A Gold Bug’s Digital Income
Gold and other precious metals have long been the basis of currency, largely due to their relative scarcity. The advent of paper money, and then the information revolution, made digital fiat currency the standard worldwide. Gold, silver, and the precious metals were largely relegated to second-tier status and just another industrial commodity.
The central banks, which controlled the supply of fiat currency, remained monopolistic gatekeepers with little public oversight or transparency. The lack of openness allowed them to abuse their positions and shield themselves from any adverse consequences. They had much to lose if alternatives to fiat, such as precious metals, gained in use.
The advent of digital currencies presented a different model. The power to make money could be decentralized and distributed. An online currency had an innate value due to the software ecosystem that made such endeavors possible, often representing encryption and processing of transactions. However, the digital currencies presented issues in the form of price volatility and adoption. The vulnerability was that exchanges for fiat currency could be targeted, setting up a new barrier to adoption.
The point of COINZ is to promote a basic income via digital currency. We believe that a digital currency used for basic income would allow it to quickly be adopted rapidly. In particular, we believe that a peg (at least initially) for a digital currency would grant it vital stability. While we are working towards a peg on a fiat currency, there is no reason that this cannot be repeated for other commodities.
Imagine if a digital currency was pegged directly to the price of gold in a particular currency (or combination of currencies), and then used as a basic income. This would allow it to become widespread, and allow those who prefer physical gold to redeem it immediately. A “smart contract” could allow the peg to be adjusted for shifts in demand. This creates a software-administered social safety net, requiring no taxes in implementation. It puts a dampener on rampant speculation, given that the peg can be both fluid and reliable. This is why we believe that digital currency and smart property offer a way out of the economic and financial trainwreck around the world.