My ideas from 2009 for a decentralized digital currency, inspired by the success of the Linden Dollar in Second Life. I met with some board members and execs to suggest that I thought a decentralized version of our currency could be built, using a number of 'balance servers' to keep an identical chart of accounts.
I didn't try to suggest a way to make new currency or reward participants, instead simply suggesting that money could 'neither be created nor destroyed', inspired by how the Linden Dollar had a public money supply balance that was slowly changing. I figured that some sort of similar distribution - maybe giving everyone worldwide an equal starting balance - could work out fine.
I focused most of my design energy instead on the problem of how two people who didn't know each other could quickly exchange the currency as easily as cash. I suggested that a system of revolving 4-digit short codes that could be exchanged easily by voice or by showing one's phone screen to another person would be an effective way to do it. This inability to quickly transact still plagues cryptocurrency today, and either this or something like QR codes still needs to happen to make digital currency useful for everyday transactions.
2. Two Pieces:
1. A single global
currency that everyone can
trust
2. Better and faster than
cash
3. A Single Global Currency that
everyone can trust:
Open public servers store global
account balances
Servers owned by different people
and countries
Money is never created or destroyed
Open conversion into local currencies
4. Faster and easier than Cash:
Exchange money using any web-
connected mobile phone
4 keystrokes to make a payment
Works both for web and person-to-
person
5. How to make money?
The 4-keystroke payment system for
faster transactions must be supplied
by a single global server (like domain
names)
Though not required or exclusive, it is
very likely that most transactions will
use this server (network effects)
We monetize the enormous traffic
and data flow through the system
6. Why will it work this time?
Because now everyone has a web-
enabled cell phone.
Because no one company owns the
servers - it's an open system than
can't be stopped by regulation.
8. User Experience: Buy Lunch
Storeowner types price of item (5 secs)
Storeowner displays 4-digit code ('XP5R')
Buyer starts SGC app (3 secs)
Buyer types code into app (5 secs)
Buyer App displays the amount/items
Buyer confirms amount/purchase (2 sec)
15 Seconds to buy in a store
(faster than making change for a $20 bill)
9. User Experience: Buy Online
Click 'pay using SGC' button on website
popup displays 4-digit code ('XP5R')
Get iPhone out of pocket (3 secs)
Start SGC App (3 secs)
Enter 4-digit code (5 secs)
Confirms amount/purchase (2 sec)
Website popup confirms that you paid
15 Seconds to buy online
(at least 10x faster than entering Credit Card info)
10. Revenue
USA = 1,300 debit/credit card
transactions per second
$400M year revenues at
1cent/transaction
11. Scaling
(it's not hard to do this anymore)
Single 1U linux server can store and
update account balances for entire
planet - 10B people.
~1Mbps traffic can handle all current
USA debit/credit transactions
Easy to make 100's of redundant
copies of data on servers worldwide
12. Secret Sauce #1: ShortCoder
A simple web service that helps make a
transaction really fast.
Person wanting to request payment sends
amount and description, gets back a 4-digit
alpha code, i.e. "D4F2"
The payor need only enter the code to make
payment
The code has to be used within 2 minutes
4 digit alpha codes with 2 minute lifetimes allow
1.2 Billion transactions per day.