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MyCHIPs Digital Money

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Eight Steps to Understanding

Just a few generations ago, the concept of a payment system based on private credit wasn’t so hard to understand. But our generation has spent so much time immersed in the current monetary paradigm, it can be very difficult to accept that MyCHIPs can really work.

Naturally, the money we are used to seems like “real money.” Something different can seem suspicious. Something really different can be very difficult to grasp. It is a big step.

So let’s break it down into a few more manageable steps.

Let’s start with the premise that you’re already convinced to try out a new kind of money. You are worried about inflation, monetary policy, government debt, privacy, sustainability or all of the above. And you’d like to try something new. You just want to understand if MyCHIPs money is “real value” and can be trusted.

Step 1

Let’s say you can download an app, much like Venmo or Paypal except instead of just showing a single account balance, it might show you five different bank accounts you have open.

You can see your Wells Fargo checking account, your Citibank savings account, and some credit and debit cards, each issued by various banks.

So one app, multiple accounts—all denominated in Dollars, Euros, or whatever you’re used to. If you want to make a payment to someone, you can decide which account to send it from. And you can configure things so people can send you money without having to know the specifics of all your accounts but the money will still arrive where you want it. No problems so far, right?

Step 2

Now ask yourself: what gives you confidence in this system? Is it because value is measured in a national currency unit or because the accounts are held by banks?

Maybe a combination of both.

Step 3

Recognize that these tokens we call money (Dollars, Euros, etc.) are really just credit, notes, IOUs. They are debts payable by the issuer, likely a central bank, to whomever holds them.

So your trust in the national currency means: “confidence in the fiscal policies of your government.” Confidence in the banks means “trusting the central bank that issues the currency.”

Rate your own confidence level in those institutions.

Step 4

Next, let’s stretch the paradigm a little.

What if your accounts now include Apple Pay, Google Pay, Venmo, and Paypal? Are those banks? Or might you still be comfortable with them because you trust those companies?

If so, maybe you can also have accounts with Nordstrom, Chevron, and even a “personal tab” at your local pub. What if you have an expense account with your own employer? Can you extend some degree of trust also to those businesses?

So your app allows you to manage multiple accounts, decide who you trust, and where you want to store value. Value is denominated in the units you understand and your trust is in the companies that issue the credits.

Hopefully you’re still on board.

Step 5

Now another stretch.

Let’s say each account can be denominated in a different national currency. Maybe one bank is in Germany with balances in Deutche Marks. Another is in England and uses British Pounds.

Now it’s starting to get complicated. We’ll have a bunch of exchange rates to think about every time we try to make a payment or add up a total.

It will be better if all our holdings are measured in a single unit of account.

Step 6

What unit will we choose? And is it possible to choose something that won’t be manipulated by governments or business cartels for their own purposes?

It would be great to pick some kind of commodity index that is more immune to inflation and reckless monetary policy. For now, let’s just say we have one that is independent, can be defined and understood, and is likely to be stable over time.

We still have an exchange rate to deal with, but only one. And all our holdings are in one unit of measure. If we deal with other people also using the system, they use the same unit. If we buy or sell something outside the system, we’ll have to deal with the exchange at one step.

This can be a bit of a challenge. But there is one big upside: We can now deal more easily with people in other countries as long as they are also using the system.

Step 7

Let’s go back to issuers. You are comfortable with certain corporate guarantors so what about people? What if one your accounts is with your Dad or your friend Bob? How about someone you just met on Ebay?

This may be fine for some people, but with others, not so much. You can trust Dad for 10,000 but Bob, you trust only for 10. You don’t trust the Ebay seller at all and he doesn’t trust you but you still need to be able to pay him.

So let’s say you only need accounts with the people you already trust and the app allows you to quantify the amount of trust each one gets.

Come to think of it, this is a great features for companies and banks, right? If we could specify how much we trust corporate issuers and limit our exposure to each one, that would limit the type of losses people experience when a bank (or worse, a country) goes out of business!

Step 8

But how do we store lots of value, like our life savings? If we have limited trust for banks, companies and individuals, who can we trust?

Let’s start by adding a home equity line of credit to our app. Now, when we have extra value available, let’s move it to pay down the balance. When we need some extra money for a purchase, we can advance it from the line.

Now we have the best of both worlds. We can spread our risk on short term liquidity across a bunch of different issuers to limit our exposure to each. And we can store long-term value in an asset we know, understand and care about.

You made it

You’ve arrived!
  • You understand that modern money is made of IOUs, or credit. Credit can be issued by anyone—not just banks and governments.
  • You can decide what banks, business and individuals you will trust and you can specify the amount of trust in each.
  • The CHIP makes it feasible to manage accounts from multiple issuers in different lands and cultures, all using a single unit of account.
  • The credit lift makes it possible to send value to people and companies, even when you don’t have an account directly with them.
  • And you have a way to store long-term value that is insulated from the erosive force of inflation.

Ready to give it a test drive?
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