Markets, Institutions and Currencies – A New Method of Social Incentivization

The article argues that currencies, alongside markets and institutions, can serve as a third way to incentivize productive activity, mainly by directing their seigniorage (the gap between market and intrinsic value) toward public goods. It points to Bitcoin, whose miners' seigniorage funds the security of its network, and to Primecoin, which directs mining toward finding Cunningham chains of prime numbers. It also describes Dogecoin's popularity as driven by its internet meme branding, and proposes "proof of excellence" as a way to automate rewards for computational research, a mechanism Sunny King has theorized but not yet applied in practice.