What might a possible future dystopia of individual token issuance look like?
Written by: Christopher Goes, Co-founder of Anoma
Translated by: Tia, Techub News
"Trump's issuance of meme coins has amplified the window for individual token issuance, expanding our imagination of what a possible future dystopia of individual token issuance might look like."
Recently, I have been reading about anthropology. Typically, some classics in economics assume that primitive economies operated on a barter system, and the emergence of money was to solve the double coincidence of wants. This assumption is taken for granted in many places (including the Anoma vision document), but if you look into history like David Graeber did, you will find that this is clearly nonsense.
Early societies and small communities today do not exchange cows for chickens (at least not most of the time), nor did they invent coins to solve the double coincidence of wants because they did not need to. Instead, they used credit. Credit elegantly and wonderfully resolves the double coincidence of wants and further integrates over time.
If I am a butcher and you are a baker (I may not need bread now, but I will definitely need it in the future). If we live in the same town and you happen to be nearby recently, we can simply keep track of who gave what to whom and settle up regularly. Of course, this requires enough repeated interactions and sufficient trust. But in small communities, both conditions can be met.
Nevertheless, there is still a need to distinguish between goods. Therefore, communities often choose a specific commodity as a unit of account and measure (though actual exchanges do not take place in that specific commodity). It can be said that the "store of value" function of money is largely virtual rather than physical: while some farmers may have more cows or grain than others, the most important asset held by residents is often the trust of the community, which allows them to obtain what they need when required, making it easier to cope with supply shocks. This trust is a form of credit that anyone can issue (but if they start demanding too much without providing returns, their neighbors may no longer be willing to accept their credit). The accounting of this credit is virtual, not precisely tracked through spreadsheets and central banks, but rather roughly tracked through observation and gossip, and it is scale-free, as anyone (individuals or institutions) can issue credit, eliminating monopolies.
Most of us no longer live in a world of scale-free credit money, and the reason is simple: in a world where money is physical, this trust accounting cannot scale. In a broad economic network, most interactions are with strangers whom people will never see again. Thus, we now live in a world of fiat credit money. In a world of fiat money, money is issued only by a few (hopefully) trustworthy institutions, such as governments and banks, and what people trade in their daily interactions is not personal credit but the debt issued by these institutions. This solves the trust accounting problem between strangers, as strangers only need to trust the accuracy of the same institution and accounting mechanism; they do not need to trust each other.
However, fiat money as a collaborative mechanism has two fatal flaws.
First, fiat money centralizes trust, thereby losing fault tolerance. Due to the network effects of units of account, store of value, and medium of exchange, the difficulty of establishing proper accounting mechanisms, and the tendency of belligerent states to enact foolish laws, the issuance of money is limited to a very few. Control over these institutions becomes a primary competitive point. It is possible for a few individuals who place personal interests above public interests to become the controllers of the money supply and use part of the money for their private purposes. Perhaps they do not succeed in doing so, but the negative externalities caused by elites competing for control of the money supply can also pollute the discourse with "alternative facts," to the extent that the regular mechanisms of social feedback and collaboration no longer function. Only decentralized trust can achieve fault tolerance.
Second, fiat credit money currently relies on measurement. In order for us to use debt instruments for payment in a context of mutual distrust, we must agree on a trusted third party and the exact payment amount, so that we can confidently walk away after the transaction and never expect to compensate each other again. If the primary benefits of the goods paid for are easily estimated, limited to the party purchasing them and their current self (e.g., a sandwich), there is no need to estimate their future value. However, if the benefits obtained over time gradually increase (e.g., knowledge), this is absolutely a poor measuring method.
I believe that many of the dystopian elements in today's world can be traced back to these two fatal flaws. The roots of war, climate change, nuclear proliferation, lack of public education, information-sharing pollution, and similar phenomena largely stem from the poor decisions made by elites competing for government positions or the propaganda that arises from it (e.g., persuading citizens to pay fees). This is the result of centralization.
In contrast, scale-free credit money decentralizes trust and shifts the measurement to the future. My credit is only valuable to you when you hope I can repay you in some form, as I cannot provide anything right now. While the parties exchanging debt can walk away, the parties exchanging credit (which may be heterogeneous) have a common interest in each other's future success. If I teach you something, and you owe me money, I do not care whether what I taught you is right or wrong; I just want to persuade you to pay me more money. If I teach you something, and you pay me with credit, then I might want to teach you something correct and useful, so that your credit will be valuable to me in the future.
In our world today, fiat credit money, trust, and currency are misaligned, to such an extent that they have become inverted. To realign them, we must realign control over money issuance with trust and return to a world of scale-free credit money.
What would a world of scale-free credit money look like?
What would a world of scale-free credit money look like? In our world, the issuance of money is tightly controlled, typically only applicable to governments and their authorized specific entities (such as banks). If money is to become credit and rejoin with trust, then these restrictions make no sense, as trust is distributed and credit is personal. So let us change some basic assumptions. Assume that everyone can print money anytime and anywhere, printing as much as they want (though they can voluntarily limit their ability to do so) and send it to anyone they wish. Assume that individuals and institutions around the world, now and in the future, are constantly creating new denominations of currency. We also assume that the denominations of currency are content-addressed: currency is held by who (cryptographically) currently possesses it, who (cryptographically) can issue it, and how much currency they can issue and under what conditions (in the case of self-limitation). A local naming system and consensus algorithm handle human-readable mappings and temporal continuity.
In this hypothetical world, so far, money is actually of little use for collaboration because everyone is using different currencies. How can these heterogeneous tools serve as a store of value, unit of account, or medium of exchange?
Let us think further about this. The agents of money printing are not just individuals; they may also be institutions that want to provide functions such as value storage, unit of account, and medium of exchange for their constituents in certain spatial domains (whether digital or physical). But in this world of scale-free credit money, competition for currency is fierce, as anyone can switch the currency they use at any time. Therefore, institutions wishing to issue currency must establish an initial distribution and issuance schedule for their potential users. In such regions, a currency chosen by a group of people can serve as a store of value, unit of account, and medium of exchange if that group can reach consensus on the currency. But what if the institution starts sending money to places people do not like? Because others can simply join in and issue another currency, replicating (and possibly altering) the distribution and changing the recipients.
You might argue that the cost of conversion is not zero. Imagine if all the goods in a supermarket were repriced; the operational costs would be very high. In a world where money is primarily physical, conversion costs are high, but in a world where money is primarily digital, this is not the case. In a world of digital currency, the store of value, unit of account, and medium of exchange can be easily decomposed through automatic price conversion and exchange.
In this world of scale-free credit money, new currencies are constantly being created, and most potential currencies do not exist in the present but exist in the future. Current value competition is not based on scarcity but on the potential retrospective allocation of funds in the future. Since funds are competitively selected, the content expected to be included in future retrospective fund allocations is based on what people and institutions believe past (our present) contributors ultimately provide value for now (our future).
Now, you may ask, in this world of infinite currency, how do we track scarce physical goods? The production costs of physical goods are high, and they often provide most of their value to private entities in the near future (at least compared to digital goods). The current payment accounting system does a good job of organizing the production of physical goods, so regularly making old payments upon receipt seems like a reasonable solution to me. Individuals and organizations producing physical goods can operate in this world as usual, simply accepting the credit of parties they trust instead of sovereign debt.
Payments for physical goods also benefit from the stability of the unit of account. In this world of scale-free credit money, currency options with self-issuance control can provide the necessary stability. Institutions issuing currency can impose their own limits on issuance rates, ensuring that the issuance does not exceed a few percentage points per year (compared to the existing targets of central banks), thus maintaining the reasonableness of the unit of account.
Now, you may encounter a question: how to interact with untrusted parties? Traveling, interacting, and trading in distant places is very nice—do we need to give that up in such a world?
It is time for the magic of mechanisms to come into play. Let us assume that there is a certain liquidity in the credit market, so that as long as someone wants to create some liquidity, any issued currency can be freely exchanged with any other currency. Now, if I want to pay you but we do not trust each other, all I need to do is find a path in the liquidity graph between us. We no longer need to use the same unit of account, store of value, or payment method to interact with each other—we only need a connected path. Of course, not all paths are equal—if there is a lot of liquidity between us, I can pay you a lot without a significant change in price, but if there is little liquidity, I can only pay you a little—but this precisely reflects the density (and directionality) of trust!
But skeptics among you may have objections; this does sound like a giant financialized world. Imagine if everyone's credit were traded—shouldn't we win the war of usage through endless self-marketing games? I believe that compared to today, scale-free credit money greatly reduces the network effects of currency because it eliminates the need to reach consensus on which specific currency to use in any particular interaction, but some network effects still exist. Additionally, there are clearly many new forms of currency currently (just look at the list here), which do seem to spend a lot of time, energy, and currency (somewhere, there is a trap here…) competing with each other.
This is my final mechanism magic: the promise of future airdrops. Airdrops have already become a common mechanism in the blockchain space, typically used to try to disseminate a new form of currency, but as currently deployed, they have a fatal flaw: time centralization. Airdrops target specific token snapshots at a particular point in time, creating discontinuity in the incentive space: holding tokens before the airdrop snapshot date is valuable, but suddenly becomes less valuable after the airdrop snapshot date. I suggest a slight modification: instead of taking snapshots at a specific time, take snapshots over time.
Future retrospective funders, through point airdrops, encourage parties wishing to receive airdrops to purchase relevant points early (and support relevant parties in doing actual work), so that even with price fluctuations, the amount of points will be higher over time. Overall airdrops can be safely promised in advance, without causing strange discontinuities in the incentive space, and can even be executed repeatedly to continuously adjust incentives. As expected, the complexity will be greatly simplified, because if your judgment about something valuable is correct, then the best strategy is to buy and hold.
Currently, in today's world, currency and trust are inversely related, as control over currency issuance is held by participants whom almost no one trusts. I think, for this reason, it took me a long time to understand the points made in this blog post, as I have a strong aversion to dealing with currency, to the extent that I was very hesitant to design any system that uses currency. (Especially when it involves a lot of measurement), I initially tried to avoid it (bad idea, it turns out this only leads to more measurement complexity…). However, once you combine currency and trust, even if only abstractly in the design of socio-technical systems, the dominoes will magically start to fall into place, as if it were all predestined.
A common problem in cryptocurrency systems is the key recovery issue. Cryptographic keys are strange things, strings that come out of nowhere, and most people forget them or lose the paper (I certainly would forget). The design of social key recovery systems suggests that we mark specific combinations of friends who are allowed to recover our keys, which, while better than having no key recovery at all, requires a lot of awkward manual interactions to specify and update this trust graph, and in any case, it is difficult to know exactly how to choose the right people, as the people one trusts can change over time.
However, if we combine keys, trust, and funds, a solution naturally emerges. Key recovery requires trust, so we must choose one or more people to trust. Who better to help me recover my keys than those who hold my credit? Our incentives are very aligned—they want me to do well so that the credit they hold is valuable in the future if I can access my account (which holds many other credits and allows me to issue more)! All we need is a threshold, directly extracting 2/3 from the distributed system, ensuring that the relevant parties can safely reach consensus on my new public key, even if less than 1/3 are offline.
Another pair of highly sought-after hypothetical protocols are those capable of achieving universal basic income and proof of humanity. I mention them in pairs because I believe they both concern the same question: what does it mean to be human? Designing a test that can distinguish humans from other entities is impossible, as humans have no essence: I am only human if you think I am. At different stages in history, laws have classified certain groups as subhuman, even assigning them numerical scores, which seems abhorrent to us today. Accordingly, I believe the idea of universal basic income is about equality, and equality in the eyes of the observer requires agreement from both parties.
These desires are two sides of the same coin, as there is no verification, only equality, and equality based on humanity must be determined by people. We could each keep a list of each other's public keys and pay each other equal amounts of our own scale-free credit currency every second, but this requires too much interaction and does not provide any predictability for the future (which may be the main benefit of UBI) and fails to leverage the assumed human attributes: they timely carry information, identity, and cryptographic keys.
Instead, based on this dual foundation of bilateral testing of humanity and the future continuity of humanity, I propose a small modification: heterogeneous UBI. We only need one ingredient: trust (and some cryptographic signatures). You and I meet in person, decide to trust each other, and cryptographically sign a commitment to continuously create one unit of our respective credit tokens per unit of time. These tokens can be sent to each other, but I think there is a better solution that can immediately create some "trust liquidity" and allow for future revocation: deposit these two tokens into a multi-signature account, which will lock them into an xy=k (or similar) automated market maker curve. This allows others to trade through us and enables us to leverage human relationships to balance other inequalities in the network.
Parties can unilaterally sign a message to the multi-signature account, which will result in the withdrawal of liquidity and the burning of the two credit tokens, so if you decide in the future not to trust me anymore, you can revoke that trust, but if others still believe in me, I will still have "trust liquidity" with them.
Of course, anyone can create a non-human cryptographic identity and start printing money with it, but unless they can persuade others to trust it, they will not gain any additional liquidity, as all paths in the liquidity graph must pass through them. No one is willing to commit to exchanging their credit for a fake identity, as they have no reason to expect others to want it! An attacker could bribe others to trust it, but they must bribe enough people to make (the supply inflation of the bribed tokens) worthwhile, so they will ultimately only pay UBI to the bribed parties themselves.
From this currency network, we can conduct a proof of humanity test between any two parties by demonstrating that there are many different individually valid bilateral signature chain paths on these commitments (of course, because it is relative) (with no overlapping member public keys except at the beginning and end), which do not exist for isolated network subgraphs (because, as mentioned, the cost of creating them is high).
Scale-free credit money and heterogeneous UBI can be issued using existing protocol primitives, roughly as follows: each issuer's smart contract account (as they may still need keys on multiple devices with different spending limits, so key recovery is only called when absolutely necessary), smart contract accounts for bilateral humanity testing liquidity locking relationships, Uniswap-style AMMs for facilitating exchanges, multi-hop exchange routing for finding paths through credit liquidity graphs (like Circles UBI), blockchains for sorting transactions and preventing double spending, and recursive ZKPs for retrospective point airdrops.
It is worth noting that privacy is crucial for scale-free credit money. If trust is not private, then it is possible to threaten someone because someone trusts another. To provide the necessary privacy, all of this must be implemented on a fully private basis, possibly including ZKPs for personal accounts and some threshold FHE for bulk exchanges, liquidity provision, and trust-minimized private cross-chain interactions.
With some misuse of Foucault, we can call this world of scale-free credit money a heterotopia. For Foucault, a heterotopia is a place outside of all places, a real place, but one where the normal operation of society and culture is inverted—graveyards, zoos, and fairs are all heterotopias. The heterotopia I speak of is not entirely a heterotopia; it conceptually precisely delineates those places that provide temporary gaps in the rules of everyday cultural spaces. Instead, my feeling is of a heterotopia that is both whole and fragmented.
Brothels and colonies are two extreme types of heterotopias, and if we consider a ship to be a floating space, a place without a place, it exists independently, is self-contained, while being endowed with the infinite ocean, extending from one port to another, from one nail to another, from one brothel to another, all the way to the colony, searching for their most precious treasures hidden in gardens, you will understand why, from the sixteenth century to the present, ships have not only been the great tools of economic development of our civilization (which I am not discussing today) but also the greatest reserves of imagination. This ship is the exemplary heterotopia. In a civilization without ships, dreams are exhausted, espionage replaces adventure, and police replace pirates.
Modernity no longer possesses any ships—not only because there are fewer treasures to plunder—but those former "exemplary heterotopias" have been toolized into costs per kilogram per kilometer and transportation APIs, organized and regulated according to the dollar. The heterotopia I speak of is a heterotopia of value, tracked and organized in a purely virtual space, itself divided into parts of overlapping subspaces in a fractal Venn diagram. Foucault's heterotopia implies the existence of a set of dominant cultural practices and a set of dominant spaces, which are semantically opposed, but the heterotopia of value assumes no specific spatial order, but merely multiple differences.
We do not live in a heterotopia now—we live in a world moving towards dystopia. A heterotopia is not a utopia—people will still disagree, accidents will still happen, and broken hearts will still ache—but I believe it is better than this world because it changes the cultural and technological foundations of currency to align with the future interests of humanity. Heterotopia is not merely a matter of currency mechanisms—currency should be a small and insignificant component of culture, society, activities, and traditions—but our current forms of currency are not, so I will focus here on mechanisms for currency transformation.
Some may be concerned about the state, as they have (only) strictly controlled the issuance of currency in recent history and may react strongly to the possibility of heterotopia. While I also fear state violence, I think this concern is easily exaggerated. While the state's monopoly may seem material, it is actually purely conceptual: once we no longer believe in it, it will disappear. Heterotopia shatters this monopoly into bits (nothing but bytes). If there is an organization that captures people across the map and sends them to camps, hiring an army of consultants to promote its so-called electorate, and has kept the world under nuclear threat for decades? Who in the future would want funds issued by an organization? If they want to survive in a heterotopia, the state had better stop locking people up and should start producing some public goods. Some governments may try to prevent the arrival of heterotopia by exerting coercion, but in a heterotopia, currency is merely information, and information is always a moving target that no bureaucratic mechanism can keep up with.
I believe heterotopia is possible. Information systems tend to stabilize, while our world today is fundamentally unstable, largely because currency and trust are so misaligned. States that can collaborate better may be more stable. But this does not mean that transformation will not produce turbulence. In particular, the existing communication infrastructure lacks a sound identity encryption foundation and trust relationship networks, making it very susceptible to propaganda, and constructed meanings may be drowned out by malicious noise. "Artificial intelligence" (fancy statistical models) may have excellent uses in artistic creation, but its role in propaganda is rapidly exacerbating this problem.
The remainder of this article is a hypothesis about heterotopia—if it is to come, what measures can institutions take to mitigate the turbulence of transformation?
First, institutions must collaborate to create the necessary technological foundation—research, protocols, interfaces, open-source software, and hardware—to make the vision of scale-free credit money heterotopia a reality. Existing blockchain/cryptocurrency protocol designers and organizations are well-equipped (excellent candidate examples include Aleo, Anoma, Celestia, Cosmos, Ethereum, Osmosis, Penumbra, etc.), but they need to work together and help realize decentralization, such as end-to-end encrypted messaging, properly distributed social media, locally prioritized applications, and systems for self-sovereignty and privacy protection applications (excellent candidate examples include Ink & Switch, Mastodon, Scuttlebutt, Signal, Urbit, etc.). Open-source and verifiable hardware is still a long way off, and perhaps can be accelerated through strategic acquisitions, followed by applying principles of free software similar to those articulated by the FSF regarding relevant hardware IP. Cryptocurrency funds often have substantial capital and should use it to achieve this goal rather than investing in Uniswap clone subsidy programs or sponsoring Formula One racing advertisements. Of course, hardware companies can also take the initiative themselves, hoping to receive retrospective funding in the future.
Second, and equally important, institutions must provide stability. Even in a better world, the road to heterotopia today will be accompanied by severe fluctuations in exchange rates, rapid changes in monetary policy, and excessive expansion of state power. Institutions can mitigate the impact on their constituents by hedging these risks: holding multiple currencies, committing to adjust wage payments inversely based on inflation rates or according to actual living costs, providing legal defense funds for individuals targeted by the government, and so on. Institutions that successfully buffer these shocks can expect retrospective allocations to include them in the future, so they have reason to try. Overall, existing legal structures have been designed to allow institutions to take risks ("limited liability") and hold assets, so existing institutions should be able to easily assume this role.
Institutions capable of issuing credit money as described above, transforming future expected value into current value, can sell credit money as existing currencies (especially fiat currencies) to fill institutional treasuries and enhance their ability to buffer shocks.
For collaboration towards heterotopia, institutions can establish bilateral trust relationships with other institutions. Importantly, these trust relationships should be publicly verifiable, as this enables parties operating within these institutions or otherwise allied with them to collaborate more effectively (e.g., deduplication work). This is very similar to the functionality of the aforementioned heterogeneous UBI proposal, but institutions can regularly agree to mint some tokens and locks for each other, rather than setting (in this case, not natural consensus) and committing to redefine future issuance schedules.
Institutions operating on the basis of the heterotopia concept should also selectively extend trust to existing legacy institutions. The conceptual frameworks and reputations of existing institutions are deeply rooted in current society, and cooperation may dampen the turbulence brought about by this transition. However, this trust (and currency) should not be extended unconditionally. Many existing institutions directly or indirectly fund weapons, propaganda, and coercion. Existing institutions have issued large amounts of currency but have lost much trust; if they wish for their currency to have value in the future, they must regain that trust. This is aligned with incentives, as scale-free credit money is a win-win—it only needs to oppose those who oppose others. Cooperative existing institutions can expect future retrospective funding, while non-cooperative existing institutions cannot expect any funding.
Certain existing institutions can easily undergo self-reorganization to rapidly accelerate this transition, as their skills and assets can serve as force multipliers for incentive transformation. Venture capitalists, hedge funds, and other private equity firms that retain direct decision-making power over their capital allocation only need to optimize the provision of public goods. Alternatively, they can issue their own funds in anticipation of future retrospective financing, but retrospective financing can also be issued to owners of existing stocks, equity, etc., through interface mechanisms, so this is not critical.
For existing capital allocators, once they anticipate heterotopia, this is incentive-compatible, as optimizing private value capture is a poor strategy from the perspective of capital efficiency in public goods provision. By definition, public goods are non-rivalrous and non-excludable. Existing schemes that convert public value into privately accessible value are artificially enforced exclusion mechanisms, such as paywalls or intellectual property laws. This exclusion limits potential future value and the corresponding expected future retrospective funding, as few can benefit from it or express gratitude for it in the future. Because each use must be tracked, the more users of a good product, the greater its potential future value, but the cost of this tracking also increases. Optimal capital efficiency in public goods provision is more likely to be achieved through infrequent measurement, as long as the amount needed to measure demand and collaborative production strategic direction is met, rather than measuring every interaction. Therefore, after the transition to heterotopia, it is expected that capital allocators who change their decision-making calculations earlier will perform better than those who do not (in terms of retrospective funding), as they will create more public resources.
Allow me to conclude with a more poetic tone. Quoting Mao Zedong:
What is the explanation for the "soon" in the phrase that the revolutionary climax is about to arrive? This is a common question among many comrades. Marxism is not a fortune teller; the future development and changes can only indicate a broad direction and should not mechanically specify a timeline. But when I say that the Chinese revolution is about to arrive, it is certainly not an empty statement devoid of action significance, as some people claim it is "already possible to arrive." It is like standing on the shore, gazing out to sea, having already seen the tip of a mast of a ship; it is standing on the peak of a high mountain, looking eastward, having seen the radiant and surging rising sun; it is a flame in the womb about to mature into a baby.
I will not translate this (note from the translator: the original text is in Chinese and has not been translated into English), as that would not do justice to the text, but it is sufficient to illustrate that the brilliance of heterotopia has begun to shine through the cracks of modernity. If you start looking, you will find it everywhere, from "Game B," to interpretations of the dystopia of social media that may lack a cryptographic foundation, to the categorical handling of economics on how to prevent "other things being equal" decision-making hubris, to conversations overheard in a Mexican restaurant in Kreuzberg about the dysfunction of the real estate market triggered by speculation. In fact, you have encountered it long ago, and perhaps it has already appeared in your life. It is not something I invented, but comes from countless of you. What I have done is merely give it a name. Even the name was not given by me.
However, once we decide to do so, heterotopia becomes inevitable.
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