Cryptocurrencies will be best suited to be the mainstream means of exchange in future extra-terrestrial settlements, according to a white paper written by Dr. Kartik Hegadekatti, Bangalore divisional commerce manager at the Indian Ministry of Railways and a colleague, Dr. Yatish S. G.
The paper, titled “The K-Y Protocol: The First Protocol for the Regulation of Crypto Currencies,” posted on the Social Science Research Network website, contends that regulated sovereign-backed cryptocurrencies (RBCs) will be the most commonly used currencies in societies on other planets settled by humans.
“We envisaged a protocol called the K-Y Protocol which makes it possible to introduce sovereign backed cryptocurrencies (just like the paper dollar, but in digital form),” Hegadekatti told CCN.
“Basically, economic activity adds value to a community (or society) and enables it to advance further,” he said. “It has been 44 years since any human has set foot on an extra-terrestrial body. I realized that this conspicuous absence of economic activity in space was partly responsible for the stagnation of space exploration and human colonization of extra-terrestrial bodies.”
“With the present-day emphasis on space travel by Elon Musk and others, I started to think how a human society on Mars (or the Moon) can conduct its economic activity at a reasonable cost,” he said. “Sustainable extra-terrestrial economic activity is the need of the hour. Hence this paper.”
Hegadekatti said the paper and his other writings on blockchain are in an individual capacity and not for the Ministry of Railways.
The K-Y Protocol is a set of rules and instructions to implement the RSBC system.
Carrying physical money into space is a costly process, Hegadekatti said. Elon Musk has said he plans to launch physical objects into space at a cost of $1,100/kg. If you carry a $100 note into space at $1,000/kg it will cost $1. This means the value of a $100 bill will be $101. If you carry it to Mars, it may have a value of $150.
“I have taken a reasonable, rounded-off estimate for calculation purposes; it is in fact way more than that, but coming down,” he said. “For the next few years at least, the cost per kg to launch stuff into space will be much more than $1,000/kg. But it will come down eventually.”
A $1 bill will also cost $1 to be launched to space. So, its actual value will be $2. Coins will be even more expensive; it will cost almost $2 to carry a 10-cent American coin to space. (One dime weighs approximately 2.27g.)
Even plastic money will need card readers or other instruments, which will be cumbersome to carry into space, the paper noted.
CCN pointed out to Hegadekatti that if the cost of carrying physical objects into space is so high, new technologies will have to be created, and that once such technologies were developed, paper currency would cost less.
“We cannot afford to send people to space, wait for an economy to develop, and then move on to complete colonization,” Hegadekatti replied. “Economically speaking, those who go to space should hit the ground running. They should be sent to space with ‘full (crypto) wallets.’ Introducing cryptocurrencies in space will enable space-farers to instantly add value to any activity. They need not worry about carrying, storing and handling paper money in space or any extra-terrestrial body.”
Asked if it would not be possible to send materials for building printers and paper into outer space to print money, Hegadekatti said it would also necessary to have other materials and trained personnel, with a continuous supply of paper and ink.
“Moreover, computer space is needed for maintaining accounts, records, etc. which can very well be used for crypto- economy itself,” he said. “Then there is the question of creation of waste out of these physical materials. As time goes by, material degradation, waste accumulation and disposal may become a major issue, as on Earth.”
“We should use crypto-currencies because they will be the most inexpensive form of money in outer space,” he said. “No physical resources needed, no wastes created, instant upkeep of records, with minimal computer space.”
“An icing upon the cake is when IoT (Internet of Things) arrives, objects will mine their own money! Robots on Mars (or the Moon) can conduct transactions via blockchain rather than paper money. This is never possible with present fiat or plastic money,” he said.
If there is a colony on the Moon, it will be possible for people on Earth to transact with the lunar colony in real time, the paper noted.
RSBCs can also be used in Earth-to-Moon transactions since they will provide stability of value, unlike decentralized cryptocurrencies. Moreover, governments will have a major role in colonizing space. As such they will be bound to use RSBCs.
But in the case of Mars, it will be very difficult to carry out a real-time cryptocurrency transaction from Earth. It takes light at least 20 minutes to travel from Earth to Mars. Unlike the Moon-to-Earth system, it is impractical to maintain a single controlled blockchain for Mars and Earth. However, a separate Martian blockchain with its own cryptocurrency can be created which can be traded in a cryptocurrency exchange.
Powerful microprocessors embedded in objects flown to (or created on) Mars can do “smart mining” and provide the basis for a money exchange system.
Machines containing embedded chips will “smart mine’” cryptocurrencies which can be used for extra-terrestrial transactions. Thus, machines launched into outer space will automatically add value to the world economy.
Extra-terrestrial economies can be linked to one another by a network of controlled blockchains.
Blockchains can also be used for extra-terrestrial contracting, voting, taxation, banking, etc. Blockchains will make it possible for rules, regulations and laws to be enforced in space without the need for human supervision or intervention.
Paper money is a hindrance to space exploration and settlement, whereas cryptocurrencies facilitate space travel and extra-terrestrial settlements. Blockchain systems, therefore, can form the basis of extra-terrestrial societies.
Images from Shutterstock and Mars One.