Software Defined Economy

Ideation Of Managed Economy

A software defined economy(SDE) is what we already have for the most part. Most transactions in the economy exchange money electronically, over software defined networks. Various rules and triggered activities occur automatically. In a broader sense we can mention some constructs like the IRA, Roth IRA, 401k, 529, HSA, etc. etc. These types of accounts belong to a person fully, however the funds held in these accounts have statutory or contractual restrictions on when and for what purpose the money maybe spent. In a lesser light, food stamps and rationing tickets for the worse-off are also basically money or constrictions on money regulating the use of money for specific purposes and amounts.

Therefore, in this post-cryptocurrency era, it is completely imaginable to refactor our whole society, well at least the whole economy on top of a software defined system. We can specify what every single cent maybe spent on, because the software can account for every single cent of money that is transacted. There would be different levels of authority who may reappropriate money for other purposes, but each of those authorities have their own limits of power and checks and balances. The transference of money changes their purpose marker according to established reasonable rules implemented in software. For example I may have authority over the accounts of minors under my guardianship such that I can specify the money can only be spent on pencils and paper. The store who receive this money can convert the label from stationary to salary, then shipping and inventory, etc. Yang’s UBI can be distributed with earmarks for food, childcare, and other bare necessities of human life. Supermarket will refuse to take food money for beer or cigarets. Amazon automatically refuses to receive toy money in exchange for designer boots.


Another interesting property we had added as a feature specifying velocity. In an SDE, we can specifically say how long you are allowed to hold on to certain funds. For example the stimulus money for COVID-19. Those $1,200 is not only restricted to rent/grocery payable, but also has to be spent in a month. If it is not spent, the money reverts to the issuer—federal government. Such a requirement would propagate the money so that the bottom-up economic stimulus shoots up the system and really jolts the economy to life. If I put the money into savings account, it would still participate in the economy but in a much slower and possibly counter-productive ways. The money flow graph can be programmed to send money back to the issuer after an entity exceeds its allotted time to spend the money, if he does spend it in time, the next entity starts its own countdown clock to spend the money. Another possibility is for the stimulus money to have a fixed life time that can be held by any entity but it either vanished or is transmitted back to the issuer at the expiry. The ability to expiring money or alter its inherent value is not new, what is new is the ability to identify money, track it and set expiry at a massive scale, one that is the entirety of the economy, and do so in the very finest grain, down to the smallest epsilon of economic value, at the same time. Being SDE also means that the implementation is easily and accurately auditable. It brings a reassurance of universality of the system of rules of our economy to our minds.


A moment of pause is required to view this design critically. The fact that we already do this to money is not the proof or even evidence that this should be done. One reason why money is loved so much is the universality of its purchase power. It doesn’t matter that I just cursed a god and spat on a little kid or defected in public, money will buy what money will buy irrespective of circumstance and status. Money is great because it does not care about most things we care about. If we start restricting what money can do, it seems to deprive this powerful tool of a most important function. Money would be worth less if we are not free to spend it as we like. OTOH, being able to dictate what money does after it leaves my hand seems like a supernatural power everyone desires—at least you wish you can order it to turn around and end up in your own account again. One can imagine a certain set of people who would feel such abilities enabled by SDE adds significant value rendering the money of this economy much more valuable.

Exchange: there cannot be exchange between different class of money.

One concern you may have is whether the demand will be consumed by the uncertainty of money. Who would ever want $1 that becomes $0 in the next second? Well maybe in a v2 or v3 we’d have the need for that kind of money, and an exchange market where one might dump short lived money for long lived money at a discount. but in v1 we may have to resort to reclassification and quantization. Recall when food money goes to grocer it’s classification becomes wages, shipping, cogs, etc. When this transmutation occurs the money will gain a new expiry, possibly offset from date of transaction, as determined by its issuer. A second remediation is to quantize the expiry in reasonable terms: one will never expect to receive money that dies in the next 30 days without reasonable transmutation. But once implemented, the money is universal again, as long as you have the right kind of credit of money, you can buy. Seller can not refuse to sell because the money you pay expires in a month instead of in a year.


The SDE does not have to fundamentally challenge our real economy, in fact its flexibility means we can write economies as dictated by economists. We can apply prescriptions of economic theory just by reprogramming the economy in the software. In fact, Spiral City should start with an SDE and then we practice migration to SDE v2 as the city outgrows it’ wedge, it implements an updated SDE on the next the sector. Software engineer can have a pleasant dream about the refactoring and data migration for this task, who wouldn’t want to do the work of reclassifying every cent in the economy ?!

And perhaps the world can tolerate two kinds of money—liberal money and illiberal money. Bitcoin, for example, can be the liberal money, and fiat currency can be SDE with all the restrictions. An exchange can produce the other currency at a discount or premium.

Haa, as I write this I see that EU has approved some where between $800m and $2.06b stimulus package. At least some of that should be put towards the development of an SDE so that the rest of the fund maybe used with surgical precision to produce predictable and intended consequences.

Other ideas for expansion upon establishment of an SDE platform: administration of affirmative action, probable stability of money flow given software expressive assumptions about agents of money. The ability to produce random numbers uninfluenced by individual agents, it enables implementation of trustworthy randomized fairness.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s