Computer Power as a Currency

I dislike Bitcoin for a lot of reasons¹, but there is one thing they got right: pegging fundamental value to computer power. Sure, it would be cool if it wouldn't consume it’s stated fundament as a side-effect of its existence, but the idea taps on a possible successor to Bretton-Woods.

The original fundament the world converged to was precious metals. Ever since abandoning the relationships between currencies and their underlying fundamentals, fiat currencies run on people’s trust², something considered very fragile. Although gold bugs will try to convince you that Time of the Gold Will Return, I don’t see any reason why it should. The value of gold is almost as much about belief as legal tender. It has very limited usage. If any commodity should replace it fifty years ago, it would be oil. But besides huge fluctuations in both supply in demand, oil in large quantities is hard to move around, impractical and without processing, very toxic.

Computer Power and Business

One side-effect of cloud development a much better ability to assign costs to run computer programs. What was previously very diluted³ with a lot of crystal ball readings and Capex Excel sheets are now easily and automatically assignable consumption numbers.

This number is currently expressed in dollars, but I can see how TFLOPs could be a currency unit⁴ in itself.

If we run into a world where mundane tasks⁵ like programming is automated using machine learning algorithms that still consume a significant amount of computing power⁶, the cost of running a business can be expressed in "how much computational power this needs".

TFLOPs are subject to an increase in global supply, but I am not sure how much inflation would cause. The growth is constrained by our manufacturing abilities and the current optimization goal is not overall TFLOP increase, but TPLOPs per Watt.

With cloud providers becoming the grantors of the ability to exchange the currency for the fundament, this would create a globally available and easily exchangeable network.

Downsides

I consider this an interesting idea, not a good idea⁷.

For one, increasing the role of tech companies as custodians of the societal infrastructure may not end up well⁸.

I also don’t think that taking away the control of monetary instruments from states is a good idea. I come to believe that “state is us” and if its inhabitants don’t believe that, it’s because they do not feel represented and that is the problem to fix. I don’t see how moving the currency control further away helps with that.

As with current banking and investment system, this also increases the inequality between those who can navigate the system and have the resources to do so—and those who can't.

None of this applies as an objection, of course, if you want to dismantle states or work at a tech company.

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1. Ethical, economical as well as ecological, but that would be another article. I am also talking about Bitcoin, a libertarian hijack of blockchain. Blockchain is a pretty cool technology and an excellent idea, which is just currently way overused. But inventing problems only to be able to solve them using your favorite product is how marketing works anyway. ↩︎

2. At least that's how some people interpret it: I believe fiat currencies run on the emitter's ability to exercise power. I don't think it's a coincidence that the world's reserve currency belongs to the world's strongest army. ↩︎

3. This is not true for a handful of large tech companies, but having internal apps to compare the cost of network traffic with the cost of developers working on optimization is still far from an industry standard. ↩︎

4. The good name would be Computer Power (CP), the inevitable name is Doge Power (DP) ↩︎

5. Like programming React ↩︎

6. Like the GPT family ↩︎

7. Like Bitcoin ↩︎

8. [citation not needed anymore] ↩︎