Crypto Currency offers a developer a unique insight into the nature of money. The LydiaCoin Project began as just such an exploration. Lydia is an ancient nation (located roughly where modern Turkey is today) where it is believed the first ever coins were minted from precious metals as we know coinage in the west. This innovation took place in approximately 650 BCE. I began tinkering with a fork of ZetaCoin primarily to gain an understanding of the nature of monetary systems, and the wonderful ways in which this can be expressed in an alternative crypto coin. What I discovered is not what I expected.
When you look at a picture of that very first coin, what leaps to mind is this big solid looking hunk of pure gold. We in the modern age are wowed by the incredible sense of intrinsic value this coin would possess today. Such images reinforce our commonly held mis-perception that money is not “real” if it doesn’t have some serious intrinsic value incorporated into it. But let’s examine this idea more closely. Did the ancient Lydians choose gold because of it’s great rarity? I think not. First of all the earths population was dramatically less than it is today. Secondly, there were no where near the amount of industrial uses for gold as there is today. And lastly, gold could still be found on the very surface of the ground in many locations worldwide. Simply put, gold just wasn’t nearly as rare as it is today in ancient times.
So why did the Lydians choose gold (and silver)? Durability.
Gold does not tarnish. It is malleable yet holds it’s shape and form. It is simply a durable and easy to use container.
A container of value. Social value, economic value – even political value. That is a coin’s job, to be a long lasting and deployable medium of exchanging value. Crypto Currency appears to be eminently suitable to the task of acting as such a container of value, being both durable and easy to use. Additional if marginal intrinsic value is added by the energy and labor costs associated with mining Crypto Currency into existence. We thus begin to see the fallacy of commodity based monetary systems such as gold or silver backed currency. Such extreme intrinsic value is not only unnecessary, but prevents the currency from gaining economic and social value aside from the backing commodity. And while it is useful to have a Crypto Currency with rarity settings that mimic a naturally occurring commodity, it is important to understand that fielding a global and general purpose Alt Coin requires one to place serious anti-deflational measures into the coin’s source code.
MazaCoin
