http://qs1969.pair.com?node_id=11142701


in reply to XPD - Do more with your PerlMonks XP

Now for a bit of monetary theory...

XPD are not created out of thin air. There is an "admin" account that started at zero. Everytime a user earns XPD, it gets transfered from admin to that user. This is to balance the books (zero sum game).

This is similar on how to properly bootstrap an economy. Say the country of Elbonia has just been founded. It needs a currency, in our example ElboDollars. So Elbonia creates a government department called the "National Bank".

The national bank lends ElboDollars to other companies like privately owned banks (which they have to pay back eventually). The national bank can do this, because it is essentially backed by the inherent value of Elbonia (the land, the resources, the workforce, the military with its nuclear arsenal,...).

The privately owned banks can then invest in other ventures or lend out the money to private individuals and companies for a price (interest payments, shares in the company, etc). This creates cash flow, which creates wealth, which allows the banks to repay their loan to the national bank. While at the same time, this created wealth increases the value of the Elbonian economy as a whole, making ElboDollars a stronger currency, which in turn enables Elbonia to use its currency for foreign trade. Of course, that only works if Elbonia makes sure that the ratio of the total amount of ElboDollars is stable compared to the size of its economy.

Technically, you can base a currency on pretty much anything, as long as the base of that currency provides value, meaning it's something that people want to have more of or something people strive to improve and add value. XPD is based on the idea that PerlMonks want to help each other and provide value in posting helpful and/or interesting stuff on PerlMonks. The best way to measure the creation of value for the community is XP, which is why XPD is based on PM XP.

This is also why crypto currencies like Bitcoin are inherently unstable. There is no inherent value underlying the currency, no government to back it up with the value of its economy, no inherent creation of value in the form of goods and services. Their price is solely determined by betting on the future price. But there is no underlying base value, like "there are so many bitcoin in existance, if push comes to shove there is a country backing it that creates X amount of goods and has Y amount of resources and Z amount of workers available for hire. So the base value of one bitcoin is at least two loafs of bread or seven hours minimum wage or 100 kilogram of iron ore". Essentially, crypto currencies are just files with random data and checksums, but without anything to provide past or future creation of tangible value that can be easily exchanged for goods and services with any sort of guarantee.

XPD is sort of my attempt to create a playing fields that let's me and other PerlMonks explore different aspects of modern monetary systems without actually having to invest any real money. This is a playing field, a digital monopoly-money simulation of modern crypto currencies. It will also let us explore the "dark" side of monetary systems like economic bubbles and criminal endeavors without breaking the law or endangering peoples livelyhood.

So, have fun!

Further reading: There are many good resources on monetary theory. One of the most insightful and easy to understand one is the Discworld novel "Making Money" by Sir Terry Pratchett.

perl -e 'use Crypt::Digest::SHA256 qw[sha256_hex]; print substr(sha256_hex("the Answer To Life, The Universe And Everything"), 6, 2), "\n";'