Comment by captainmuon | Hacker News Reader

Comment by captainmuon | Hacker News Reader

I crazy idea I had was using counterfeiters to mint money.

Make it so that the manufacturing cost of a $100 bill is $100 minus the amount you want the counterfeiter to make, so for $1 say $99. Include tons of security features, use silk, gold, diamond dust, whatever. Then just let the market do it's thing.

Have money testing machines that shred fake bank notes at sight. You may or may not want to keep punishments for using fake bank notes. You just want to keep a little bit of pressure to keep the manufacturing costs so high that you control monetary supply. (Now that I think about it, supply of bank notes != monetary supply. You'd have to physically print A LOT to shift the value of a currency notably.)

There are a ton of reasons why this wouldn't work or wouldn't be a good idea. For one, a complete waste of resources. Also, you wouldn't have as much control over the money supply. And advances in technology change the production rate and profits from printing rapidly.

All of those caveats also apply to Bitcoin, of course.

That is similar to have e.g. gold coins as currency. That is inefficient because it is hard to create enough of the currency for the economy to function optimally. It is also quite expensive.

Not only that, it's relatively easy to counterfeit - a modern currency note is probably harder to counterfeit (easier to validate) than a gold coin.

Yes, tungsten has a density surprisingly similar to gold.

The original example in the grandparent comment would be expensive to counterfeit, though.

I wouldn't say that it's easy. You at least need some tungsten, uranium-238, rhenium, platinum, iridium, osmium, or chengdeite (Ir3Fe) most of which are nearly as expensive to obtain as actual gold. Any other material that is denser is probably also radioactive, and only available from nuclear fission reactors.

  Os  22.59 kg/L  $13k/kg   $294k/L
  Ir  22.56 kg/L  $22k/kg   $496k/L
  Pt  21.45 kg/L  $29k/kg   $622k/L
  Re  21.02 kg/L  $69k/kg  $1450k/L
  Au  19.30 kg/L  $40k/kg   $772k/L
  W   19.25 kg/L  $50/kg    $960/L
  U   19.1  kg/L $150/kg   $2900/L

The obvious choice for counterfeiters would be tungsten. A gold bar that has been hollowed out and filled it with tungsten is detectable with ultrasound. Counterfeit tungsten coins with known dimensions can be detected by measuring electrical resistance, or by doing a "ring" test, which is striking the coin with a hard object and listening to the sound it makes. The difference between the sound of a gold coin and a tungsten fake is clearer than the difference between a genuine B20 bell-bronze crash cymbal and a cymbal made from cheap brass. The gold coin will ring, while the tungsten coin will barely sustain a dull thunk.

The other noble metals are available in extremely limited supply, and usually comparable in value to gold or platinum anyway.

Devices that test for the density of gold coins are already cheap and widely available. Using a Fisch device and dropping the coin onto a countertop is just as easy as using the counterfeit detector marker, checking the watermark and color-shift inks, and looking at the security strip under a UV light.

This is precisely what is happening in Somalia (as noted in the article), although in the inverse: the value of the money fluctuates (down) with the cost of production.

In practice at scale a high quality replica is far cheaper to make than the note it denominates

This is hardly a crazy idea, it's basically a de facto commodity-backed currency. It's not functionally different from a bond that can be exchanged for X weight of tobacco, corn, gold, etc.

Except for the fact that shredding makes it also a lottery system: Attempts to exchange the bond result in either redemption at face value or nothing, with the probability being equal to the proportion of fake bills in circulation. Assuming, of course, that the bank has a monopoly on counterfeit-detection devices (they don't).

The validation requirement for each exchange of money alone would put counterfeiters in an advantageous position.

Part of the benefit of blockchain is that this validation is automated and baked into any transaction - in real life, this is not at all easy.

Isn't that basically the same as trading gold coins?

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