A Coin with a Stable Value Relative to Production Cost

Sample IOUs

_{The paper chits above were meant to demonstrate how easily any small community can turn the value of a unit of electricity into a useful currency. It was also meant to promote the idea of entrepreneurs in especially tiny isolated villages capturing natural energy and at the same time bring a local currency into circulation ~ there are communities where being able to charge a battery can be a life changer and light at night means the difference between becoming educated or not.}

An Attempt at Mount UltCoin

In Search of the Right Collateral

My search for the right commodity to serve as collateral for a stable currency ended with energy.

Why Energy?

Energy appears to be the most basic component of everything. That is what physics tells us. But in practice, most importantly, energy is work. Every techie knows this. What this basically means is that all physical work done is directly proportional to the amount of energy transformed ('spent') in the process. In fact, by definition, 'work' = energy.

• Work done is proportional to the energy spent to do it
• The amount of work done to do a specific task is constant

Every stage in the physical production of anything material consumes a specific amount of energy. This implies that the production cost of relatively simple essential goods is to a large degree energy related.

This means that for example, it will take the same amount of work (energy) to bring a cup of water to the boil now as in a hundred years. The same goes for ploughing a land and for producing a tin of baked beans. It is important to note that this is more so for mass produced goods. And as industry evolves, as it is rapidly doing, into replacing manual labour with robotic labour, the closer the relationship between energy input and the monetized production cost of essential goods becomes.

But this relationship between production cost and energy is not the only aspect of the production of essential goods that is important to consider in search of a value to relate to a sensible currency - one with a stable value.

The Essential Link between Money and Reality

The stability we are looking for lies not only in the stable relationship between energy and the cost of production - the key factor lies in that essential goods are in fact essential..that for basic survival, each and every one of us needs to consume a certain minimum amount of these goods in order to survive. This, as in the water example in the introductory post, tells us that essential goods in general, like water, energy, basic foodstuff and certain medical products all have an intrinsic real value that is reflected in the price we are willing to pay for these essential goods. And as with potable water, this real value we attach to all essential goods is a value that will always be there, no matter what the market does. It is the kind of value we attach to essential goods that really matters.

In the water example (@clicketyclick introduceyourself), the intrinsic value of potable water was linked directly to the value of the currency we wanted to create. This leaves a currency linked to the value of a liter of potable water vulnerable, in the case of bottled water, to it disappearing off the shelves of the retailers.

In the case of energy as collateral, we drill down deeper, to where we can anchor the value of our currency directly to the root of our very existence. In the case of bottled water, if bottled water disappears, the currency disappears and we survive on filtered tap water. In the case of energy as the commodity of choice, if energy disappears, we cease to exist.

So energy as a collateral is guaranteed to be there for as long as we are. And energy as an essential production factor in the production of essential goods establishes a real value relationship between energy and us. The stable relationship between volume of production of essential goods and the amount of energy consumed provides a constant in terms of the quantity of energy that equates to the survival of any individual.

I require 'x' amount of essential goods on which to survive. It takes 'y' amount of energy to produce those goods. It will put me out of pocket 'z' amount of coins with a value equivalent to energy to buy the stuff, tips included. So I know where I stand in terms of survival. I know what my minimum wage should be. I know exactly how many of these coins I will need every month for my pension. I know that my savings in this coin is safe. I feel secure and can now happily plan my life ahead. No more nightmares about dicey policies or volatile equities I was seduced to invest in. And when prices get out of hand, I can calculate the cost of competing with the production of goods so much more easily and so keep the cost of survival under free market control.

What kind of energy?

The answer is obvious: not only is electric energy playing an ever increasing role in production, but just about every household is familiar with electricity and the units in which it can be purchased. Even in lower income households with prepaid meters something like "Go buy us some power will you - I think about a fifty units will see us through" will not be uncommon. In other words, a very large part of the modern world population is already pre-educated, so to speak, not only about the intrinsic value of this commodity, but also with the most frequently used unit of quantification of it. The fact that the universally adopted 'unit of electricity' is more formally known as one kilowatt-hour of energy may be known to less, but that does not matter.

The Shape of the Coin

• The value of the coin can be that of one kilowatt-hour of energy as reflected in the price of one unit of electricity in other currencies.
• The name of the coin can be a PROD, referring to production costs, or it can be an ESC, for being an Energy Stabilized Coin, or simply an En for Energy, or an ENNER for having a nice counterpoint ring against the dollar to it - whatever may have a popular resonance with the nature of it. Any suggestions?
• It can be a SmartCoin, as by Dan's design, probably presented as bitPROD, bitEN, bitENNER, or whatever works best.

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There is a lot more to say

but I think for the moment this will do fine

I will be posting follow-ups more frequently now

Energy as a collateral has interesting features
and a coin like this can have far reaching effects and benefits

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I highly value the interest and acknowledgement shown by @algons, @derp91, @firepower, @adriangee, @peaceloeliberty, @teamsteem, @jaichai, @dailypoetry, @kromosoom and @gamzeuzun

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If you find this interesting

then kindly spread the word...

- this stuff might just bring home the bread one day!