Comment by msandford | Hacker News Reader

Comment by msandford | Hacker News Reader

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Yeah I did, but the author seems to brush that aside and say "it needs to be accounted for directly" and I would argue that's not necessarily true.

The problem is that I value my first gallon of water every day very highly for drinking. The next gallon also pretty highly for drinking and brushing my teeth. The next two gallons are for cooking and stuff, so they're less precious; the next five gallons for bathing and sanitation; the next 10 for cleaning and washing, etc. All the way down until we get to the market price which in Houston for water that comes out of the tap is $0.01 per gallon.

I think it would be utterly exhausting to list out every subjective value that I place on every thing that I exchange for every transaction of every day. It's something that I can do in my head with very little effort since for many transactions the value/cost delta is high and I don't need to do careful accounting.

One of the great things about money is that it has basically zero transaction cost as compared to bartering which has a substantial either time cost to find the best price, or price cost to find a deal in a short period of time. Engaging in these kinds of nonlinear transactions (if they need to be done honestly) would bring an economy to its knees.

While it's not necessarily true that our exchanges need to account for value in this nonlinear way, I think it's an interesting thought experiment to discuss ways in which our currency can express different aspects of the value of our transactions. I'm not claiming that Strangecoin represents the "true value" of our transactions; I'm simply saying that it's another way to model our economic relations, and looking at the network in this way might reveal salient aspects of the network that are hidden from view with other currencies. So I think Strangecoin really is describing some aspect of our economic relations, and it's a perspective that money often doesn't give you. If you trade me money, I don't know where it came from or what ties it has to the rest of the economy. But if you trade me Strangecoin, the trade itself gives me a picture of your importance and influence on the rest of the economy, and I can use that information to judge the value of the trade we're engaged in.

The low transaction cost of money is partly a result of how deeply embedded it is in our social and institutional practices. I don't think it is an essential feature of money itself; other practices might come to fill similar roles. I would also suggest that the opacity of traditional currencies to certain forms of value also has a crippling effect on our economy. Economics talks about these as "externalities", but they are best understood as values that aren't represented in our trades. I'm not claiming that Strangecoin can capture all externalities, or even that it catches the important ones, but only that it captures some dimension of value that is hidden in traditional currencies.

You're right of course that the reason money has low transaction cost is because it is widely accepted. But that's kind of tautological; if it wasn't widely accepted it wouldn't be money by definition.

In my mind the low transaction cost is a feature in that you can make snap decisions (or in many cases not make them at all) without having to explain yourself.

What I mean is that if I had to itemize every gallon of water, every kilowatt-hour (or watt-hour) of electricity, every cubic foot of natural gas, every byte I upload or download, etc etc etc to come up with their "true" values I wouldn't have enough hours in the day to do 10% of what I normally do.

So I guess my question is this: at what level of granularity is this being proposed? And if it's anything less than "full granularity" why? What I mean is why should utilities be any less valued than phone apps? I need that first gallon of water WAY more than I need Angry Birds, so it seems to me like that needs to be accounted for. But that would be exhausting. I can't see a way for me to take this proposal really seriously AND not simultaneously want to hang myself.

I think it's an interesting idea to be sure, and it's fun to think about. But I really hope I don't have to tell everyone how much I like water or electricity or whatever.

Agreed. In fact, all of the myriad secondary costs and benefits from commerce are already accounted for when you have a market that trades the currencies themselves.

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