Internet tokens would be a sort of currency, but with limitations. They would normally only exist on the internet and be used typically in exchange for internet content. The unit value would be very low, probably less than 1p, and it would be exchanged as a flow rather than in lumps. Saving tokens would not be possible.
With normal currency the validity of the currency units, coins, is established before the exchange of goods, whereas with internet tokens the value would be checked after the exchange of a portion of the goods. This means that the validity check needs to be computationally simple and fast, allowing efficient checking the validity of the flow of tokens rather than the validity of single coins.
Of course people will try to cheat, but only if it is worthwhile. Consider a buyer who is reading a newspaper story at the rate of one internet token every few hundred words. If a single internet token in the stream is false this would represent an insignificant gain to the buyer and an insignificant loss to the seller, who could be relaxed about continuing to supply the content. This means that the seller has time to check the validity of tokens after the exchange and, if there are too many false ones, do something later on in the stream, maybe stopping the information flow until enough valid tokens have been received.
A mean reader might get a few hundred words for nothing, but this is equivalent to reading the headlines of the paper on a newsstand or reading the first few pages of a book in a bookshop. Is the seller bothered?
Clearly the cost of checking a internet token has to be much smaller than the value of the token itself, but a small proportion of false tokens could be tolerated. The concern is not for the validity of the single units but for the integrity of the flow.
The idea is that content and services could be sold chopped up into arbitrary sized blocks in exchange for a flow of internet tokens. If the exchange rate was, say, 200 tokens to the £, then a 100-minute movie costing £3 would be demanding an average rate of 6 tokens per minute, one every 10 seconds.
Implications
I suggest that users would accept paying for internet content, but only if it involved zero hassle. (unlike Pay walls where signing on, and yet another password, results in a “can’t be bothered” response).
Today everyone communicating via their phones is being charged and do not seem to be the least bit concerned.
A profound and possibly game-changing outcome would be for internet tokens to be used for all sorts of publications; newspapers, searches, access to commercial databases, broadcasts, writing and images, any content that needs to be sold to cover production costs. It would provide an alternative to the use of advertising.
Advertising as a pseudo-currency is very inefficient. The overhead costs of operating it include the collection of personal data, analysis of this data and administration of the targeting. Also the transmission of the extra data of the advertisements themselves is a load on the internet as a whole. The amount that the users actually pay is measured in irritation and inefficiency in their access to the content. Some users with better focus (or better ad-blockers) will be getting the content “cheaper” than others, which is unfair.
By using internet tokens instead of advertising, the BBC and the commercial broadcasters could operate on a mostly similar footing, so reducing the need for the special status of the BBC. The only real necessity for a licence fee is to pay for content received via on-air broadcasting for what must be a small and declining proportion of all viewers.
A proposed internet token
This is just a suggestion, there may be better ways. However, this proposal provides an example with which the various issues can be discussed.
In this proposal the token is a block of data, probably less than a kilobyte. It would have a unique id which includes a web address and a serial number, a history field and a key field.
There are a number of token servers each at a unique web address. Each server would manage a fixed number of tokens identified by their serial number.
When a token is used buy a item of internet content, such as downloading a one of a series of web pages, the payment would normally be made after the page has been downloaded and before downloading the next page which could be made conditional on a successful transaction.
The transaction would proceed as follows:
- The buyer has a token with the key A supplied by the token server. The buyer generates a random key B, does an exclusive-or with key A to give key C.
- The buyer sends the token with key B to the seller and with the key C to the token server.
- The seller sends the token with key B to the token server who then does an exclusive-or with key A, which it already knows from last time the token was exchanged, and checks that the result is the same as key C from the seller.
- If this test is passed, the token server sends the seller a new token with a different key A, and informs the buyer that the transaction has gone through and the original token is no longer valid.
- If the test is not passed, the token server informs the buyer of this. The buyer will continue to make the transaction with another token, almost certainly from another server.
If the buyer or seller change a single bit in the token it becomes void. Neither can gain by cheating but they both have to trust the token server.
The history field records the date and some details of the last few transactions. If the transaction was an exchange for money then the amount paid would be included. If the transaction was just a renewal then the details would include data taken from the previous token (the one offered by the buyer) which includes a count of the number of non-monitory transactions. This would have permitted maximum. When this is reached in would be no longer valid for a normal transaction and an ordinary user would need to return it to their ISP who would have to sell it back to the server and replace it with new ones. There would also be a maximum permitted time in circulation after which it simply becomes worthless. The token server would reissue it as a new token. No details of users would be recorded anywhere.
Paying for it
The overheads of trading tokens for cash will necessitate dealing with them in large bundles. Most users will have an account with a service provider, such as an ISP or phone company who will buy tokens in bulk and supply to their clients. The clients will generally have cash accounts and the supply of tokens will be a small addition to the costs of other services. However any user could trade bundles of tokens if they needed to. Content providers on the other hand will have an inflow of tokens.
For example consider a newspaper publisher selling an on-line newspaper:
- this newspaper has a million readers
- ait costs £500,000 per day to publish, ie, 50p per reader
- there are 200 tokens to the pound
- each reader will read an average of a hundred tokens worth of content during a day
- the newspaper will collect from readers a hundred million tokens a day, very approximately, a hundred thousand seconds
- the newspaper could assemble bundles of, say, ten thousand tokens every 10 seconds, worth £50 and sell them to the server network.
How do the servers work?
The technical workings are not clear but it seems that there would have to be some sort of peer-to-peer distributed processing amongst servers.
There would be a fairly large number of identical servers
Each token server would handle a maximum number of tokens and at any one time a proportion will not be in circulation. If the server has more than a bundle of these it offers them for sale and the buyer of tokens will buy them.
The servers will also offer to buy bundles of tokens which will be mixed. All the servers then swap other tokens for their own and so accumulate them to make sufficient numbers to sell.
The profit would come from the difference between the buying and selling prices, enough to pay the hosting costs. This is intended to limit any incentive to increase transaction costs above the actual running costs and to make it difficult for there to be any sort of conspiracy among servers. (I estimate that a transaction cost of 1% of the token value would give provide single server with an income of a few hundred pounds a year. More than enough to pay for the hosting costs and to make it worthwhile but not making a fortune.
The buying and selling prices would be set by individual servers, so that they are bidding for trade. It should be possible for servers to start up and wind down trading so that any server that finds it is not making enough profit, it can withdraw temporarily or permanently.
All servers would put the history of all their tokens with their current status of in circulation or not, on public view. Tokens will be issued on a first-in first-out basis, which I estimate, will result in tokens spending several days out of circulation. What this means is that the proceedings of every server is open to scrutiny by anybody and in particular every other server and all the users who buy and sell bundles of tokens.
Servers would be installed on stand-alone hardware owned by public spirited individuals who are content to not be out of pocket and maybe make a small profit. There could be a recruitment process in which they establish that they are upstanding citizens, with no criminal record, and they own the server in their own right an not on behalf of a corporation. These details would be made public sufficiently for the details to be checked.
Servers would normally be running autonomously and the server owners would only have to act if autonomous behaviour was detected. Their role is to provide oversight and the small profit is their reward for this.
Will it work?
Trust
Trust is fundamental requirement for any currency system. In this case it will be based firstly on total transparency. Every token each with its history of transactions is open for inspection and any one will stay unchanged for the last a day or more. The identity of the owners of servers and their income from their server is made public. Trust between buyer and seller is inherent in the paying-as-a-flow process. The peer to peer structure of the server network and combined oversight of the distributed owners would make it difficult for any sort of conspiracy
Robustness
The distributed nature of the server network, with each one acting autonomously means that the unavailability of few servers would have little effect, provided that users have tokens from a variety of servers.
User acceptance
To succeed, the system should not involve the users in extra activity. Ideally all the activity should happen behind the scenes and the user not be aware of any difference, except for some sort of indication of the rate of flow of tokens and maybe an alarm to show if it is excessive. And of course the blissful lack of adverts!
Cost
All currency systems have running costs. Banknotes need printing, cash machines need manufacture and maintenance, Bit coins need mining and the hardware costs of storing the blockchain must be paid somehow. The token system is designed to minimise transaction costs.
Scalability
The scale of the system can be increased indefinitely by recruiting more servers.
Financial stability
This is a difficult issue. The cash value of tokens would be set by the joint action of the server owners, but to what should it be pegged? In an ideal case there would be a user who is providing access to free content but the overheads of providing this have to be met. The value of the token could then be fixed to the overhead costs of providing one unit of content.
Currently there are many suppliers of “free” content that is actually paid for by advertising or donations. With advertising there is not much hard information to go on but very rough estimates suggest the following (200 tokens per £, $, €):
- Search engine: 4 per search
- YouTube: 10 per view
- Blog sites: 0.2 to 2 per visit (depends on popularity of site)
- Wikipedia: 1 per page view
It may be possible to peg the value of the token to the likes of Wikipedia, who have transparent costing and no interest in the resulting value of a token.
Another thorny issue is different currencies. To keep things simple, each server would only deal in a single currency. Users who trade tokens would sort them into single currency bundles and trade them with the appropriate servers. As far as ordinary users are concerned all tokens are equal. The complicated issue of exchange rates would fall to the trading users.
Each currency would have its own network of servers for redistributing purchased tokens.
* Some sneaky tactics are possible, for example a seller who charges an exhortative number of tokens for a vital item.