authored by

John Kierans
January 2018

The open ledger is an exciting prospect.  Allowing and encouraging third parties to validate transactions and events is a smart idea that can deliver real value.  It can cut out a lot of replicated record keeping, verifying and general administration tasks.  This delivers a lot of cost saving from the lifecycle of a product being created to being sold.  So far so good!

There is a problem in how we compensate the cohort of people validating transactions.  The people that process each block of data and form the blockchains need to be paid.  At present they are accepting tokens or cryptocurrencies.  This is fantastic for the creator of cryptocurrencies.  You pay the ‘validators’ a token or crypto currency which you created out of the blue and they do lots of work for you.  In order for the workers to spend their hard earned coins in the local supermarket they must convert them into established currencies.    

Labour tokens have a long history.  It is a history of failure.  In the nineteenth century labour tokens were issued to workers for hours of work done.  These labour token could then be exchanged for goods and service within the community in which they were issued.  In other words they could only be spent within their own ecosystem.

Crypto tokens/coins/currency or whatever they may end up being called are not widely accepted or used beyond their own individual ecosystems.  That may change.  But right now they face similar challenges to the labour tokens of the nineteenth century.    

The technological development of blockchain is not dependent on cryptocurrencies.  There is no reason why a crypto payments system could not be developed using Dollars, Euros or Gold.

Gold and silver have a longer history as money than fiat currencies, labour tokens or cryptocurrencies.  I suspect they will have a longer future too.  

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