Sunny King on Cryptocurrencies, Cryptocommodities & Cryptofiats (NuBits Mentioned)

Hey guys, I wrote something here about our dividend coin Peercoin. I basically tried to narrow Peercoin down to its true purpose, to replicate gold in digital form, rather than to act as a currency. Please read my full explanation to first understand the context…

Then read Sunny King’s response to my thread…

Sunny King:

"The confusion regarding the terms ‘currency’ and ‘commodity’ as in ‘cryptocurrency’ and ‘cryptocommodity’ arises in relations to an understanding of the macro views of the monetary system.

In the past when gold was the absolute base money, I guess no one called gold ‘commodity’, but only ‘money’, ‘currency’ etc. Now that gold has been stripped off many of its monetary roles by governments force, it is now widely referred to as ‘commodity’. From user’s point of view it’s about price volatility, it’s understandable as one of the three major functions of money, unit of account, has been stripped from gold and given to fiats, this has made gold look volatile and commodity-esque. Still keep in mind, fiats are also volatile relative to each other, so even though gold lost most of its pricing power, it’s other monetary power still keeps it in competition to fiats, as the least volatile commodity in the world and having the highest stock to flow ratio of all.

So what’s the big deal with gold? Gold’s inflation property is determined by physical and social-economic laws, as in laws of the nature/universe, not laws made by man, nor was it voted on by a committee. This means one important arsenal missing in government finance, that is the power to control the issuance of currency and the access to a hidden ‘inflation tax’. This is the central battle that defines the monetary history of the previous century.

If we really have some convictions to a monetary future of freedom, it would be more proper to call bitcoin/peercoin/primecoin cryptocurrency and nubits cryptofiat, to make such distinctions. Though I have no problem with people wanting to call nubits cryptocurrency and bitcoin cryptocommodity, for practical purposes it is indeed true that nubits works better as unit of account in the fiat dominated world. Still one must remember the word ‘cryptocurrency’ has a strong philosophical underpinning born with bitcoin that nubits wouldn’t be able to represent."


I think Sunny has a good point saying that NuBits is a crypto FIAT but it is partially true. If FIAT was a vector, its value would be only its norm. NuBits as a vector has the same norm as FIAT but all its components are different.
Besides, so far, we can acknowledge that the FEDs have made a good job in spreading a value transfer vehicle all over the planet while keeping its value relatively stable over each year.
This is the good aspect that NuBits is capturing.

EDIT: typo.

I altered the title. Also, I’m interested in hearing what @tomjoad, @JordanLee and others think of Sunny’s reply if they get a chance.

Yes, the central banks seem to do a good job of keeping their currencies stable, but the problem as @JordanLee pointed out here…

…is that the money creation power of these central banks is abused in order to fund all sorts of evils. Nu would take the good aspects of the central banks like keeping the currency prices stable while weeding out the evil elements that might be the result of coercion as you pointed out here…

Still, Nu’s pegging is currently dependent on the central banks around the world, so Nu doesn’t seem to be eliminating the problem of central bank abuses. I think the only way to eliminate the problem would be to transition Nu to a peg-less state and completely replace all central bank functions with NuShareholder decisions, something that couldn’t be done unless Nu was very widespread around the world. Central banks would become obsolete and Nu would now be in control of the world’s various cryptocurrencies as fiats died off. The USD would fade away and US-NBT would take its place. NuShareholders would then take on the responsibilities that central bankers originally held, except without the threat of coercion and the ability for anyone to have a seat at the table by owning NuShares. Since Nu is decentralized, there would be no single person for governments to threaten to get their way.

And if Nu replacing all central banks in the far future is an impossible and unrealistic goal, we could always take Sunny’s approach. He explained that gold removed the power of new issuance from human control and left it up to nature, making it impossible for those in power to abuse the system, since you can’t print more gold to spend on wars. Peercoin would be even more useful if it replaced gold, as its inflation rate can be controlled via coding unlike real gold. Governments also wouldn’t be able to strip it of its usefulness by passing laws, potentially allowing its power of unit of account to return over time, making it useful for everyday transactions again like gold used to be back in the far past.

I think I prefer the first solution though of replacing all central bank functions with Nu.

Well what is dependent right now on the FED is just the purchasing power of 1 NBT.
If 1USD is devalued down to 50%, automatically 1 NBT is only able to buy half of what it used to.
But imagine the FED stops printing USDs (in fact it seems now that there is a USD liquidity crisis. Cash is more and more rare…I hope you guys have withdrawn some physical cash. Strong negative interests are right around the corner…).
Would that stop Nu from printing NuBits? Absolutely not.
More over, Nu can and will introduce new pegs.
The only thing we need to make sure is that the purchasing power of the peg is stable.
Right now NuBit is pegged to the USD because the purchasing power of the USD is enough stable.
If that stability vanishes, Nu can find new pegs.
In fact this is what is going to be implemented via [Passed] Motion to introduce new NuBits products and I think this is at the right timing. With the Yuan mostly likely to get the status of one of the world reserve currencies, it will be included in the SDRs, strengthening a lot its rols.

So I would argue that the dependency of Nu upon the FED is superficial or weak because Nu’s monetary policies are basically independent.

Well I do not think it is true in practice. The price of gold is controlled by the same centralized agencies.
That is why you see the price of gold (and silver) declining while the inventories are vanishing…
One of the goals of WW2 by the cabal was to plunder all the gold from the world’s populations (the Nazis in Europe, the FED in the USA (well it started 10 years prior to WW2), and of course the Japanese in Asia, in order to prevent anybody from starting a currency backed by Gold.
Gold is easily controlled since you need a lot of resources to extract it.
Furthermore, gold is rather scarce so backing a currency entirely by gold makes the currency scarce which is not good if you think you want to grow an economy…

So my point is that backing a monetary system on Gold entirely is not desirable.

What seems is going to happen is that the world economy (world’s currency if you will) will be backed by a basket of reserve currencies + gold. The new SDRs system that could be released as soon as 01JAN16 according to a source I follow. It is heavily connected to the shadow financial system but the reality is that the current system is very shadowy. :wink:

Which makes a SDR-NuBit even more desirable and needed.

EDIT: typos

My opinions shouldn’t mean much to the Peercoin community since I own zero PPC. I have noticed that Sunny is a proponent of Austrian economics, and statements like these reinforce it:

Gold’s superiority to fiat in promoting economic stability isn’t a worldview shared by the majority of economists, and I don’t support those thoughts either. The Great Depression in the 1930s was shortened once FDR was convinced to devalue the gold standard, after watching the British do the same thing a year or two earlier. The gold standard would later be completely abandoned by Nixon in the early 1970s. Sunny states “Gold’s inflation property is determined by physical and social-economic laws, as in laws of the nature/universe, not laws made by man, nor was it voted on by a committee.”, which I view with the same enthusiasm as “plants and herbs are naturally made, so they’re better than pharmaceutical drugs for treating AIDS”. Economics advanced in the 1930’s once governments realized they could stimulate their economies by adjusting the power of their currencies, setting interest rates, and other tools. It certainly helped when the US required quantitative easing in the aftermath of the 2008 financial crisis to avoid a second great depression. And yes, some governments have been poor managers of their fiat currencies, and some governments have spent irresponsibly. Global economic growth has still benefited from flexible monetary policy.

The great thing about Nu is that it is compatible with many different belief systems because it is so flexible. My own interest and belief in Nu is both pragmatic and idealistic. I strongly believe that a pegged currency to USD is of more utility today to our users than a volatile cryptoasset like Peercoin; that’s my pragmatic view. However, like others here I also dream of a future 1000 years from now where the value of non-governmental currencies are responsibly controlled by everyone on the planet, and not just central policy makers. If that happens, the future will be more peaceful. Nu is the first globally decentralized design in history that can possibly accomplish this. I think Jordan summed up why I’m involved in the Nu project eloquently in his quote:

I think cryptocurrency is beautiful because it is inclusive of all economic beliefs. Peercoin will appeal to Austrians as well as those who think sidechains will one day facilitate stable tokens. Nu will appeal to more traditional fiat fans who want to use USD values, but also those who want to create new financial tools like SDR NuBits or other global stores of value. Nu can even invent its own value peg if shareholders think there is benefit to the world to doing so. As long as we’re making strides as a collective group of cryptocurrency enthusiasts towards “advanced modern money”, we’re succeeding.

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Well there are more than 100 NuShareholders right now. Now that big compared to the 6 B humans on this planet. But it could grow exponentially.

Anyone tried to ping Blythe Masters ?

Now that Sunny has responded to my thread, I’ve gone ahead and posted it to r/cryptocurrency. I’d appreciate your support if you’re interested…

It’s also now available at r/peercoin…