The prerequisite cultural and technological foundation for rationalizing the post-TRUMP era heterotopia of everyone issuing tokens and returning to the free-scale credit currency world

Written by: Christopher Goes, co-founder of Anoma; Translated by: Tia, Techub News

"Trump's issuance of meme coins has magnified a window for the issuance of personal tokens for us, and opened up our imagination. What would a possible future utopia where everyone issues tokens look like?"

Recently, I've been reading something related to anthropology. Usually, some economic classics assume that the primitive economy is barter, and the emergence of currency is to solve the double-coincidence-of-wants. This assumption is taken for granted in many places (as is the Anoma vision book), but if you look up history like David Graeber, you will find that this is obviously nonsense.

Early societies, as well as small societies today, do not exchange cows for chickens (at least not most of the time), and they did not invent coins to solve the double-coincidence of needs because they did not need to do so. Instead, they used credit. Credit solves the double-coincidence of needs in a beautiful and elegant way, and further integrates over time.  

If I'm a butcher and you're a baker (I may not need bread right now, but I certainly will 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 when, and settle accounts regularly. Of course, this requires enough repeated interactions and enough trust. But in a small community, 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 measurement (but actual exchange is not in that specific commodity). It can be said that the "store of value" function of money is mostly virtual rather than physical: although some farmers may have more cattle or grain than others, the most important asset held by residents is usually the trust of the community, which allows them to get what they need when they need it, so that they can more easily cope with supply shocks. This trust is a form of credit that anyone can issue (but if they start asking for too much without providing anything in return, their neighbors may no longer be willing to accept their credit). This accounting of credit is virtual, not tracked precisely by spreadsheets and central banks but rather roughly by observation and gossip, and it is scale-free because anyone (individual or institution) of any size can issue credit, so there is no monopoly. Most of us no longer live in a world of scale-free credit money for a simple reason: in a world where money is physical, this kind of trust accounting cannot scale. In a broad economic network, most interactions are with strangers who people will never see again. So we now live in a world of fiat credit money. In a world of fiat money, money is issued by only a few (hopefully) trusted institutions, such as governments and banks, and what people trade in their daily interactions is not personal credit but debts issued by these institutions. This solves the problem of trust accounting between strangers, because strangers only need to trust the same institution and the accuracy of the accounting mechanism, and they do not need to trust each other. But fiat money, as a collaborative mechanism, has two fatal flaws. First, fiat money centralizes trust and loses its fault tolerance. Due to the network effects of units of account, stores of value, and media of exchange, the difficulty of establishing appropriate accounting mechanisms, and the tendency of bellicosity states to make stupid laws, the issuance of money is limited to a very small number of people. Control of these institutions becomes a primary point of competition. It is possible that a small number of people who put their personal interests above the public interest will become the controllers of the money supply mechanism and use part of the money for their own private purposes. Perhaps they do not succeed in doing so, and the negative externalities caused by the elites' struggle for control of the money supply will also pollute the discourse field with "alternative facts" so that the normal mechanisms of social feedback and coordination no longer work at all. Only trust decentralization can achieve fault tolerance.  

Second, legal credit money currently relies on measurement. In order for us to use debt instruments to make payments without trusting each other, we must agree on a trusted third party and an exact payment amount so that we can walk away at the end of the transaction and never expect to compensate each other again. If the main benefit of the good paid is easy to estimate and limited to the party buying it and itself in the present (such as a sandwich), there is no need to estimate its future value, but if the benefits obtained will increase gradually over time (such as knowledge), this is definitely a poor way to measure.  

I think many of the dystopian elements of today’s world can be traced back to these two fatal flaws. The roots of war, climate change, nuclear proliferation, lack of public education, pollution of the information commons, and similar phenomena stem largely from poor decisions made by elites competing for government positions or the resulting propaganda (e.g. persuading citizens to pay for it) that is the result of this centralization.  

By contrast, free-scale credit money decentralizes trust and shifts the metric toward the future. My credit is valuable to you if and only if you expect me to be able to repay you in some form, because I can’t offer anything now. While parties exchanging debt can walk away, 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 don’t care if what I taught you is right or wrong, I just want to convince you to pay me more money. If I teach you something and you pay me with credit, I probably want to teach you something that is correct and useful so that your credit is valuable to me in the future.  

In our world today, fiat credit money, trust, and money are misaligned, so much so that they have turned upside down. To realign them, we must realign control over money issuance with trust, and return to a world of free-scale credit money.  

What is a world of free-scale credit money?  

What would a world of free-scale credit money look like? In our world, the issuance of money is tightly controlled, typically only available to governments and specific entities they authorize (such as banks). If money is to become credit, reunited with trust, then these restrictions don’t make sense, because trust is distributed and credit is personal, so let’s change some basic assumptions. Assume that everyone can print money whenever and wherever they want (although they can voluntarily limit their ability to do so), and send it to whomever they want. Assume that individuals and institutions around the world are constantly creating new denominations of money now and in the future. We also assume that the denominations of money are content-addressed: money is determined by who (cryptographically) currently holds it, who (cryptographically) can issue it, and how much they can issue and under what conditions (with self-limiting constraints). Local name systems and consensus algorithms handle human-readable mappings and temporal continuity.  

In this hypothetical world, money is not actually useful for collaboration so far, because everyone is using a different currency. How can these heterogeneous instruments function as a store of value, unit of account, or medium of exchange?  

Let's think about this further. Agents who print money are not just individuals, they may also be institutions that want to provide functions such as a store of value, unit of account, and medium of exchange to their constituents in some space domain (whether digital or physical). But in this world of free-scale credit money, competition for money is fierce, because anyone can switch the currency they use at any time, so institutions that want to issue money must develop an initial allocation and issuance schedule that can be used by their potential users. In such a region, a currency chosen by a group of people can serve as a store of value, unit of account, and medium of exchange if the group can agree on the currency. But what if that institution starts sending money to places people don’t like? Because someone else can simply join in and issue another money, duplicating (and potentially changing) the allocation and changing the recipients. You might object that the switching costs are not zero. Imagine if you had to reprice all the items in a supermarket. The operational costs would be high. In a world where money is mostly physical, switching costs are high, but in a world where money is mostly digital, they are not. In a world where money is digital, the store of value, unit of account, and medium of exchange can be easily decomposed through automatic price conversion and swapping. In this world of free-scale credit money, new money is constantly being created, and most of the potential money does not exist in the present, but in the future. The competition for value in the present is not based on scarcity, but on the potential retroactive allocation of money in the future. Since money is competitively selected, what is expected to be included in the retroactive allocation of money in the future is based on the value that future people and institutions believe the contributors in the past (our present) ultimately provided to the present (our future).

Now, you might ask, how do we keep track of scarce physical goods in a world with infinite money? Physical goods are expensive to produce and (at least compared to digital goods) tend to provide most of their value to private parties in the near future. The current payment accounting system does a decent job of organizing the production of physical goods, so regular old payments upon receipt seem like a reasonable solution to me. People and organizations that produce physical goods can operate in this world as normal, simply accepting credit from parties they trust rather than sovereign debt.  

Payments for physical goods also benefit from the stability of the unit of account. In this world of free-scale credit money, the option of a currency with self-issuance controls can provide the necessary stability. The institution that issues the currency can impose its own limits on the issuance rate, so that issuance cannot exceed a few percentage points per year (compared to the existing targets of central banks), thereby keeping the unit of account reasonable.  

Now, you might have a question: how do you interact with untrusted parties? Traveling to distant places, interacting, and trading is great - do we need to give that up in such a world?  

It’s time for some mechanistic magic to come in handy. Let’s assume that there is some liquidity in the credit market, such that any issued currency is freely convertible with any other currency as long as someone wants to create some liquidity. Now, if I want to pay you, but we don’t 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 - all we need is 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 the price changing much, but if there is little liquidity, I can only pay you a little - but this is exactly the density (and directionality) of trust!  

But the skeptics among you may object that this does sound like a world of mega-financialization. Imagine everyone’s credit being traded - aren’t we supposed to win the usage war through an endless game of self-marketing? I think that free-scale credit money greatly reduces the network effects of money compared to today, because it removes the need to reach consensus on which specific currencies are used in any particular interaction, but some network effects will still exist. Also, there are apparently a lot of new forms of money at the moment (just look at the list here), and they do seem to spend a lot of time, energy, and money (somewhere, there’s a catch here…) competing with each other.  

Here’s my last mechanic of magic: the promise of a future airdrop. Airdrops are already a common mechanism in blockchain circles, and they are often used to try to spread a new form of money, but as currently deployed they have a fatal flaw: time centralization. Airdrops target a specific token snapshot at a specific point in time, which creates a discontinuity in the incentive space: holding tokens before the airdrop snapshot date was valuable, but suddenly becomes less valuable after the airdrop snapshot date. I suggest a slight modification: instead of taking snapshots in time, take snapshots over time.  

Future retroactive funders, through point airdrops, encourage parties who wish to receive airdrops to buy the relevant points early (and support the relevant parties to do actual work), so even if the price fluctuates, the amount of points will be higher over time. The overall airdrop can be safely committed in advance, does not cause strange discontinuities in the incentive space, and can even be repeated to continuously adjust incentives. As expected, the complexity is greatly simplified, because if your judgment about the valuable thing is correct, the best strategy is to buy and hold.  

Currently, in today's world, money and trust are anti-correlated, because the control over the issuance of money is controlled by actors that almost no one trusts. I guess, for this reason, it took me a long time to understand the points made in this blog post, because I hate dealing with money so much that I was very hesitant to design any system that uses money. (especially when it involves a lot of measurement), and I initially tried to avoid it (bad idea, it turns out that this only leads to more measurement complexity...). But once you combine money and trust, even just abstractly in the design of socio-technical systems, the dominoes start to magically fall into place, as if it were all preordained. A common problem in cryptocurrency systems is the key recovery problem. Cryptographic keys are strange things, strings that appear out of thin air, and most people forget them or lose pieces of paper (I certainly do). The design of social key recovery systems suggests that we tag specific combinations of friends who are allowed to recover our keys, and while better than no key recovery at all, the solution requires a lot of awkward manual interactions to specify and update this trust graph, and in any case it's hard to know exactly how to choose the right people, because who people trust changes over time. However, if we combine keys, trust, and money, a solution emerges naturally. Key recovery requires trust, so we have to choose one or more people to trust. Who better to help me recover my keys than the person who holds my credit? Our incentives are pretty well aligned - they want me to do well so that the credit they hold will be valuable in the future if I can access my account (which holds many other credits, and allows me to post more)! All we need is a threshold, 2/3 directly extracted from the distributed system, which ensures that the parties involved can safely agree on my new public key, even if less than 1/3 are offline.  

Another pair of highly sought-after hypothetical protocols are those that enable universal basic income and proof of humanity. I mention them as a pair because I think they both care about the same question: what does it mean to be human? It is impossible to devise a test that distinguishes humans from other things, because humans have no essence: I am only human if you think I am. At various points in history, laws have classified certain groups of people as subhuman, even assigning them numerical scores that would seem abhorrent to us today. Accordingly, I argue that the idea of ​​universal basic income is equality, and equality in the eye of the beholder requires both parties to agree.  

These aspirations are two sides of the same coin, because there is no test, only equality, and equality based on humanity must be determined by people. We could each keep a list of everyone else’s public keys, and pay each other an equal amount of our own free-scale credit money every second, but this requires too many interactions, doesn’t provide any future predictability (which is probably the main UBI benefit) and fails to exploit our assumed human property: that they carry information, identity and cryptographic keys in time. Instead, I propose a small modification based on this dual foundation of a bilateral test of human nature and future continuity of humanity: 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 continually create one of our respective credit tokens per unit of time. These tokens could be sent to each other, but I think there’s a better solution that creates some “trust liquidity” immediately and allows for future revocation: deposit both tokens into a multisig account, which in turn locks them to an xy=k (or similar) automated market maker curve. This allows others to trade through us, and allows us to leverage human connections to balance out other inequalities in the network.  

Each party can unilaterally sign a message to the multisig account which will cause it to withdraw liquidity and burn two credit tokens, so if you decide in the future that you no longer trust me, you can revoke that trust, but if others still trust me, I will still have "trust liquidity" with them.  

Of course, anyone can create a non-human crypto identity and start printing money with it, but unless they can convince others to trust it, they won't gain any additional liquidity because all paths in the liquidity graph must go through them. No one wants to commit to a fake identity in exchange for their credit because they have no reason to expect anyone else to want it! An attacker can bribe others to trust it, but they have to bribe enough people to make it worthwhile, so they will only end up paying UBI to the bribed parties themselves.  

From this currency network, we can perform proof-of-humanity tests on any two parties (because it is relative, of course) by proving that there exist many different individually valid bilateral signature chain lists on these commitments (with no overlap of member public keys except at the beginning and end), which does not exist for isolated network subgraphs (because, as mentioned above, they are expensive to create).  

Free-scale credit currencies and heterogeneous UBIs can be issued using existing protocol primitives, roughly as follows: smart contract accounts for each issuer (because 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 human-tested liquidity locking relationships, Uniswap-style AMMs for facilitating swaps, multi-hop exchange routing for finding paths through credit liquidity graphs (such as Circles UBI), blockchains for ordering transactions and preventing double spending, and recursive ZKPs for tracing credit airdrops.  

It is worth noting that privacy is critical for free-scale credit currencies. If trust is not private, then it is possible to threaten someone just because they trusted someone else. To provide the necessary privacy, all of this would have to be implemented on a fully private basis, perhaps including ZKPs for individual accounts and some threshold FHE for batch exchange, liquidity provisioning, and trust-minimized private cross-chains.  

To misapply Foucault a bit, we could call this world of free-scale credit money a heterotopia. For Foucault, a heterotopia is a place outside of all places, a real place, but one where the normal functioning of society and culture is inverted—cemeteries, zoos, and fairs are all heterotopias. What I mean by heterotopia is not quite heterotopia, which conceptually demarcates precisely those places that provide a temporary interstitial with the rules of everyday cultural places. Instead, my sense is a heterotopia that is both complete and fragmented.  

The brothel and the colony are two extreme types of heterotopias, and if we think of the ship as a floating piece of space, a place without a place, existing independently, closed in itself and at the same time endowed with an infinite ocean, from port to port, from nail to nail, from brothel to brothel, it stretches to the colonies in search of their most precious treasures hidden in their gardens, you will understand why the ship has been not only the great instrument of economic development of our civilization from the sixteenth century to the present day (which I have not talked about today), but also the greatest reserve of imagination. The ship is the heterotopia par excellence. In a civilization without ships, dreams dry up, espionage replaces adventure, the police replaces pirates.  

Modernity no longer has any ships - not only because there are fewer treasures to plunder - those former "par excellence heterotopias" have been instrumentalized into costs per kilogram-kilometer and transport APIs, organized and regulated according to dollars. The heterotopia I’m talking about is the heterotopia of values, tracked and organized in a purely virtual space, which is itself fragmented into a fractal Venn diagram of partially overlapping subspaces. Foucault’s heterotopia implies that there is a set of dominant cultural practices and a set of dominant spaces, which is semantically the opposite, but the heterotopia of values ​​assumes no particular spatial order, just a plurality of differences.  

We don’t live in a heterotopia right now – we live in a world heading towards dystopia. The heterotopia is not utopia – people will still disagree, accidents will still happen, broken hearts will still ache – but I think it is better than this world because it changes the cultural and technological basis of money to suit the future interests of humanity. The heterotopia is not just a matter of the mechanics of money – money should be a small and insignificant component of culture, society, activities and traditions – and our current form of money is not, so I will focus here on the mechanics of monetary transformation.  

Some people may be concerned about states, because they have (only) in recent history strictly controlled the issuance of money, and may react strongly to the possibility of heterotopias. While I share my fears about state violence, I think such fears are easily overstated. While the state’s monopoly may seem physical, it is in fact purely conceptual: once we stop trusting it, it disappears. Heterotopias smash this monopoly into bits (and nothing but bytes). Who in the future would want money from an organization that rounds up people across the map and sends them to camps, employs armies of consultants to propagate its supposed constituency, and keeps the world under nuclear threat for decades? If they want to survive in heterotopias, states had better stop locking people up and start producing some public goods instead. Some governments might try to prevent heterotopias by exerting coercive force, but in heterotopias, money is just information, and information is always a moving target that no bureaucratic mechanism can keep up with. I think heterotopias are possible. Information systems tend toward more stable states, and our world today is not stable at all, largely because money and trust are so inconsistent. States that work better together are likely to be more stable. But that doesn’t mean the transition won’t be turbulent. In particular, the existing communications infrastructure lacks a robust foundation for identity encryption and a network of trusted relationships, making it highly susceptible to propaganda, and the construction of meaning can be drowned out by malicious noise. "AI" (fancy statistical models) may have excellent uses in artistic creation, but its role in propaganda is rapidly exacerbating this problem. The rest of this article is a hypothesis about the heterotopia - if it is finally coming, what measures can institutions take to ease the turbulence of the transition? First, institutions must collaborate to create the necessary technical foundation - research, protocols, interfaces, open source software and hardware - to make the realization of the heterotopia vision of free-scale credit money possible. Existing blockchain/crypto protocol designers and organizations are well-equipped (good candidates include Aleo, Anoma, Celestia, Cosmos, Ethereum, Osmosis, Penumbra, etc.), but they need to collaborate and help enable decentralized systems like end-to-end encrypted messaging, properly distributed social media, local-first apps, and self-sovereign and privacy-preserving apps (good candidates include Ink & Switch, Mastodon, Scuttlebutt, Signal, Urbit, etc.). Open source and verifiable hardware is still far away, perhaps accelerated by strategic acquisitions and then applying free software principles similar to what the FSF has articulated for relevant hardware IP. Crypto funds tend to have a lot of money and should use it to achieve this goal, rather than pouring money into Uniswap clone subsidy programs or sponsoring Formula 1 ads. Of course, hardware companies can also strike out on their own in the hope of receiving retroactive funding in the future.  

Second, but equally important, institutions must provide stability. Even in a better world, the path to heterotopia today will be accompanied by wild swings in exchange rates, rapid changes in monetary policy, and overreaching of state power. Institutions can mitigate shocks to their constituents by hedging these risks: holding multiple currencies, promising to adjust wage payments inversely to inflation or to the actual cost of living, funding legal defense for individuals targeted by the government, and so on. Institutions that successfully provide a buffer against these shocks can expect retroactive distributions to include them in the future, so they have reason to try. In general, existing legal structures are already designed to allow institutions to take risks (“limited liability”) and hold assets, so existing institutions should be able to easily assume this role.

Institutions that can transform future expected value into present value by issuing credit money as described above can sell credit money for existing money (especially fiat money) to fill institutional coffers and increase the institution’s ability to buffer shocks.  

Institutions can establish bilateral trust relationships with other institutions for the sake of heterotopia collaboration. It is important that these trust relationships are publicly verifiable, as this enables parties operating within or otherwise aligned with these institutions to collaborate more effectively (e.g., de-duplicating work). This is very similar to how the heterogeneous UBI proposals above function, but rather than setting (not natural consensus in this case) and committing to redefine future issuance schedules, institutions can periodically agree to mint some of each other’s tokens and locks. Institutions operating on heterotopia concepts should also selectively pass on trust to existing legacy institutions. The conceptual frameworks and reputations of existing institutions are deeply embedded in existing society, and cooperation may dampen the turmoil that comes with this transition. However, this trust (and currency) should not be extended unconditionally. Many existing institutions directly or indirectly fund weapons, propaganda, and coercion. Incumbent institutions have issued a lot of currency, but have lost a lot of trust, and must earn it back if they want their currency to have value in the future. This is incentive-aligned, as free-scale credit money is a win-win — it only needs to work against those who work against others. Incumbent institutions that cooperate can expect retroactive funding in the future, while uncooperative incumbents cannot expect any funding at all.  

Certain existing institutions can easily restructure themselves to rapidly accelerate this shift, as their skills and assets can act as force multipliers to incentivize the shift. Venture capitalists, hedge funds, and other private equity firms that retain direct decision-making over their capital allocations need only optimize for the provision of public goods. Alternatively, they can issue their own funds in anticipation of future retroactive financing, but retroactive financing can also be issued to owners of existing stock, equity, etc. through an interface mechanism, so this is not critical.  

For existing capital allocators, this is incentive compatible once they expect a heterotopia, as optimizing for private value capture is a poor strategy from the perspective of capital efficiency over the provision of public goods. Public goods are, by definition, non-rivalrous and non-excludable. Existing schemes for converting public value into privately accessible value are to impose artificial exclusion mechanisms, such as paywalls or intellectual property laws. Such exclusions limit potential future value, and the corresponding expected future retroactive funding, because few people can benefit from it or be thankful for it in the future. Because every use must be tracked, the more users a good product has, the greater its potential future value, but the higher the cost of such tracking. Optimal capital efficiency in the provision of public goods is more likely to be achieved through infrequent measurement, measuring only the amount needed to coordinate demand and the strategic direction of collaborative production, rather than for every interaction. Therefore, after the transition to heterotopia, capital allocators who change their decision calculations early are expected to do better (in terms of retroactive funds) than those who do not, because they will create more public resources.  

Please allow me to end on a more poetic note. To quote Mao Zedong:  

How to interpret the word "soon" in the so-called revolutionary climax is coming, this is a common question for many comrades. Marxism is not a fortune teller. Future development and changes should only give a general direction, and it should not be possible to mechanically determine the date. But the Chinese revolution I'm talking about is not, as some people say, a "possibility that has already arrived," a completely meaningless and unattainable empty space. It's like standing on the shore and looking out into the sea, you can already see a ship on the tip of a maple pole. It's like standing on the top of a mountain and looking into the east and seeing the sun shining brightly. It's like a baby in the mother's womb whose flame is about to mature. I won't translate this because it doesn't do justice to the text, but it's enough to say that the light of utopia has begun to shine through the cracks in the surface of modernity. If you start looking, you'll find it everywhere, from "Game B" to the explanation that social media dystopias may have no cryptographic basis, to the category theory of economics dealing with how to prevent the conceit of "other things being equal" decision-making, to the conversation overheard in a Mexican restaurant in Kreuzberg about the dysfunction of the real estate market caused by speculation. In fact, you have already encountered it, and it may even have appeared in your life. It was not invented by me, but by countless of you. All I did was give it a name. Even the name was not given by me.  

However, once we decide to do this, utopia is inevitable.