However, Cryptocurrency works best in places with a robust
internet infrastructure to back up digital transactions, and where there is a critical
mass of people in an area willing to trade their goods and services for the
currency. In the early days of floating hamlets though, better alternatives to crypto exist.
What is cryptocurrency?
Typically*, it's digital de-centralized cash. It's decentralized
because no central authority controls the supply of it. The creator of Bitcoin
has no more or less ability to create more coins than any other miner. The
current total supply is public knowledge, as the amount available in the
future. This scarcity isn't controlled by anyone, or even everyone, but by a
cryptographic protocol called blockchain. This same blockchain ensures and
facilitates the transfer of bitcoin from one anonymous address to another.
This all is in contrast to centralized currency, sometimes
called 'fiat', which has value because an authority like the European Union or
Facebook claims it has value. Like fiat cash (and unlike other digital
transactions like credit cards), transactions in cryptocurrency do not
implicitly come with an identifying record of the transaction.
In summary, crypto* has three features that make it money as
real as any other currency: scarcity, transfer-ability, and resistance to
counterfeiting, all of which are maintained by a network of computers running
an open-source protocol called blockchain.
* Bitcoin and its forks, in particular.
Why is crypto popular among seasteaders?
Seasteaders want to build permanent economies, which requires a currency, but
they want maximum independence from each other and from land-based governments.
The groups that have adopted crypto and the people looking to seastead have a
substantial overlap: they want independence from a central authority figure,
whether that figure is government or corporate. Cryptocurrency provides the
independence that seasteaders crave.
Further,
many issues with security and scalability have been tested over the last 8+
years with the original, and largest, cryptocurrency Bitcoin.
So what's the problem?
A few
more small things: Bitcoin continues to experience massive swings in price
compared to other currencies. Other cryptocurrencies are smaller and even less
stable. A network of computers is harder to maintain at sea than on land,
giving 'miners', those who make money by maintaining the cryptocurrency
network, a disadvantage compared to their land-based competitors. The market
cap (or rather, the open interest) of even the largest cryptocurrencies is
small enough to be open to manipulation and intentional destabilization a
hostile authority.
But the
big one is that a crypto-based economy is top heavy. At the moment, there are
too many people intending to make their money on crypto and not enough people
willing to produce goods and services in exchange for that crypto. In developed
economies, bitcoin is traded for fiat currency as if it were a stock in a
company, but rarely is used as a means to purchase things. Seasteads,
especially in the early days, will depend on trade with these established
economies.
What could be done in the interim?
Produce commodities with similar properties (fungible, transportable, hard or
impossible to counterfeit), but ones that have an intrinsic value even without
the claims of a network or a central authority. Namely, core necessities like
energy and food.
What are some alternatives?
Hydrogen.
Figure 1 is a Hoffman apparatus. It's simple to make, and with an
electrical current it converts water into hydrogen and oxygen gases. Figure 2
is a fuel cell. It converts hydrogen and oxygen into water and electrical
power. Oxygen is plentiful in the atmosphere, but hydrogen almost non-existent
(it's too light, and eventually 'boils' out of the atmosphere). Hydrogen gas is
scarce, impossible to fake, and is immediately valuable as an energy source. It
can be produced from any surplus electricity, so wind, waves, and solar power
can all become passive sources of income.
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| Figure 1, a Hoffman apparatus for turning energy into hydrogen. |
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| Figure 2, a fuel cell for turning hydrogen into energy. |
As a
basis for a currency, hydrogen has one more property that makes it good for
economies; it leaks. Hydrogen gas is extremely hard to store for long periods
of time. Being the smallest, lightest, molecule there is allows it to slowly
leak out of most tanks. That's a engineering problem, but for an economy, it's
a boon because it comes with its own incentive to be spent and not hoarded.
If you
want to store your energy with more stability, you may instead want to produce...
Gasoline.
Through air-to-fuel technology like those currently being scaled up
by Carbon Engineering, you could convert carbon dioxide and electricity into
gasoline. This can presumably be combined with some other activity that would
otherwise release greenhouse gasses, such as the co-generation of electricity
from biomass. The biomass itself could be produced cheaply as seaweed or as food
waste. As a major bonus, the carbon that is released from burning the gasoline
is the same carbon that was stored in the biomass, making an approximately
carbon neutral alternate to mined fossil fuels.
In short, out with the dollar (and bitcoin), and in with the Kilowatt hour.
Rare earth magnets.
For example, coltan and neodymium. These are considerably more
common than precious metals like gold and silver, so they can be used for
smaller values. Their content can be tested at a distance by measuring their
magnetic strength instead of a much slower method like a scratch test. Also,
rare earth magnets are critical for technology like consumer electronics and
wind turbines, so they have an intrinsic engineering value.
Fiat currency.
It's a bitter pill to swallow, but there's a lot of places that are
outside of US control that use US dollars as a de-facto currency. Early
seasteads could be some of these places. Using a currency already accepted by a
host nation means one less barrier to trade.
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