Episode-1561- Another Look at the Future of Crypto Currency and Virtual Nations — 21 Comments

  1. I’m just saying, a guy can only hear so much about bitcoin and virtual nations. When do we get back to the gardening and swales?………….. 🙂

    • @RonBoots – you joke, but I personally never get tired of reading people’s comments that essentially say “I don’t like this whole permaculture nonsense, Jack has so many good insights on things like education, modern survival, and business. I don’t know where he comes up with this stuff, but it’s great, why can’t I hear more about that!” Never realizing that maybe if they looked into that whole permaculture nonsense, they might figure out where Jack gets those insights from.

  2. Speaking from a software engineer’s perspective – and as someone who has written algorithmic trading bots for bitcoin I would like to emphasize the following. I honestly think that the destruction of any exchange value, from inside credits to dollars be kept to zero. Ensuring that exchange from credit to dollars is impossible or very limited will be key to establishing an unquantifiable and untaxable asset. What may be more important is being _unquantifiably appreciable_ in dollars, even if inside credits are able to purchase more over time. We need to itemize how price discovery occurs for an asset (digital or not) then destroy any price discovery possible in dollars. Anyone have thoughts on this?

    • If there’s a free market on the exchange rate of the currency, then I don’t see how income within the nation couldn’t and wouldn’t be considered taxable in some way by whichever country you hold physical citizenship of. I would assume that it would be considered taxable in a similar manner to Americans living abroad are taxed currently.
      However, if the currency is being kept artificially low or high in order to encourage new investment or discourage trade outside of the virtual nation etc., then you have to create an ever increasing state to act like a dam, as the pressures of market forces want to equalize.
      Which would then beg the question… why bother, if you only end up creating just another state to rebel against?
      Even then, I’m not sure it would do much good. If I were an attorney or an agent for the IRS (and I’m not), I would just take something that is easily exchangeable in both the virtual nation and the physical nation and extract an exchange rate from that. As an example: the virtual nation “X” trades “Y”. There is no exchange for “Y” to US Dollars, but you can buy an ounce of gold for 100 Y, and an ounce of gold is going for $1,200, therefore we have determined that 1 Y is equal to $12. Therefore, an income of 1,000 Y will be taxed as if you earned $12,000.

      I may comment further on this, I’ll want to sleep on it, and see if something else comes to mind. But, as of right now, I would imagine that it would be a lot more beneficial to the long term success of the project if there was just an open exchange of crypto currency in the virtual nation to other crypto currencies and to physical currencies.

      • Don’t set it up as ‘currency.’

        Make a ‘game’ out of it with ‘points’ exchanged between ‘players.’ [So what if the ‘players’ take your ‘game’ way too seriously.]

      • Thanks for the reply USCPrepper.

        The price discovery mechanism you are talking about would be successful but it is still indirect.

        The problem I’ve observed from the onset of bitcoin and any crypto currency is the blaring reality that there exists structural demand for fiat currency so the attempt to escape it is always supplanted by price discovery of the crypto in dollars. Ever consistently everyone is pricing their bitcoin in “dollars” and constantly obsessed with its USD exchange rate. If the marketplace has this sentiment, as it currently does with bitcoin, BTC is not a currency but a mere convenient USD payment system. This doesn’t escape the control of state or the federal reserve system as perhaps the design intent was with BTC and is with the virtual nation concept.

        However – even though indirect price discovery can still occur – it may be helpful or at least the right brainstorming direction. What we desperately need right now is a roadmap of goals, so we can hone in on the technical design intent of a virtual nation.

        • @Alex – sorry, my post was not meant to stifle a brainstorming direction. I hope it didn’t have the unintended consequence of doing so.
          My background is in Finance, Investing, Economics etc. Not in Computer Programming.

          In regards to Bitcoin being a mere convenient USD payment system, the same could be argued for any commodity like oil, gold, silver etc. That has more to do with human behavior being put onto an exchange, than the exchange itself.

          However, I really like @Lukkas idea of making a game with points attached. One of my advisors in college studied a game called EverQuest and had done all sorts of economic studies on how the economics within an online community works. One of the things he was able to determine was exchange rate for the points used within the game. To my knowledge, the IRS never came to the gaming community of EverQuest and taxed the points a gamer accrued as if it were income unless they sold their points through eBay and accrued cash in their PayPal account. But then it wasn’t the game they were taxing it was the real income, in the real world that was being taxed. So there is actually some sort of legal precedent for it. So, what if everything in the virtual nation was traded strictly in the virtual nation, and never was extracted by anyone for Dollars? Could it be done somehow where it was either non physical product like software, arbitration, advice etc. Or, if it was physical product it was something that is not easily quantifiable such as Jack’s Duck Eggs if Jack sold his Duck eggs exclusively on the exchange, and never for cash.
          How could or would you enforce such a barrier without creating another version of a state government?

          How this helps a programming guy be able to develop a roadmap of goals for the purposes of a technical design of a virtual nation… I’m not sure.

  3. So what exactly was wrong with Silk Road anyway? As far as I could tell there was nothing wrong with it, people just used it for crime. Like… oh I don’t know… the USD or the Yen or the Peso….

    • Funny how that works… 😉

      You’re not allowed to trade anonymously… or choose not to give a cut to the mob…

  4. I’m just learning about Bitcoin and cryptocurrencies, so my question might seem somewhat naive. If Bitcoin in a market-based currency, freely exchangeable into any other currency, then there is an exchange risk, just like I’d have if I were buying/selling USD for Yen, etc. Are there ways to hedge against this risk? Is there any kind of forward or futures market that’s developed or is in the works? I know this starts to make cryptocurrencies like any other currency but, given the volatility of Bitcoin since its inception, I sure wouldn’t want to be holding it for long if I couldn’t protect myself. I’d appreciate others input on this and also suggestions on some good primers about how one gets started with Bitcoin. I recently read “The Age of Cryptocurrency” by Paul Vigna and Michael Casey which was excellent, but it didn’t have a lot of “how to” regarding how a beginner might get started. Love the show and all the great discussion. Thanks All!

    • There absolutely is an exchange risk with BTC, my comments as to a pegged currency were not with BTC, but using BTC like technology, inside the VN, with a backing by other crypto currencies as the reserve behind them.

  5. I’m not sure if I’m wrapping my head around the VN concept correctly but could I trade my microgreens or quail eggs or whatever to someone else in exchange for some kind of contract resolution or medical/dental service or ducks, beef, chicken, etc? Then I’m not paying income tax or sales tax, I think

    • May be, may be not, the answer is I don’t know and we don’t know yet.

      In my head it would be more like this.

      Carol makes micro greens, chef Keith wants 200 dollars worth, but we put that on the shelf and look at it, sip our beers and say, isn’t that nice.

      Instead inside Libertas.nation chef Tony sends 2000 libercoins (note the number is 10000000% made up and arbitrary) . Now Carol just happens to give some greens to Keith out of the goodness of her heart.

      Chef Keith does NOT expense any purchase, as there was no purchase. Let us call it a game something “Liberty Karma”. Keith earned Karma in the game, you simply replicated in the real world.

      Taxes are two fold, most expenditures result in expenses.

      What if and I am just saying, you came into the game with a buy in, but that amount was all you could ever remove, at least to a real world?

      What if there were dozens of VNs with exchange rates but the only place that the VN karmpoints could not go was outside of the virtual world. So that there was never a repatriation of the fund?

      Could this work, would this avoid the government? IDK? But my point is there is likely a solution that does.

      There are a lot of game changers here, I mean may be “greens” are too phyical for phase one or even phase four.

      But what about 3D printing. What if many “producers” instead of selling a product just started selling the patterns, that IS going to happen anyway.

      Well now, I need a custom part for my Ruger. I buy it from Tom as a pattern for 10 libercoins. But he ships nothing, no dollars exchange hands, in fact the libercoins are not bought with dollars.

      1s and 0s are sent to me, my printer makes the product. I bought the medium in the real world, I paid the man for that. How do they tax this? Seriously how?

      There is no doubt that this must first be used with non material goods.

      But you and Chef Keith could do business for greens in the real world and still have some dealings in the virtual even in the early phases.

      Again what can’t be yet done should not be an excuse for what can be done not getting done now.

      There are a shit ton of I don’t knows in this. Just like there were a shit ton of I don’t knows in questions like, “how can we settle states like Kansas in the early 1800s”?

  6. I don’t understand why we’d hang on to the ‘nation’ concept at all. Why not a myriad of competing services instead? The nation concept implies jurisdiction, usually geographic. If I want to get married, I can work with the best marriage contract company but if I want to start an LLC, I have to work within the jurisdiction I’m subject to, ie) my state. In this sense also, since the state determines what happens to my property when I die and determines the way hospitals treat guests when I’m sick, I have huge incentive to work through them for my marriage as well.

    The keyword is subject; people are subjects to nations because the nation says so. The reason why the island and seasteading concepts are popular is because they allow you to escape political jurisdictions (nations). I don’t see how crytoanything allows us to escape the jurisdiction of anyone (other than the property that is directly within the blockchain). But I can certainly see us out sourcing various services that the state currently offers but only to a limited degree.

    • As a means of defending against the compulsory state, you create a voluntarist nation.

      If you listen to my first show on this I define nations and states far differently.

      Israel is a state

      Judaism is a nation

      They are not the same thing.

      A state is a geographic region with defined borders where all residents, citizens, visitors are required to submit to the will of the state itself.

      A nation is a voluntary association of individuals bound by common ideals.

      Such as the Iroquois nation is not only on the reservation we placed their people on.

  7. I have been following the VN concept for a while now. The one thing I see missing is the research data required to develop anything like this. Curious why no one has taken this concept into a think-tank and create some microcosm experiments to prove out some of the tougher concepts behind this.

    The challenge is for individuals to be able to erase their current perceptions of our existing infrastructure and recreate this infrastructure in a virtual world. Lots of things will work seamlessly, but others become more of a challenge primarily because we are so engrained with doing things a specific way.

    This concept requires a lot of “letting go” which the common person making ends meet to keep afloat in the current arenas will not likely be sold into anything that requires a “starting over” concept.

    Like this topic and would love to see it start to get some lift.

  8. I just listened to this podcast so I am getting a bit of a late start. A very short time into the podcast I started thinking about how you COULD use SecondLife as the platform. You purchase lindens from cash initially so there is an exchange rate. With all the tools offered and available in Secondlife, you could then create another totally different “credit” for use in “buying” and “selling”. Initially, you would “purchase” a claim within the VN with lindens but that claim would come with some number of these new credits. You would then use these credits in the real world to exchange with others for services and goods. If you didn’t allow direct purchase or exchange between lindens and credits, no exchange rate could be established. The best you could do would be to sell your entire claim complete with any associated credits belonging to that claim for lindens and then cash out your lindens at which time I am not sure how that is currently tracked. It would take some programming and a while to get an “economy” going but I think it could work. My mind is racing faster than I can keep track of how everything in SecondLife could be used.

  9. Sorry, the interface here starts getting weird when your post gets too long. Anyway…

    I haven’t been in SecondLife for a long time but even w a y back, there were numerous tools you could use to do just about anything you wanted. If something wasn’t available you could create it with your own script or program.

    I would love to follow this further if others were interested. We could even meet in SecondLife and hold meetings or seminars. It really is almost endless what you could do. I wanted to use SecondLife shortly after it was created to do something big. Unfortunately life got in the way. Maybe the time has come. Please let me know your thoughts or comments.

  10. I posted this on the FB page as well, but thought I would put it here. I just caught up on this one. Was a GREAT follow on to last year’s episode on Libertas. I was thinking…hmm….what else could we do with this type of platform? I came up with a ton.

    -Contracts and dispute resolution, which you already covered.
    -Architectural design and engineering
    -Any service-based product: web design, graphic design, programming, branding, consulting (that list can go on forever)
    -You covered education, but this could also expand to tutoring, assistance with editing written documents. What about some adult supervision for teens (via webcam)? Virtual housesitting? Online assistance with homework on an as needed basis?
    -Music and production! With so much music being composed digitally, this could go into “Libertas.” As could production – sound / movie editing works very well in the cloud if you have enough storage

    I’m an attorney (I know, I know) and I would be one of the first in line to offer services in “Libertas” or whatever it ended up being. I’m also a new-ish NRA certified firearms instructor, and your other episodes on entrepreneurship have really inspired me to use the time when I’m not at my job working for someone else to do something for me and reduce my tax burden and interaction with the State as much as possible. I’m pretty excited about it, and once I’m up and running (3-6 months, maybe) I’d certainly offer discounts to MSB members.

  11. In some ways we are already seeing some of the starts of fledgling virtual nations in the gaming community. MMOs such as World of Warcraft or Eve Online are massive communities of millions of players which have their own economies whose complexity rival that of some real world countries. Granted the purchases largely have no real-world value to the player aside from entertainment, with the exception of being able to use in game currency to pay for your real-world subscription to the game. In some ways though we can learn from these existing economic structures, geared toward frivolity though they may be.

    In a Libertas setup one could possibly earn/maintain their citizenship likewise by service within the virtual nation (a virtual equivalent to being called in for jury service, things that help keep the place running). One area that anyone could contribute, regardless of skill level, is donating computing time from their personal computers to the mining of the virtual currency. Distributed computing has long been used by scientific projects(example: to solve computationally-intense problems, the same voluntary setup could be applied to building a virtual nation’s money system. This reduces the vulnerability of any one person in the nation being the source of the virtual currency, and makes the economy harder to shut down. Obviously this would need some refinement to work in practice, but it is worth a thought to consider using.