Karma as a universal cryptocurrency

Karma as a universal cryptocurrency

a concept of an ERC-1155 NFT for the moneyless world

People have been searching for the best medium of exchange for a long time ago. One of the biggest problems with fiat money is centralization. Bitcoin and other cryptocurrencies solve the problem of centralization, but they have their own problems. For example, you have to mine bitcoin before you can spend it. Let’s imagine 2 people on an uninhabited island, Peter and Laszlo. Peter has an apple tree, and Laszlo has a cherry tree. Cherry and apple are available at different times of the year, so they cannot directly exchange the fruits. How can we solve this problem? The loan is an obvious solution, but what can they stake as credit protection? They can stake only their identity and trustiness. If Peter gives some apples to Laszlo, and Laszlo doesn’t give back it in cherry, then Peter will never give him apple again. This is a very basic credit system based on trust. But how can we build a currency from it?

One of the first questions is, what will be the unit of our currency. What is the universal currency unit of the world? Maybe time is the most obvious answer. Time is a scarce resource, and we can measure it well. When we work, we transform our time into money, so time could be a universal medium of exchange. The problem is that one person’s time can be more valuable than the other. There are other factors like knowledge, owned resources, etc. why time is not a good currency. But if not time, what could be a universal currency?

My solution is karma. Karma comes from the Indian religion, and it is a philosophy of how your current actions influence your future. If you do something good, you will get it back somehow from the universe. A small good action can be worth a lot to someone else, so karma somehow includes the different values of a person’s time. Karma as a currency sounds good, but how can we digitize it?

In my system, every person can issue his/her own currency. Peter has a “Peter coin”, Laszlo has a “Laszlo coin”, etc. Fiat money is issued by the governments, but in this system, every single person is a “separated country” with its own currency. These personal coins are “karma”. Every person can infinitely issue karma, but the amount of issued karma is inversely proportional to the person’s reputation. If you have a great debt to the Universe (to other people), your reputation will be low.

But how can we determine the value of the personal coins (the karma)? The obvious solution is an exchange where people can sell and buy karma. Every person’s interest is to buy back his/her karma to raise his/her own reputation (remember, if you issued too much karma, your reputation will be low). Don’t imagine the karma market as a manual exchange. Selling and buying karma can be done by bots and automated algorithms, that try to optimize your karma balance and keep your reputation high.

In the karma system, when Peter buys some cherry from Laszlo, he pays with karma, and his reputation will be lower. In the future, Laszlo buys some apples from Peter and pays with his karma. After the transaction, Peter can buy back his karma from Laszlo by using Laszlo’s karma, and his reputation will be restored.

This is my hypothetical karma system, which is a universal decentralized digital currency. It could be implemented on an Ethereum network by smart contracts. For example, ERC-1155 is a kind of NFT, where NFT’s are split into smaller parts. It’s possible to use these NFT’s like karma. The most important part of it is a reliable identity system, where people won’t be able to change their identity. If somebody can have more than one identity then the reputation will be meaningless.

This karma system is only a concept, but I think it’s a very promising solution for a P2P, moneyless world.