitcoin is the technological proof of concept of the decentralization of peer-to-peer trustless electronic cash. Bitcoin and its underlying blockchain has led to the economic achievement of the issuance of a new global non-fiat currency.
While there continues to be debate as to the actual monetary value of bitcoin and whether everyone who hodls bitcoin is insane, stupid or gullible, the fact that we are even debating this point, and, the fact that there are world wide crypto exchanges, and, the fact that bitcoin even exists with any value at all, points to, for all intents and purposes, a new global non-fiat currency regardless of the volatility and current price.
The fact is, bitcoin is not backed by any one issuer to redeem bitcoin for some other asset and the fact that it even works in any actual transaction for goods and services is an absolutely mind blowing achievement. Full stop. So we pay homage to Satoshi Nakamoto’s 9 page whitepaper, and take a moment to also say, wow, 10 years ago if anyone were to say that bitcoin was going to be worth anything at all more than even a penny, they would have simply been met with blank stares as to ‘what are you even talking about?’.
For us, bitcoin is the undeniable achievement of a level of unmatched decentralization, meaning that while there are centralized components that make up the system supporting the bitcoin network, the network itself is structurally decentralized.
The innovation of bitcoin is also an economic innovation in providing an incentive structure that is able to support a decentralized network.
With the advent of the internet, the ability to create networks, whether social or in communication or of resources is unmatched by any other infrastructure thus far in human history. From roads, to railroads, to radio, to TV and telephones, creating networks was limited to the robustness and scope of the capabilities of the medium of the network, and in those former cases, the ability to create networks also entailed a great deal of capital. But in solving the issue of double spending and also providing a structural incentive mechanism to support this internet enabled, decentralized network of independent nodes, it became more than just electronic money, but rather the basis for a decentralized economic system in the structural form of a network. And inherent to that are all the benefits automatically gained through ‘network effects’ in both its adoption, utility and value.
The strongest use case for cryptocurrencies can be found in its crisis currency adoption in unstable emerging markets.
We have seen this extremely apparent and true use case in every country with major currency inflationary issues such as Venezuela and Zimbabwe. Simply put, when the national currency is failing and there is no way to transact in other currencies, cryptocurrency becomes the most accessible option. Now, at the national level of these countries, cryptocurrencies are not solving the underlying issues, rather they are a tool for survival. So, while crisis adoption is a definite use case, it has utility because the central monetary policy is failing, not because it created a new decentralized system. But I stated this use case to establish that cryptocurrencies as a currency has not yet been fully explored even with clear adoption cases.
Yet, this use case does not solve the greater structural economic issue facing emerging markets, namely systemic corruption and financial exclusion.
What we mean by systemic corruption is that the entire system is corrupt, that nearly everything that happens to you in your daily life has been affected by corruption and thus it appears normal because its all operating at a sub-optimal, exploitative standard. This is extremely hard to visualize if you’re not from a failing emerging market and live as a local. But imagine if it took 2 hours to commute to work everyday simply because of daily 12 hour traffic jam periods, that nearly everyone you know has gotten robbed at one point or another and while you are university educated, your family still lives in an urban slum with no set address.
What we mean by financial exclusion is that no matter how educated or talented you are, you simply will not break out above the urban poverty line unless you decide to work abroad and leave your family for years at a time to remit money home annually. A lot of fintech firms focus on an understanding of financial inclusion to mean a way of remitting money back with lower transaction fees, and while this may help maximize the effort of remitting back, it does nothing to solve why they had to leave to work abroad in the first place.
But this single line of the abstract does not do justice to how absolutely devastating these two problems are to the countries they affect, and how monstrous the scale of these problems. To date, there is no solution for both systemic corruption and financial exclusion save a complete political revolution or military coup with reforms lead by a dictator. This is not being overly dramatic, this is actually a fact.
IBMR.io proposes a social impact solution for the economic development of the emerging markets in Southeast Asia by creating a ‘Social Proof of Work’ network that rewards users with ‘ARCC’, Asia Reserve Currency Coin.
So first off, the context is emerging markets in Southeast Asia. Singapore is one of the most developed countries in the world economically, so this project is not targeting them, but Southeast Asia generally means Indonesia, Thailand, Malaysia, Philippines, Vietnam, Cambodia, Myanmar (Burma), Brunei, Laos and Singapore. Each of these counties are at different stages of their development but most of them have high populations of the urban working poor.
So here we outline what our decentralized network is called, Social Proof of Work network and the incentive is ARCC, Asia Reserve Currency Coin. Here we have both the cryptocurrency and network as structural components with ARCC to act as the incentive for others to create and maintain the integrity of the Social Proof of Work network.
The ‘Social Proof of Work’ network allows for users to participate in socio-economic surveys or directly report, identify and cross-verify points of corruption in urban areas. The aggregated verified real-time data of corruption can be used to finally publicly expose the extent and scope of the systemic corruption. Users would be incentivized to participate in the network by earning ARCC through the act of social mining.
This is what the network is. It is basically a reporting system to report and aggregate data for the urban working poor who, as a socio-economic class, bear the brunt of systemic corruption because they have no legal or financial representation. But since the situation is systemic, we will basically aggregate all data from time spent commuting, to power usage, to number of times sick, to times robbed, extorted, attacked, utility bills, medical costs to identifying failing infrastructure and unending construction and unfixed roads. By doing so and having a system of validating these reports as well, we can create a public mandate that empowers by exposing the extent of the systemic corruption.
Why urban areas? From an economic development theory standpoint, urban centers are what drive the most amount of national economic growth as developing urban areas create the jobs and new commerce for productivity. Also, only urban areas will have the infrastructure for low cost smartphones (under $100) and WiFi or prepaid mobile data capabilities for those people to participate.
Yet for this information network to work, it needs to incentivize the participants. This presents an opportunity for also on-boarding participants for cryptocurrency usage which is in fact a structural establishment of financial inclusion. In this case, ARCC replaces the capital requirement for mining with the act of reporting which is an adaption of the bitcoin structural economic network model to an emerging market objective. In the case of bitcoin, the network eliminates intermediaries, the need for trust in storage and relatively seamless transactions, which are really G8 pressing developed world issues. But when a majority of the urban population in failing emerging markets do not even have a bank account or have never had an asset and their daily lives are at physical risk then the objective of the network is to address this corruption and financial exclusion. The greater the number of participants reporting, the better the aggregated data will be in terms of scope, validation and support.
ARCC mined by the user would be subject to a 3-year vesting schedule, as the objective is to provide debt-free capital for entrepreneurial investment.
At this point, moving forward, chapters of the whitepaper are used to explain what we mean by debt-free capital and how entrepreneurial investment works in this decentralized economic model/system, but essentially we are not here to simply just give free money that would be spent in the current corrupt economic system. Rather, ARCC should be deployed by the participants to invest into something that will raise their standard of living. If the public mandate created by the Social Proof of Work network creates a safe and corrupt-free environment, then the participants will need their own capital to invest. In this model we reject microloans as a viable way to support mass entrepreneurship. Not because microloans are not a great mechanism and tool in the current economic system, but we can do better than that in a decentralized context. Rather, we are not looking to on-board participants for them to simply give it to the banks as interest, as this would — in the long run — create the exact problems that bitcoin was established to address in the G8 level economies. Instead, we are focused on aligning ARCC to actual productivity through urban centered entrepreneurship. This is also not a play for ARCC to be used primarily in financial trading, but rather for capital investment.
As such, to act as a sufficient long-term incentive, ARCC itself would derive its value by being positioned as a macroeconomic stablecoin ‘regional crypto-reserve currency’ and a ‘micro asset’.
Honestly, if I went through this you’d be getting the introduction chapter of the whitepaper, but the main point of this is to address the biggest question that continues to plague even bitcoin, how does this token have any value, what is the basis of this value, and what is the value mechanism here? And of course, if ARCC only had speculative value then eventually the bubble would burst and the network would be abandoned. So, much like any successful fiat currency, we seek to establish value by ARCC’s alignment and contribution to actual macroeconomic production, i.e. the macroeconomic stablecoin (which is unlike the current stablecoins in the market which we at IBMR.io would classify as ‘transactional stablecoins’ as they do not contribute to production but rather to increasing liquidity for the financial crypto-to-crypto exchange markets).
ARCC has a macroeconomic utility because the decentralized network created does not need to disrupt the current fiat system, but act as a superstructure that can actually stabilize the local fiat currencies in the region by acting as an accessible (crypto)reserve currency and as a capital asset, i.e. a micro asset as opposed to a micro loan.
This would be accomplished through a sovereign wealth fund structure composed of a ‘foreign currency reserve’ with an inflow of funds from ‘underlying assets in regional investments’ as well as a three phase token monetary policy.
So here we introduce the actual mechanism structure for the backing of ARCC and there is a lot packed into that, but unlike other stablecoins, we are not relying on design alone. We have outlined more of a brute force approach that again is tied to increasing productivity, but also can be algorithmic in its interactions with the market. To that end, our monetary policy assumes that this a long process which we have planned for 40 years to establish full independent value as a cryptocurrency.
The ‘Social Proof of Work’ network would also act as an asset management network for any ARCC mined.
We introduce the utility of ARCC beyond just being an incentive for the integrity of the data on the socio-economic network, but its utility within the network for asset management benefits. So ARCC mined on the Social Proof of Work network will be eligible to participate with ARCC’s main investment activities -post investment, so there is minimal risk to the participant- with no minimums or restrictions on access beyond what is open for participation. Essentially, unlike most cryptocurrencies on exchanges or in your cold storage where you do not earn anything on it, they are essentially dead or limited capital, but in the case of ARCC, it will always have some option to grow as a capital asset.
The ARCC ‘Social Proof of Work’ network, by simultaneously removing corruption and enabling financial inclusion, would enable a transition to a new economic model of a radically transparent efficient entrepreneurial environment for micro-capital deployment, development and productivity.
So, as we lower corruption and enable continual access to gaining ARCC,
we create a less corrupt environment which;
leads to a public mandate to;
invest in infrastructure that;
maximizes the investment impact of ARCC for;
ultimately will lead to urban development and;
productivity and economic growth in the region.
All in a 40 year day’s work.
You can consider this the tldr post of the whitepaper.
Sinjin David Jung
February 5th, 2019