Money is the tokenization of value. Money is a process constructed from basic operations like Issuance and Backing. As such, money is programmable…
Here is the basic instruction set for programming money:
- Issuance: Who is allowed to put new money into circulation, when, and under what circumstances. Also, when and how is it taken out of circulation.
- Backing: What is the mutually agreed upon basis for the underlying value of the money.
- Redeemability: When and how can holders of money exchange it for the backing.
- Governance: The procedure and rules related to transactions, enforcement and reprogramming.
For instance, banks issue a form of money called “secured credit.” One type of secured credit is your home mortgage. It’s issued once the bank approves your application, it’s backed by your house, redeemable once you pay off the principal plus interest, and is governed by a legal contract you sign with the bank.
Airlines issue a form of money called frequent flier miles. They are issued by the airline automatically when you fly with them, in the amount equal to the number of miles you fly (possibly with a bonus if they are running a special). Frequent flier miles are backed by future flights, which you can redeem your miles for based on a redemption table published by the airline. The airline governs their frequent flier miles as they see fit to maximize your loyalty and their profits.
And of course, the U.S. government issues money in the form of dollars, backed by the the “full faith and credit” of the government. It’s programming is described here.
The Economic Space Agency is creating a platform which allows communities to program new forms of money. One such example is COMMON Cents, a form of money designed to the needs and specification of the COMMON community.
If you were to design your own money, what would you use it for, and how would it work?