February 2021 Archives

Or, Muskcoin: a credible proposal.

So, a few weeks ago I was chewing over COVID19 on Mars (insert any other pandemic here), a discussion of how a Musk-initiated Mars colony circa 2070 might handle an aggressive viral pandemic.

Which brings me onto the topic of Elon Musk (okay, Tesla) recently buying $1.5Bn of BitCoins. I personally think this is a stunt, but an interesting one: BtC is a commodity in a bubble; if it goes up, Tesla turns a profit, and if it goes down it's a tax write-off. As Tesla is currently ridiculously over-valued this therefore looks like a smart way of hedging against some of their risk. But it got me thinking about SpaceX ...

Some of you have read Neptune's Brood, right? Shortlisted for the 2014 Hugo award, and, ahem, currently on offer for $4.99 as an ebook (North American edition only, sorry British folks).

What are the opportunities for Musk's colony to implement its own cryptocurrency?

In terms of "Neptune's Brood", MuskCoin might be a plausible implementation of Medium Money.

On Earth it would function as a cryptocurrency backed by the Mars colony. Blockchain is used for transactions. However, the proof-of-work in generating a MuskCoin is non-algorithmic: you transmit a digital certificate for your shiny new coin to MuskBank on Mars, where it is countersigned with a string from MuskBank's One Time Pad, which was generated on and only exists on Mars. The blockchain is then updated—from Mars. The publicly issued checksum of MuskBank's OTP is itself published via the Blockchain.

MuskCoin is required in payment for cargo capacity on Earth-to-Mars shipping, or for purchasing real estate on Mars. It has a floating terrestrial exchange rate: the idea is that it's used for mediating interplanetary exchanges.

Unlike Bitcoin there's a central bank and an anti-forgery mechanism. It's not inherently deflationary like Bitcoin, because the Martian Central Bank can if necessary generate a new one time pad and add its checksum to the blockchain, expanding the money supply. The proof of work doesn't inflate over time, either—it remains constant, and is ridiculously hard to forge (the only reasonable mechanism would be to figure out how to derive the one time pad from the published checksum, which should be impossible). And given its founder's ego issues, the unit of currency will be the Elon.

Conversion between Elons and regular (fast) money: you use it to acquire title to a chunk of land on Mars, then put it on the real estate market. When somebody buys it, you get your exchange rate.

One side-effect of it being Mars-backed is Mars has a shallower gravity well than Earth: once the colony is up and running and eating its own dogfood (in terms of semiconductor and high-end space-rated fabrications), it may be cheaper to buy satellites and other spacecraft from Mars than to lift them from Earth, as long as you schedule their launches years in advance. However, that's a long-term consequence. The main point is that it provides a way to loosely couple the Martian economy with Earth's, without locking Mars into fiscal interdependency with other-planetary economic cycles.

Note that I have certain ideological assumptions: namely that BitCoin itself is a highly inappropriate currency for anyone, much less an embryonic Mars colony. It's designed to promote Libertarian values, is inherently deflationary, and ridiculously wasteful of energy, all of which are liabilities when you live in a tin can on a lump of rock with no air. Interplanetary colonies for at least the first couple of centuries are going to be highly regimented collectivist institutions, more like a 1950s Kibbutz than a libertarian utopia. But any sufficiently large colony will eventually need to interact at a macroeconomic level with its neighbors—Mars will get out of the inevitable early Juche phase fairy soon, or Mars will die—at which point some species of currency seems desirable. However, one that is directly exchangable with existing terrestrial currencies is an invitation to disaster (if nothing else it renders the Mars colony vulnerable to speculators on Earth).

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