I’m a fan of Paul Krugman. This is not due to his economic or political views (although I always enjoyed it whenever he and George Will would square off on Sunday morning TV), or even to his 2008 Nobel Prize in economics. Rather, it is because Krugman owes, like I do, much of his life outlook to one book: Isaac Asimov’s Foundation. I’ve written about this influence, The Asimovian Epoch is a good starting point.
Five years ago, Krugman wrote an opinion piece in the New York Times with the title, Adam Smith Hates Bitcoin. Krugman argued that Smith’s “dead stock” (like gold and silver) was raising its ugly head again in modern times in the form of “virtual currency”.
Bitcoin, like other virtual currencies, is built on blockchain. This architecture enables a secure, distributed ledger to be stored as a linked list (‘chain’) of groups of records (‘blocks’) and used simultaneously on many computers, which is where most of the security comes from. It’s much more difficult to ‘hack’ thousands of computers in order to falsify a record than it is to do so on a single, centralized computer.
Modifications to the blockchain are implemented as transactions. In the case of currencies, these transactions perform tasks such as sending and receiving ‘coins’. The low level implementation of these transactions is usually done with a scripting language, and this code often looks an awful lot like Forth, one of the oldest and coolest languages in the history of computing. I’ve written a lot about Forth, Forth: A Syntonic Language is a good starting point.
The big problem with most virtual currencies is the tremendous amount of computational resources they suck in both to maintain their blockchains and to mint (‘mine’) new currency. This is a modern form of “dead stock”. Nothing truly productive comes from all this computation, only more currency. It would be better if money was left to serve its symbolic function, and the production of people, computers, and energy went into moving the world forward.
Gridcoin is an open source cryptocurrency that aims at harnessing this production to assist in scientific research. It was officially launched a few months after Krugman’s opinion piece was printed in the NY Times. Instead of Bitcoin’s “proof of work” mechanism (the basis of security and ‘mining’), Gridcoin implements two newer concepts, “proof of stake” and “proof of research”.
Proof of stake (POS) is an extremely efficient mechanism for securing the network and generating new ‘coins’ based on a simple interest rate dividend. Proof of research (POR) turns all that computing power toward scientific calculations via projects hosted on the Berkeley Open Infrastructure for Network Computing (BOINC) framework. These projects range from biology to cosmology, and many interesting fields in between. This effort is closely related to computational Citizen Science, yet another subject near and dear to my heart. Using POS and POR, participants can contribute to scientific research while earning some ‘coins’ to at least offset some of their expenses for equipment and electricity. They can also learn about blockchain and virtual currencies without a scary dive into the deep end of cryptocurrencies.
Paul Krugman, Isaac Asimov, and yes, Adam Smith, would approve.
David Brin, author of Foundation’s Triumph (1999), had some interesting thoughts on Adam Smith in the context of psychohistory here.
There are other similar projects.
One final thought. Adam Smith was a key personage of the Scottish Enlightenment. Another giant of that ‘clan’ was the American founding father Benjamin Franklin (who was a friend of Smith’s). Franklin was almost as great a polymath as Asimov. When I founded the Geopense computational citizen science team years ago, and ever since, this quote has been on the main site page:
Tell me and I forget.
Teach me and I remember.
Involve me and I learn.
– Benjamin Franklin