What I am proposing has some similarities to existing financial entities but in structure are radically different. For the greater part of this paper I will not go into more detail than necessary. The reason is that the first system I am presenting using a high security gold base may be impractical to maintain. Using currency as a base for this system is less secure. However, it would be superior to any existing cyber currency available because its primary feature is anonymous transfer. I am a critic of those who believe gold, not minted, is money. It is almost the opposite. For example in a currency inflation the value of money depreciates to the value of gold. Their values move in opposite directions. One could imagine a gold coin that has a fiat value, but that would not work internationally.
Advice to the reader. Please feel free to read this document in any order you please. In fact, many would prefer to start with the finale summary. I like to skip read first before perusing and I have constructed this post to satisfy those who do the same.
I assume the reader is familiar with the cyber currency using algorithms for determining scarcity, and the block chain. My final proposal is based on my own theory of mutual accepted value and dispenses with the base and inherent value. It is an anonymous cyber exchange system that does not use the block chain* or any minting. Value is based on a mutual exchange derivative. It does take some ideas from Islamic banking and “The Real Bills Doctrine”.
First, I will present the gold base possibility by describing its advantages and disadvantages. Then I will consider the case for a baseless system.
First the two similarities:
- Distributed data bases (1)
- Physical gold standard
Gold was chosen because it is well established into all financial systems and any replacement would be unnecessarily troublesome and costly.
Distributed data bases are an essential part of this structure.
The advantages of this system are:
1.Depositors and investors are the same. (2)
2.Return of principle is to the greater extent guaranteed.
3.Built in anonymity. The most important and essential part of this system is anonymity of the account holder and transfers of value.
It is a trading, investing and currency exchange instrument. Its support base is physical gold. Its value is determined locally. The support base is gold but individual users determine value depending on their own private situations. This value cannot be lower than the current exchange value for gold. It can be used anywhere in the world at any time if one has a computer or other instrument to connect to the data bases.
It has two disadvantages, but these are necessary for security and anonymity. The depositors must handle security responsibly or they can lose everything to a thief. Passwords and identification devices, if lost, will render the account unusable. No amount of identification can retrieve it. It can put a permanent lock on a quantity of gold. I am going to ignore the possible fact that it may be practically impossible to maintain.
Start with the gold and how it is acquired and stored.
The base gold bank.
Before discussing the function of the gold base bank, I must go into some detail about gold, the metal and how it is mined.
First of all, it is easy to falsify a gold coin or bar. With apologizes to Archimedes the specific gravity test can be fooled. Destructive testing is not practical. There are non-destructive methods but these must be done by experts using equipment that can measure at least one part in 10.000. I personally believe that a major part of the gold in storage today is contaminated by one part in 1000. I mean that the third decimal place is uncertain. That is an unacceptable amount. The gold content should be precise to 3 decimal places, or one part in one thousand, therefore the test requires a higher precision. Think of it this way. Would you say 1000 bars of pure gold is equal to 999 bars of pure gold and one of tungsten, one of the metals used in the core of fraudulent gold? The other metal is osmium. There is one problem. The maximum degree of purity available for gold is called 4 nines, meaning 9.999 pure gold. This is acceptable, however, standard delivery of gold allows a minimum of 9.995. That, for a large gold storage base, is too low for me. However, you may think a .004 tax on your lifetime income is not important. For a billion bucks that is only a chicken feed $4,000,000.. Lesson, do not accept any bulk gold for investment less than four nines gold bars. You might ask that if I insist on a high degree of gold purity why am I not insisting on the same precise weight for the ingot of gold? The answer is simple. A scale to weigh gold precisely is not a large investment and only requires a little time. The buyer of gold will not give face value cast of stamped into the ingot, but will determine value on its weight. If people do not do this for all gold, including coins, they are foolish. Please allow an aside at this point. If you have a basic education in physics you will understand this test. If you do not not it is not important. A given weight of gold bars can be tested if one has duplicate weight of the same type of bars having the same overall topology by using the specific heat method. One would need a very accurate remote thermometer, an accurate time piece as well as a specialized oven into which the bars can be placed. My guess is that some 20% of the gold in storage today is mostly tungsten.
Secondly, governments can-often with good reason-confiscate or put a tax on stored gold. A good reason is that a large part of the gold mined is done irresponsibly or illegally and does environmental damage that tax payers must pay to remedy. If a person illegally mined gold on public land and then sold it to a buyer, that buyer bought stolen goods. It amazes me how people invest in gold without precisely seeing an authentic record of origin or an independent lab analysis. A lab analysis can actually determine origin and even prove ownership. No gold is 100 percent pure and the many impurities are a signature of its origin.(3)
Taking those two things in consideration, the base gold bank needs to be distributed in bases in different countries. Each with a proven standard bar and precise testing standards. The gold must be proven to be mined using responsible practices and not originate from any illegal or irresponsible source. One consideration is to use the one troy ounce bar individualized with a serial number for the basic unit.
A person or group plays two roles. The first role is as the identified investor. The second role is as the anonymous depositor. The investor is human. The depositor is only a unique system of characters. I will explain.
The depositor can give special drawing rights on his account to another if that other is a depositor with a unique identification. Of course, any depositor can buy in a number for any person, persons or entity. If the other entity or entities agree, they can draw in increments of a mil and transfer them to their account or have the buyer do the transfer when both give permission.
These special drawing rights take value as a derivative of the price of the gold and like any other derivative have their own trade value which may be higher- but not lower -than the value of the gold they represent. These special drawing rights can be bought or sold repeatedly for different values and there is no time limit on when they can be exercised. Their value is determined privately between prospective buyer and seller.(4)
Can the depositors or anyone else buy or buy back physical gold from the gold bank? No. That would require some very messy and impractical transactions, but of course, this might be changed by a court of law and extremely advanced technical equipment and technique by the party making the claim.
I developed this system from historical versions that were successful but had failings. However, I recommend not to take seriously any stories about the Rothschild family and gold. The family is a family of bankers, but I found no evidence they founded gold based paper money or anything similar to that. It appears the secrets of their success were connections and honest accounting practices as well as excellent analysis of risk and value.
Is gold money? By definition, only if it is minted as such by an authority, is it money. A bar of gold may be exchanged for money or simply be used in bartering. By market definition gold is a commodity. A minted coin may have an associated paper certificate that a person can take to an institution and exchange for the minted coin of gold or the commodity gold. The system I am proposing will not grant this right or even issue a certificate. It does lock down for any other use a quantity of gold identified with a unique sequence of characters in a distributed data base. This quantity of gold can be locked down forever but will not in practice.
I was a physics major. The structure of the courses were, teach everything about physics the first year. Then in the second year repeat that course but with more detail and so on each year through the last year. Same physics taught every year but with with increasing detail. That is the structure I am following with this paper. I will keep returning to every topic with ever more detail and to redefine original assumptions.
I want to jump to the subject of anonymity. I said that this system has perfect anonymity. There is an identification number that lays claim to, locks down, any part of a global base gold bank and which can never be associated with any person, persons, organization or any other entity. It has one and only one association, a part of the base gold bank.
The data bases contain very little information. “Troys” is an invented word for troy ounces.
Amount of, in troys or mils, of gold presently associated with a unique identification.
Transfer of, in troys or mils, of gold to be assigned or received to or from identity A
Transfer of, in troys or mils, of gold to be assigned or received to or from identity B
How can anonymity be maintained when a specific human being has to choose the unique identity? Would not this same identity for the system also connect to a specific human? No, unless you know how to run time backward. The depositor, in the role of investor, buys an interest in the bank. The investor is not anonymous. The bank registers the investor’s name and the amount the investor has invested along with other data that laws may require. The investor lays no claim to any specific part of the gold but only a quantity of gold valued at the spot price the moment the payment is received. The value of his investment will change with the market price for gold at some given exchange.
Next, to security. Anonymity has many possible uses but it is always a central part of security. Data bases have their own systems of security that control the change, entry or removal of data. On a temporary basis these systems can be fooled. All practical systems of distributed data bases are replicated many times throughout a network. At short specific intervals any change outside of an algorithmic discipline is matched with the redundant versions. That change made in a single data base entry can be reverted to an original value, blocked or eliminated. Any person can store a copy of a redundant version on any device the person of entity wishes.
Next, will move to the the security of the beautiful gold itself. The 9.999 gold is beautiful. It is often machined to a mirror finish and the volume and regularity is precise to .001 parts.
An imaginary example to make a point.
Imagine you are in the actual depository for this gold and you are called to the door. There are a number of smartly dressed, large and powerfully built men standing there. One of these gentlemen introduces himself as being from the government and shows his identification. He then asks you, ever so kindly, to step aside while his team removes half the gold. You say, ever so nicely, no, our rules do not permit gold to be removed. He answers, ever so nicely. Sir, if you do not step aside the resulting blood on the floor will cause a slipping danger. You respond, sir, I will step aside but will you permit me to leave this room. You see, when anything or anyone approaches that gold within 10 meters a system of highly redundant, secretly placed dead hand devices are actuated. We have no record of any kind of what the consequence of that would be or the area affected, but it could present a danger worse than slipping. You then say, I have an idea. Let us all leave, lock the door, bury this vault in concrete and then the government can claim all this gold is theirs and we will, only for accounting purposes, you understand, claim it as ours. If the government can claim gold, bought by us, that the government has never touched, seen or inspected and tested for quality and volume, then we can, as the private party that legally owns the gold, and that has done all that, claim ownership as well. If the basic rule is that gold can never be removed, then why not cover it with concrete? The message here is to make the gold as secure as possible.
I am going to go through an example of a set of transactions.
John, an investor wishes to buy into the bank.
He goes to the bank web site and signs in with all his necessary information and requests an identification.
He sends sufficient funds to buy increments in troy ounces. ( I refer to as troys). The funds would be determined by the spot price of a troy ounce of gold on some given exchange.
He then transfers this troy claim for drawing and transfer rights to the identification he received.
Understand, the master data base only keeps a record of the very last transactions. It will keep a record forever on a pair of completed actions but will erase them if either one engages is another action that transfers all value to an anonymous entity.
John now wishes a second identity. He once again goes to the bank web on an anonymous but secure computer that has none of his personal information and does NOT sign in.
He simply goes to the request an anonymous identification link and he selects an identity from the selections on the screen.
On the same site there is a write in box , assign, and one for receive.
John, now assigns the drawing rights of his investor identity to be received by his anonymous identity.
John, then, gets at least another anonymous identity and assigns drawing rights from his other anonymous identity to it.
The connection of John’s investor identity to his anonymous depositor identity is not in the master data base anymore. The history of the gold path is not recorded.
Mary would like to use the gold bank but does not have any money to invest, but she can still be a depositor.
She goes to the gold bank web site from an anonymous computer that has none of her personal information and chooses at least one anonymous identity.
She does a service for another anonymous identity who pays her by assigning drawing rights for 10 mills to her depositor identity. Depositors are anonymous.
Without investors we have no gold. The motivation to be an investor in the gold bank is to have a secure investment in gold that will always be worth at least the market price of gold. Four nines gold is always worth more than this market price. The second motivation is to be an anonymous depositor assigning high value drawing rights.
Something missing? Yes. Where are the funds to build this banking infrastructure? If the banking infrastructure can be a company allowed to issue stock we can solve that problem.
Part Two: Details
The “number” part of identification number is actually a code using bits to encode a character. If we use only the characters of the 8 bit ASCII we would have ungainly long characters for sufficient security. These would be not only difficult to remember but increase the probability of error when copying. We can easily reduce the identification numbers to no more than 10 characters by using multiple alphabets and symbols. This is done using a Unicode standard (I am thinking of UTF-8). For example, we could easily assign a million identifications to each person on earth. I will use the term identification number although it is possible an identification will contain few if any decimal characters. Of course, there are practical limits to how may identities we can use. Computers will never process faster than the speed of light. As for programs that accept UTF-8 characters, they exist. Julia is one example.
Next I would like to describe the construction of the data base but before that we must look at what the business, its owners and what the law requires of it.
This economic system is to be part of a business, as such, it must have a transparent part. The business itself can not be anonymous. It must file a financial report and pay taxes on profits and inventory. The inventory of gold, its value and the names of persons, who hold permanent ownership of this gold, the investors-not depositors- as well as well as changes in the value of its inventory must be reported to authorities.
The data base does not hold a collection of identity numbers ready for selection but generates a group for selection by the client. If the clients are gold investors they are directed to a sign in page where they are asked for the identification numbers, passwords, credit card numbers, confidential questions and their answers, contact information and the amount of gold they wish to purchase, buy into. They do not need to transfer this gold to an anonymous identity, but they will eventually be charged a fee for the storage service.
Fees become a part of the gross profit of the business and this profit is publicly available.
Fees are extracted, in mills, from the client’s account. Fees may be paid in cash or if not paid by a conventional method they are extracted in mills from the account. Fees of this type are gold recovery fees and are not part of the gross profit.
Should the investors wish to sell their gold back to the gold bank, they may do that and receive the current exchange value minus a typical handling fee in cash.
The investor is not required to become an anonymous depositor, but if the investor becomes a anonymous identity, as such, sell back is no longer possible. An anonymous depositor can only assign or receive troy and mill credits within the bank. To draw standard currency is possible, but the depositor will lose anonymity and by definition is no longer a depositor.
A company that intends to use this new financial instrument of anonymous traders needs investors out of necessity, but investors must be encouraged to become anonymous depositors. The purpose and vision of the company is not to hold investment gold. The purpose of the gold is to assure a solid financial base for the anonymous depositors.
Plan for the data base structure
A program that services the data base that is to be available in the secured web page of this enterprise will have an identity number generator. It will generate a page of characters. The user will build a string of M characters selected from this page or other pages generated. There are over 120,000 possible characters over multiple pages. The string many contain many characters, but if M is too large the user will have difficulty remembering it and typing it in. It is understood that not all devices have complete character maps but these can be made available in the web site. The wide selection is necessary because the characters of one language may be very difficult to recognize or name by those not familiar with it. One needs a selection based on some criteria for any given client. The longer a sufficiently pseudo randomized string of characters from more than a 120,000 character selection the more secure. There are magnitudes of 10 combinations that are essentially unbreakable within practical time limits.
After the prospective depositor selects an anonymous identity he or she can use it to receive claiming rights in increments of mills from another depositor. If that other depositor is an investor who had previously assigned all his claiming rights to an anonymous identity and transfers any claiming rights to any other anonymous identity he will lose the record of the public identity- anonymous identity pair he had. It will no longer be in the data base as an identified individual. It will be intentionally removed. His anonymous identity has all his claiming rights information and the investor identity is no longer needed. EMPHASIS: THE MASTER DATA BASE DOES NOT STORE NAMES OR ANY IDENTIFICATION OF ANY HUMAN BEING. IT ONLY STORES THE VALUE OF AN ACCOUNT NUMBER AND THE EXCHANGE BETWEEN ACCOUNT NUMBERS. EACH ACCOUNT NUMBER IS PASSWORD ASSOCIATED. IT CAN NOT BE ACCESSED WITHOUT A PASSWORD.
There is a misunderstood idea about money. Is it assumed money needs a single defined base to be accepted and valid. That is false. If a country issues paper certificates without any defined base, BUT guarantees to take in payment its very OWN certificates for all items and services of value and that the ratio of this value to quantity of certificates remains constant, these certificates are valid and trusted money. This assumes that the country has valued goods and services. If a country is very strong and produces highly competitive goods it can DEMAND payment in its own money. With sufficient military, informational and economic power it can force an egoistic economics on the world. However, I hope it is obvious that any economics that is governed by power can no longer be considered to be scientific. However, power and trust, while not clearly defined, can act as a base for money. Not clearly defined is not to be interpreted as ambiguous.
If depositors agree to take claims on a known and fully assured quantity of 9.999 gold as payment, then these claims have an exchange value that, though not money, can be accepted as such for payments of goods and services. The value of these anonymous claims is supported by the known gold but also has a value as a limited issue on the right to make a claim. They have a clearly defined limited issue and this issue cannot be increased. As a result, the rarity will increase and this rarity contributes to value. The exchange value will always be lower than the four nine actual sell and buy price because the exchange is exchanging derivatives of the gold. In any exchange that uses derivatives there no mechanical connection between different valuations. For example currency A loses value to currency B but currency A gains value to gold and Currency B loses value to gold. Disconnects, always temporary, like this are common in all exchanges that use derivatives.
Transfer of rights to claim can be used as money and these rights have to be bought with a depositor’s mills.
The company that runs this system has to make a profit in a given real currency. There is a plan to pass claims in mills through the anonymous curtain without exposing depositors. This plan will only be read by the interested because the relative complexity requires active concentration to keep one’s attention. As I read the feedback this blog generates and I can determine that I can capture undivided attention, I will detail the profit plan or, better said, a conditional profit plan. I have doubts about the cost of maintaining a gold base system of exchange.
I did some conservative estimates of the business plan and these include an assumption that gold will not increase in value, there will be no inflation and confidence in this plan will grow very slowly. On these assumptions I calculated a yearly net profit return of one dollar on each ten dollars after the one time and permanent gold purchase is complete.
My realistic estimates scare me. They indicated exponential growth of the depositors to the extent that the other financial institutions lose as this system gains. As a result these institutions will use their “influence” to bring political and legal pressure on any company using this system. Their chain shot charges will drain company funds if it has to defend itself. Buying political influence would be a mud fight with pigs, counter productive. I expect growth should only be allow to grow slowly and with little hubris.
Ā¶Œ ɇПЯ ת€∏
If you are ready to deal with an identity such as this we can tackle the secret of how ghosts move their money through the anonymous curtain. First and foremost, understand that the gold bank system must remain truthfully beyond reproach ethically and legally. Because of this, anonymity is lost when there is a standard currency- investor claiming right pair.
How do we deal with identity numbers-yes, they really are numbers-that use characters such as this?
¶ is a representation of the Unicode number 00B6. The hexadecimal number 00B6 is the decimal number 182. In place of the character, whose name you probably do not know, remember 182. Using an online Hex-Dec converter and character maps or the character map in Windows 10 you can retrieve a lost character sequence. But remember, if you use this system to remember identity numbers, that a decimal number in the identity is only a character that has a Unicode representation. It would be better to keep a secure record of the character sequence. Of course, the bits in the computer memory are the same for a character, Hex or Dec. The character representation is a human recognition and memory service.
Using the Unicode,we could, with 10 characters, have many millions of possible anonymous accounts for every person on earth. In total more than 3 *10^44. Please refer to: http://www.unicode.org/versions/Unicode9.0.0/
Passing the curtain of anonymity.
I described gold bank entering, investing, earlier but how does one exit and claim money for the gold bank gold claims? Rules prohibit a sale of any gold in the bank.
- John wants to become a depositor in the bank but has no other depositor to assign him mills. He must use his physical cash to cross the curtain and assign himself the funds to buy mills.
- He cannot, as John, an identifiable human being, assign cash to an anonymous identity. Only anonymous identity pairs are allowed in the depositor data base. A human can pair with an anonymous number but that pair cannot be a depositor.
- John needs another anonymous identification to change the value of the currency to an active depositor identity.
- He does that, and the public-anonymous pair is eliminated. All information is in the anonymous pairs.
- He uploads the site data base to the master data base.
- The master data base then checks John’s entries for logical consistency, mathematical errors and the gold value in the queue.
What is the master data base and the queues?
The gold bank site is the front end, or form, for the working data base. The master base cannot be changed except by an upload of a working data base that passes the master base protocol at any given time. The prospective depositor’s request will be passed to the queue after it is checked for errors.
Let me break this explanation to explain the reasons for what seems like an overly complicated process. It is not in practice, but the explanation requires painful detail.
Review what I said about money. It does not require a base. The problems are that the quantity and exchange value of such money is open to abuse, manipulation and fraud. Only money that has some accepted value, such as gold coins or something firmly based in a natural, not created base, such as gold, can be tightly regulated. This assumes the base is authentic and precise. For example, the failure of John Law was not that he was ignorant or dishonest. He was an honorable man and probably the most knowledgeable banker of his era. His bank failed because the money it issued had a poorly understood base that depended on random changes in international rights. Money with a poorly constructed or ambiguous base can produce a speculative bubble that is no more secure than a Ponzi scheme.(5)
The deposit and request of John must wait until an accounting check is made comparing the base gold quantity with depositors and current exchange value of John’s currency with the quantity of gold in the bank. The queue that hold John’s request is the called depositor enter queue.
It is best that John access the gold bank web site from a computer that has no personal information. John does not sign in but makes an anonymous request to rent the use of a anonymous number.
What if John wishes to draw his local currency from the gold bank? Where is the money coming from to do that?
The money used to buy or rent anonymous identities is deposited in a general public fund and demands for money are paid from that fund. But what if the balance in this fund does not match demands?
The data base uses a queue for fund requests. John’s request for actual currency waits until there is sufficient funds to pay him. He is paid at the exchange rate of the price of gold when he makes his request.
What if there is a run on the gold bank and all depositors and investors want money?
If the bank can no longer operate it can, as a last resort, sell its gold and pay its investors and depositors.
Compare this to other financial systems. Cyber currency often uses only scarcity for value. This is acceptable under certain conditions. We will talk about that. Savings banks keep less than 10 per cent of their depositor’s funds. In a banking run and insolvency they can only pay one tenth of what the depositor gave them. Of course, they have a government insurance fund they can turn to but this fund can easily be exhausted. All gold funds that I have examined are vague about where the gold they have in storage was mined and its purity. As I said, gold mined illegally from a government’s public land can be considered stolen. The trace elements, even in four nines gold, are proof of it origin.
The business plan for the gold bank requires a long description that has more than a single form. However, to give some insight into it here are some considerations:
The depositor identities will have a action time value.
The major sales point will be to convince depositors to accept gold assignments which may lose or gain value outside of the anonymous curtain but maintain value within. The gold price itself, as determined on an exchange changes, but the internal anonymous assignments are units of gold. This has an obvious advantage over algorithm based cyber money. The transfers within the anonymous curtain are invisible to the public. The block chain distributed data bases are visible.
Another disadvantage of the gold bank assignments is that they are not always instantaneous and may be rejected if there is not enough value in gold or depositor money to cover them.
This disadvantage is a form of protection but it also allows depositors to buy and sell rights to make assignments. These rights are a derivative structure within the system and are not recorded in the master data base. They are essentially a separate market.
The master data base can only be changed by the uploaded local base. A copy can be downloaded for a given instant but is shut off to any other access. There is no way to download the dynamic data base, only a recent snap shot.
Part 3
There is a difference between inherent value and a base when talking about any derivative. As we understand the definition of money, it has no inherent value but may have a base. However, it does not need a defined base but can have derivative value. That value can be derived from the certain exchange of goods and services based on mutual agreement over value. If you and I agree there is something of value that we can exchange and that we believe each of us will deliver as promised, then we do not need the curtain. All transactions can take place within the anonymous realm. This type of exchange is not new. I am only introducing the cyber element to broaden and ease its use. But be clear. The parties doing an exchange are not anonymous to each other. (6)
Units of value are invented and have no physical equivalent. We can name them after actual things but we are only using the names free of any relation to the actual object or imaginary thing. The only thing that is important is that we agree on the exchange value of the products and services we offer. For example, if a unit of exchange is called a daisy, we have to agree on how many daisies is the product or service is worth.
For this plan we do away with the gold base and the role of the investor. The local data base only passes an account number and a value, if any, assigned to it. My account number receives value from the buyer. Once I have this value I can become a buyer and transfer some or all of this value to a seller.
I hope you are now asking, where do the original funds-the daisies- originate? I said that there are buyers and sellers. I did not emphasize that they must be the same. If they are, then any buyer can simply invent the number of daisies needed to buy goods or services. However, in exchange, must accept the same value on daisies for goods and services exchanged to the previous seller acting as a buyer. If there is an agreement on value then there is no advantage to inflate one’s the daises, Of course, not all trade would be done this way. Most of the time trade will want to take advantage of competitive price discovery and sacrifice the anonymity. In fact, this anonymous system will only work in that environment. As one of my favorite country songs almost says: “You’ve got to know when to hold them and know when to show them”.
There is a problem. How can a trading system work if the supplier can not raise prices to compensate for the suppliers increased costs? We must let a seller increase costs, but under certain conditions. We must divide the the daisies into two groups. One group is the virtual daisy that can figuratively be pulled out of thin air. The second group is the real daisy that one acquires in trade. If the buyer buys with virtual daisies then those daisies become real daisies for the seller when he buys from the buyer acting as a seller. That is, the former buyer who used these virtual daisies to buy must accept them with equal value. He can not raise prices, within that value, on the buyer he bought from. Of course, it is possible for an anonymous agent to cheat. Doing so, the involved agents will lose their anonymity and therefore their security. In a culture where the consequences for this behavior are sufficiently severe this rarely happens. The cheating agent does not have a second chance to repeat bad behavior.
Notes:
(1) Do I mean RELATIONAL data base? I am not qualified to say if a data base is relational or not or whether it is predicate logic based. I must depend on the experts to build the most efficient data base management system that meets the gold bank requirements.
(2) Granted ambiguous, but I hope within this content it is clarified-somewhat.
(3) Why has this not been done? The answer is corruption within the governments. This illegal mining can become invisible to authorities if some “public servants” are greased. Therefore, to bring charges would implicate government officials.
(4) The business model requires a time limit.
(5) Despite John Law’s massive failure he must rank as the most influential economist of modern times. All national financial systems and all cyber currencies are based on John Law’s theory of value and scarcity. The gold bank financial system presented here differs from his theory of the base but accepts his theory of scarcity and value-partly. I will give an example that I think illustrates the problem with the theory of scarcity. Imagine you like to eat apples, have land and live in a climate to grow apple trees. So, you decide to plant the seed of your favorite apple in the expectation that in a number of years you will have a tree producing your favorite apple. But alas, alas. The tree produces the highly more likely apple that is nothing like your favorite. It is highly likely that this apple will be a generally undesirable fruit that no one would ever care to eat. Nevertheless, it will be a unique apple of a type not found in the world. It will be scarce among apples, however, it will have no value based alone on that scarcity. If it should be an unlikely, but possible, be a really good eating apple, it will be scarce, but it will have an inherent value. Parts of this tree have a value derived from this apple and can make its owner rich because he can use the tree to produce-not apples- but scions for grafting to other apple trees. The scions take their value from the future apple. It is the apple that has inherent value.
(6) This last system is based on an Islamic model invented sometime between 800AD and 900AD. It is still in somewhat private use today. It was copied by Eastern European Jews. Agreements are not specifically stated in everyday language but sometimes depend on only a hand signal or facial expression. The double status of a given currency has been used many times but I took it from the real bills concept. My idea is to combine these ideas with capabilities of modern computer technology to achieve greater speed of transfer and better security. An emergent advantage is that if there should be a general financial collapse this system remains intact and usable as indirect bartering. Its definition changes but the operative parts do not.
Summary:
If economics is a science then it must have precise definitions. Inherent value may be better defined as intrinsic value, I do not know. However, the meaning should be clear. Does one doubt that water has no inherent or intrinsic value? When the European explorers encountered the native Americans for the first time they had one thing whose value they agreed on, gold. It obviously has inherent value. Scarcity, generally speaking, does not determine value.* Nothing in the world is exactly alike, so every individual item is scarce because it has no exact duplicate. Such things can have personal or attributive value but this is a fluid value that has to clearly defined point in time or location. Money is a medium of exchange but a medium of exchange is not always money. Money is a special case. Anonymity is an essential part of strong security. Those wishing to violate the secure limits will find it difficult if they do not know what they do not know. Derivative value has a precise definition that it is very often corrupted. Derivative value derives its value from recognized inherent value not just from something else. The recognized value can also be State power or what ever the warden of your prison says has value. However, cascading derivatives, derivative value derived from other derivatives, can not be sound. Unlimited money does not in itself produce inflation. Inflation is a product of competing bidding. If two or more agree on the value of products and all agree to accept the medium of exchange used to buy all products then the medium of exchange, be it money, can be produced by simple production as needed, without limits. Any bidding war would devalue this money for all, so bidding has no advantage as the increase in prices would not change their value. A million bills can be reprinted as ten bills. It becomes only a silly game of playing with zeros.
*Yes, I am familiar with the water- diamonds definition of scarcity value. This is a particular case as are trading stamps. I do not know of any truly general definition of value. The labor value of the Marx political economy is an example of a special case. I can only find three components that can separately or in combination determine unemotional value, scarcity, utility and derivative.
Block chain
I have very little knowledge of the block chain CURRENCY. The reason is as I started to study this cyber technology I was overcome with the emotional feeling that this was a brilliant plan to become a self imploding scam designed to bring down national economies. This is my uneducated opinion only. In my opinion the block chain currency is a total mess. The block chain currencies are not compatible with each other or even internally compatible. The so called miner, a term seemingly invented to associate the currencies with gold, is given control over the value of any given account, a value which rages in volatility. I have never seen an example of how capital gains are determined for taxes or for how the fees for cashing out are determined. How is even instantaneous value determined? The worst is that most of the people jumping on this thing do not know a hard fork from a butter knife.
It should strike the reader that the peer to peer block change currencies are very similar to my last example of a data base currency which I named daisies. Actually they are not. The block chain currencies are valued directly relative to the accepted currency of nations. The daisies or the currency of the data base system does not have a direct relation to any currency but only indirectly through goods and services and the daisies, as I called them, never leave the data base: They cannot be sold, or exited, for currency if anonymity is to be maintained.
The block chain currency system appears to have many danger points but the one most obvious is that it persuades the investor to buy in with ever more money and drive the values of the block chain higher. Humans being humans are eventually going to want to sell their block chain currency for accepted currency. If this is not the case why value the block chain currency relative to other currencies? At some point, before the block chain currency value goes to infinity, this sell off will cause a major drop in the block chain currency value. The same psychology that ballooned the value of the block chain currency will drive its value down at a rate that people will not accept it as payment and there will be a rush to sell off to prevent losses.
Thoughts and objections to current ideas about money, cyber currency and gold 