Niall Ferguson, world famous historian, presenter of The Ascent of Money, and named in 2004 as one of TIME magazine’s 100 most influential people in the world, has joined a crypto blockchain startup.
Ampleforth is trying to build a stablecoin, but with a twist. Instead of pegging it to the dollar, they plan to peg it to goods prices.
The whitepaper starts off somewhat confusingly, stating: “Ampleforth is a decentralized store of value protocol that is volatile in price and supply at launch, but is strictly better than Bitcoin at steady state because it converges on a stable unit of account.”
By that they simply mean initially there will be a lot of new tokens, but then the coin should be able to maintain stability both in the long term and the short term.
All stablecoins so far, including DAI, are pegged to fiat which can be inflated. Ampleforth, which is non-collateralized and purely algorithmic, plans to target “a CPI that represents purchasing power against a basket of commonly consumed goods.”
An Unstable Stablecoin
Stablecoin is the most familiar term, but it might be misleading in this case as the coin can experience volatility against fiat or cryptos because the aim is to keep a stable purchasing power for goods. Brandon Iles, an engineer at Ampleforth, says:
“We’re at a time in history where we can effectively design how our next money should operate. If all we do is bring fiat to the blockchain (or just recreate fiat) than we’ll have missed a big opportunity.
Really, we’re trying to create an Ideal Money–a fair, government independent cryptocurrency capable of fulfilling all functions of money.
The Ampleforth protocol maintains a stable unit of account by using a decentralized elastic supply policy, effectively shifting volatility from unit price to unit count.
This gives us a unit of account resistant to the devaluing effects of inflation, but also maintains the same store of value as gold.
Instead of stablecoin, we say that we’re an Ideal Money–the most efficient monetary system possible. We take no seignorage, apply no demurrage, and add no transaction fees.”
This will all run on ethereum smart contracts through an ERC-20 token with the high level design somewhat simple:
“The idea of reinventing money excites me,” Niall Ferguson said in a statement announcing he has joined the advisory board, then added:
“Bitcoin, currently, is incapable of being ‘money’ that can be a means of payment. But at the same time, I am doubtful of fiat-pegged stablecoins.
As someone who is deeply interested in financial innovation, I’m attracted by Ampleforth’s mission to reinvent money in a way that protects individual freedom and to create a payments system that treats everyone equally.”
Paul Krugman, the left-leaning economist and New York Times columnist wasn’t happy, stating:
“I’m on record as saying that crypto is a mishmash of technobabble and libertarian derp. But I guess that I should add that it’s also a giant draw for sufferers from Dunning-Kruger syndrome.”
Ferguson for his part has not returned the favor, unlike previous exchanges where he called him “Krugtron the Invincible.”
We tried to get some comments from the Ampleforth project, but there was no one available in time for publishing. It is unclear thus when this will launch, but its attempt to apply Frederick Hayek’s suggestion in the Denationalization of Money for what would be the best currency, might be interesting.