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Comment by rojeee | Hacker News Reader

I too would like to see a peer to peer IOU based system where anyone can issue credits. It doesn't necessarily have to be built "on top of bitcoin" though. Indeed, you can have credit money systems that don't require an explicit settlement currency. I did a tonne of research into this and wrote a bit of code but sadly not many people seem to be interested in credit money systems, instead favouring what crypto is currently. I guess the reason why is that credit based systems don't have the feature whereby issued credits can increase in value far excess of their nominal value. Sad because I think a P2P credit money system would add real value to the World.

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I agree, Bitcoin is just one potential reserve for such a system. But seem to me that being such a reserve is exactly what Bitcoin would be good at.

I universal currency would probably emerge from market interaction, just as gold emerged. You could still use it for something else, but there would be a day-to-day standard.

If you could then tie this to some sort of stock market that is denominated and actually does its trading in that same currency, it would be great, but for now that seems to be a fantasy.

You should read about the "new monetary economics" and the "BFH payment system" when BFH stands for (Fischer) Black, (Robert) Hall, (Eugene) Fama - the economists who conceived the original idea. This paper is a decent review: https://ciaotest.cc.columbia.edu/journals/cato/v32i3/f_00261...

I will check it out. So far I have been skeptical about removing a base.

My original comment is mostly based on "The Theory of Free Banking: Money Supply under Competitive Note Issue" by George Selgin. There is of course a lot more surrounding literature.

Anything that you can point me to on how this would work? Or care to have a conversation some time? I've been working on a decentralized market place for setting up supply chains and have come to the conclusion that credit system or mutual credit on the ledgers would be quite useful. It would also be a means of moving beyond current capitalism.

Certainly happy to have a conversation about it. I'll dig up my notes and I have a whole bunch of research papers you might find interesting. Feel free to drop me an email: rojw at pm dot me.

I've found that talking about "credit money" explicity is problematic because most people - especially in the crypto world - don't understand what money really is. They believe it is, or should be, some kind of token with "intrinsic" value. But history suggests otherwise becuase the vast majority of monies were credit instruments and the system we have today is a credit based system, it's just heavily centralised around central banks. I believe that one could make a better system by liberalising who can create credit. The problem ultimately boils down to reputation scoring and tracking.

I'm not saying that "intrinsic value" coins such as gold coins were not used. Of course, they were! Particularly in situations where relationships were ephemeral or not long lasting so maintianing a credit ledger wasn't possible. However, now we have the technology to maintain a credit ledger for the whole World so instinsic value tokens/coins are not necessary anymore. In that light, I believe the current iteration of crypto really isn't very useful for anything other than facilitating a big casino.

In the meantime, have a read of this great paper [1] by a British Diplomant called Alfred Mitchell-Innes. He wrote two papers and this is the first one and I think it's the best paper on "what is money". Enjoy!

[1] https://www.community-exchange.org/docs/what%20is%20money.ht...

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