Teracoin -- A Digital Currency Minted by the Labor Force

Bring it on, Bitcoin!

Bitcoin is building momentum, and will soon change finance, ushering out some of the old order, but ushering in some new order as well. Bitcoin is wonderfully democratizing in many ways, but staggeringly autocratic in other ways.

Bitcoin benefits those with very fast processing power and those who got in early. For the few who bought their bitcoins (or mined their bitcoins) early on, when it was easy and cheap (and super risky), there is an astronomical return to be made if bitcoin is adopted mainstream. In the long run, when it won't be easy to mine bitcoins, only people with very fast processors (or the money to buy them) will be able to secure transaction fees and newly minted coin. These principles, to reward those who speculate and to reward those with power (be it processing power), are no different than the ones our current monetary system is grounded on.


I'd like to propose a digital currency that acts to balance the playing field. Start with bitcoin and let's make a few modifications. Firstly, instead of coins being made by miners, what if coins were issued when any human did one small piece of "digital work?" You might think of it as a global minimum wage. This digital work would need to be performable by almost any human at almost the same pace and be verifiable by a computer. CAPTCHA and reCAPTCHA are good examples. reCAPTCHA in particular has a humanitarian benefit as well (the digitizing of books). The creation of new money would happen when any person did one small piece of work for a small reward.

The Economic Bit

Let's assume this proposed digital currency makes it through the gauntlet of adoption (massive assumption, I know). If there is some large volume of this currency in circulation, being used in some online stores and maybe some brick and mortars, then the creation of new coin, via digital work would inflate the currency by a small amount, slowly reducing the value of money (much like the way our current system works).

Now here's the fun part. If a group of banks or wealthy investors, or the frenzy of the crowd decided this was going to be really big. If they speculated that at today's price, this inevitable advancement in financial transaction is a bargain, and they wanted to buy it up, in an effort to make a killing later, they would drive up demand, concurrently driving up the global minimum wage. Not just that, the increased demand would incentivize people to sit back down to do their digital work. In doing so they would create newly minted coin, increasing the money supply, pulling the price back down, acting to stabilize it. A stability provided at the expense of the speculators. A stability that would keep money doing what it's supposed to do, act as a medium of exchange. For the less economically oriented minds out there, just consider that in this proposed system money would not come from the government's printing press, or the Fed's loans, but minted by the labor force in doing their work.

A Work for Progress in Progress

Maybe there's a way to adjust bitcoin to work this way, or maybe something needs to be built from scratch. Either way this isn't a fully baked idea, a ton of work remains (I have a list of tough questions for starters), but I do hope this inspires the tech activists out there, and the economists and others.