Milos Mrdakovic

Money is not a “natural” thing. Money is a human abstraction. A tool that solves a problem. Money, although most people don’t view it as such, is technology.

To see the problem we must go back to the world without money.

Without money, people would exchange their products in barter - direct exchange of goods and services. This practice has endured thousands of years of civilisation especially with the development of agriculture, when people started cultivating soil to produce various goods. Farms often produce an excess of one thing but need others. To this day you can see barter on the farmers market. While farmers have certain potential for this type of trade, for others barter is limiting or impossible. Barter exchanges take place only if each trading partner has a direct personal need for the good he receives in the exchange. But even in those cases the goods are often too bulky and cannot be subdivided to accommodate them to the needs.

Money is a (partial) solution for problems of barter exchanges.

Medium of exchange is something both parties are willing to accept in exchange for goods and services. In the history of mankind, a great variety of commodities—cattle, shells, nails, tobacco, cotton, copper, silver, gold, and so on—have been used as a medium of exchange. In the most developed societies, the precious metals have eventually been preferred to all other goods because their physical characteristics (scarcity, durability, divisibility, distinct look and sound, homogeneity through space and time, malleability, and beauty) make them particularly suitable to serve in this function.

When a medium of exchange is generally accepted in society, it is called “money.”

Paper money

Commodity money, while great store of value, can be a difficult medium of exchange. Imagine doing a large trade with silver coins. Imagine going to shopping today with coins. The invention of paper and a printer enabled paper money. A third-party would offer a service to store your commodity money and issue a paper certificate for which you, or anyone else, can redeem it. The ability to move value around on paper made trade much easier. Social cooperation flourished. Increased exchange of ideas and more economic specialisation meant people could grow more food and make more stuff. But now third-party trust is required. Soon governments took over the printer and abused it to print more money than there is the backing asset.

Fiat money

Fiat money is the money we use today. It is backed by the government and is reflection of the nation-state power. It is often inflated. There is no guarantee it will follow it’s historic performance, or even exist in the future.

Money of the Internet

The internet has erased borders allowing instant information transfer across the globe - global village. You can surf the web, make audio and video calls, play games, all in a mostly permissionless manner. You cannot transfer money in permissionless manner. Cross-border transactions are expensive, slow, and often impossible. The financial system is made for fiat money, for nation-state control. It favours developed societies over developing ones. In the digital age we need cheap, fast, and permissionless payments - accessible to everyone.

Until recently, the new information technologies have been unable to create any new monies. They have been able to develop various new instruments to access and transfer money. These new electronic techniques of dealing with money are very efficient and beneficial, but they must not be confused with the creation of electronic money.

The first electronic money is Bitcoin, created in 2009. It is built on top of the decades of innovation in the field of cryptography. It is backed by mathematics and energy. In fact it is backed by so much energy that no single actor can manipulate it. It is decentralised and permissionless because anyone can contribute to the network and transfer value. It is scarce as there is a limit to the number of coins which will ever exist. We have a hard electronic money capable of micro and high-value, local and global transactions, at any time. Technology unlocking a new level of social cooperation among humans, also capable of supporting a new dimension we are entering with the advancement of the AI.

How can electronic money empower AI?

Pay per request

Electronic money can replace expensive subscription based model with pay-per-use model. That can be done through HTTP 402 status code - payment required.

ChatGPT is the most popular AI chatbot. Today you can pay 20$ per month to OpenAI through traditional payment networks for full access to ChatGPT. This is inefficient because there is a high percent of the unbanked globally. Because the payment gateway might decline you for various reasons. Because you might use the service less then what you paid for. There is no way payments will look like this in the future.

alternative: There are wrappers around ChatGPT(and other models) which let you pay per request by integrating HTTP 402 with cryptocurrency.

AI agents economies

We are going to witness the rise of AI agents. They don’t have an ID and a bank account. There will be thousands and millions of them. They will specialise in different things, and often to complete a task will need to interact and pay to other agents, who will need to pay to other agents… the number of transactions will be massive. For this payments need to be fast and cheap. Fortunately, agents can create digital wallets.

To sum it up, money is a technology which makes trade easier. Monies compete. Commodity money is generally a good store of value for future trade. Fiat money is a good medium of exchange for short-term trade. Electronic money can be both.

Online communities are a bastion of meaningful communication in a growing unidirectional networking. Groups I’ve joined over time are all hosted on Slack, Discord and Telegram - all proprietary software handling well public and invite-only groups.

What about paid memberships?

Paid membership is a great filter for spam.

Paid membership amplifies my motivation to immerse into an activity, like a gym or a language course.

A useful feature rarely available. Discord offers community subscriptions only to US based server owners, with high fees and strict terms. Other platforms outsource to third-party integrations - bots and automations - another layer of complexity and risk.

With technology at disposal, we can do better.

• Nostr is a social protocol which facilitates identity, direct and group messages.

• Lightning network is a payment protocol for fast and cheap transactions.

Here is an idea: open-source app tailored for online communities, built on top of Nostr and Lightning.

How would the flow look like?

• Group landing page has an input field for your Nostr public key.

• Enter and get Lightning invoice generated.

• Pay invoice and your Nostr account can connect to the group private relay through a custom client with familiar experience.

Unique features

As paid community grows, valuable content needs to scale. Owner can allocate funds to stimulate other members' contributions.

Community members usually want to connect on public media. Besides internal view, the app would offer public feed (visible only to group members) of all member activity over public relays.

Sounds interesting?

A month ago I gave a talk at TX Conference 2023 about the Fediverse. The video is here.

Social networks are tools to keep us up to date with what others are doing. But they come with flaws. I will focus on centralization.

Instagram (Meta), Facebook (Meta), LinkedIn (Microsoft)… You see the pattern here?

Major social media is owned by tech giants.

The business of attention and data is a lucrative one, and there’s abundance to keep them running. Revenue is maximized by advertisements and algorithms amplifying content to keep your attention… these features make user a product and communication unidirectional - parasocial media.

But businesses often fail.

When a social network is gone, there is no way to migrate your connections.

Remember MySpace?

The above-mentioned platforms were created 10, 15+ years ago, when hardware was expensive and developer resources limited. To build such a system was a massive technical and financial challenge. Cheaper hardware and developer resources enabled a number of smaller platforms, often powered by open source software.

In 2018 ActivityPub is presented, a social networking protocol authored by W3C.

Protocol is a set of rules for communicating data. You are probably familiar with HTTP protocol - rules web browsers and servers follow to show you requested web page. Or email protocols - rules email clients and servers use to exchange email messages. ActivityPub is a protocol created for social media.

Let’s imagine X (ex Twitter) and Instagram have integrated ActivityPub protocol - Instagram is actually rolling it out for Threads. I could see, like, comment my friends' Instagram posts all inside the X app. They could see, like, comment my X content without leaving Instagram. While this is still an imagination, there are similar platforms which allow this kind of communication. They implement ActivityPub and form a decentralized network known as the Fediverse.

Mastodon is an ActivityPub-supported social network and the most popular one in the Fediverse, with many instances open for registration. It is open source - you can self-host or use a hosting provider. It is used at Medium, Vivaldi (the web browser), and Swiss authorities - to name a few interesting entities.

Other notable ActivityPub-supported platforms include:

• Pixelfed, a decentralized photo sharing platform
• PeerTube, a decentralized video sharing platform
• Lemmy, a social link aggregation and discussion platform

But also WordPress (via official plugin), and soon Threads (docs), Tumblr, GitLab (experimental)… All setting the stage for widespread adoption.

There are drawbacks to this system.

In Fediverse, your identity is tied to an instance where you registered an account. The concept of instance and having to select one is an obstacle for newcomers. Like centralized platforms, you cannot rely on an instance run by communities and individuals to always be available, and when it disappears you have to migrate to a new one. Self-hosting is a choice, but that’s another issue.

Nostr is a social networking protocol with a different approach over ActivityPub.

We’ve covered centralized media, then partially decentralized (Fediverse) - if your instance disappears, so does your identity. Nostr is fully decentralized.

In Nostr you own your identity.
It does not link your identity to a specific server.

How? By using public-key cryptography.
Your public key is your identifier. Everything you publish to the network includes a signature only your key combination can create, in such a way that client can verify it’s you by just knowing your public key. Servers are called relays and serve as a database. They are not federated, do not talk to each other. Clients connect to multiple relays to publish and fetch data. As long as two users have mutual relay, they can exchange content. Moderation, filtering, and blocking are all client-side.

It’s a very interesting protocol I plan to cover in another article.