I've been mulling over recent essays on digital cash by diverse authors that have popped up here and elsewhere and I'd like to highlight a revolutionary new "meme" of high cpunk relevance I see emerging, which I've not seen promoted by any single author yet (although I have seen some prominent cpunks argue the opposite). the basic thesis is as follows. digital cash obviously leads to an entirely new economic system in which the nature of routine future transactions may be radically altered. one of the chief alterations discussed ad infinitum on this list is the rise of economic freedom from taxation etc. however there is another interesting theme that is worth exploring at length that is at least as significant as this (bugaboo) taxation issue. one might look at the modern world and suggest that there is an increasing unification of currencies. the EU (European Union) is an example of this "trend". however I'm going to argue the opposite and suggest that the trend is toward increasing diversity of currencies. I believe we are moving toward a new system in which explosively more "currencies" will exist than do today. where will these come from? answer: stocks. I believe that future company stock will be considered a kind of currency issued by the company. when you are buying and selling stocks, what you are really doing is buying and selling currencies backed by different corporate entities. I have seen EH argue here and elsewhere that only a government has the legal capability of creating a currency. his view is that a currency is backed through *liability* that is enforced through laws. this is an interesting statist-flavor argument coming from a radical libertarian. what I would propose instead is that what a government has is *credibility*. this is the old "reputation capital" issue discussed here frequently too. a government is a massive entity larger than many companies that uses its full legislative "force" to back its currency. in another word, *trust*. however, I don't believe there is fundamentally a major difference between a company and a government, particularly in this area. (go ahead, flame me to oblivion for saying this, but I believe it is actually a very libertarian argument.) the only difference is in size and influence. it seems to me when a private company issues "cash", the basic principle is the same. the person who uses this cash is *trusting* the entity that issues it to back it with whatever they say they are backing with it. to use my stocks == currency analogy, the stock or currency of that company is backed by that company's assets and profitability. the interesting theme behind this is that it unifies the entire economic picture. suddenly the difference between currency and a stock tends to blur when stocks 1. can be exchanged readily 2. there is no government intervention/regulation in the exchange 3. middleman ("stockbroker" etc.) costs are minimized 4. (other similar elements yet to be identified) note that all these things appear to be the inevitable trend of uniting an economic system with cyberspace. -- my view of all this is somewhat blasphemous. the current system says that we have to have a government entity called the SEC to ensure that stocks are safe for those who invest in them. however, what I am suggesting is that a free market can actually devise its own methods of sorting out bogus from valid currency/stocks without government intervention. in fact, in my opinion that's precisely what investment advice is. this is exactly analogous too to the way that capital "naturally" moves away from unstable currencies and economies (of course capital does not do it, but the intelligent human forces that guide it amount to this basic effect). hence what I am proposing is a sort of currency spectrum. stocks are high risk but greater profit, and currency is low risk (stable) but subject to inflation or loss of value. they are two ends on a currency spectrum. and what I am proposing is that in the future, this currency spectrum will tend to emerge out of economic transactions in cyberspace. this currency spectrum will be recognized as a basic function of the cyberspatial economy. this economy will evolve overall to cut out middlemen and anything that decreases cash value. hence, you will see things such as companies offering their own cash (stock) directly to "consumers" without the large overhead associated with today's stock market (which will be considered a rather backward way of running an economy in the future because of the horrendous dissipation of capital involved in merely moving it from place to place). -- in the end, the government and various bankers lose their economic monopoly on "creating" cash, which affords them no end to manipulative capabilities. governments will compete with all other entities that desire to create cash systems. cash will move where governments and entities most "respect" it. oppressive tax laws etc. will be considered a lack of "respect" for cash. I know that the opposite trend seems to be happening: an increasing clampdown on "black cash". I think this may actually succeed in the short run, but the eventual movement of the economy is toward unrestrained cash in the same way there is a clear movement to an unrestrained cyberspace. there may be "blips" or "disturbances" on the way, but they'd merely be anomalies. my own view is that governments are either legitimately created or they are not ("consent of the governed" etc.). if they are legitimately created and maintained, then people will continue to support them even when it seems they have the choice not to (such as evade taxes). if they are not supported, then they are not legitimate. putting one's money where one's mouth is is the ultimate test of legitimacy in our reality. that is, support of a government by its people is the ultimate test of its legitimacy, and the the ultimate test of support is *cash*transferred*. no amount of policemen thugs pointing machine guns at tax protesters attempting to intimidate the entire population will change this basic reality imho. in fact I believe that many systems of today that are based on intimidation are going to dissolve as cyberspace becomes more prevalent. the scientology battle is a good example of this. before the internet their litigious intimidation tactics may have succeeded (and arguably did). however the tactics are becoming increasingly discredited in my view. but I am not saying this will happen without a struggle. I believe this will be the ultimate conclusion after a lot of turbulence and perhaps even bloodshed. -- today we think that cash moves around the world very readily, in the blink of an eye. but I suggest that today we actually have tremendous amounts of "friction" that are dissipating economic value of "currencies" merely as it moves through the system (the stock market would be one example). looking only at today's *cash* systems, indeed there is low friction, but when considers that *stocks* are actually cash, then our overall economic system is quite backward. cyberspace will act as a sort of economic lubricant of the highest degree in decreasing this friction. I will debate intelligent opposition to these ideas in this essay, but frankly I think what I describe is a reality that is going to emerge completely independent of my own promotion or anyone else's opposition. the famous Gilmore quote is that "cyberspace sees censorship as a defect and routes around it" has an analogy in the economic realm: "cash sees the middlemen as a defect and routes around him". inflation is one example of instability or lack of resiliency (a defect) of a currency. it can be seen as the exact opposite effect the growth of a stock is: loss of economic capital due to dissipation. I imagine one of the main claims against my essay will be as I anticipated above: only governments have the force and power necessary to back a currency. but I believe this is an anti-libertarian view. it suggests that cash only works when the government is involved, and the force associated with that government is employed as a means of keeping the system in check. can one have an economic system not based on mandatory obeisance to a government? I think it is clear to most on this list such a thing is not only possible but advantageous, desireable, and preferrable. the "trust" that a person places in a company stock is absolutely no different, in essence, from that placed in a currency of a government-- only the scale and the participants are different. I don't really believe that the legal framework associated with a government is what holds commerce together. there are many situations where companies simply eat their losses even when they are in the "right" legally and could sue and win. cyberspace will tend to prefer "anticipation" to legalities. in other words, it will tend to prefer to develop systems that anticipate failure (such as currency crashes) before they happen. courts will be seen as the absolute last resort for any kind of arbitration. in my view this has already happened today.