I have been thinking recently about banks and currency. It's a fact that American currency and that of the majority of the world is fiat currency, it's currency that is completely based on the promise of the government. The government is free to do with it as it wishes and to inflate the currency, debase it, and so on. The user of the currency has no control over it. Further, governments allegedly use their gold reserves to further manipulate and solidly backed currency to maintain the value of their fiat currency. You can play this game if you want, but in the end it's a loser's game because any and all fortune that you have over time will be simply washed away through inflation. This is a standard lament of a lot conspiracy theorists who now and then are proven right by a major depression or at the least a solid recession.

Being as it may, we have some examples online of private fiat currency that are backed by other fiat currency. The best example of this is PayPal which makes over a billion dollars per year for eBay, the owner of PayPal. Google wants some of that revenue and so it's attempting its hand at getting people to adopt its currency through Google Checkout. Consumers these days however are oblivious to the fact that they actually have a billion dollars of revenue that they are giving away to companies like PayPal for mediocre service and high transaction costs. In the end the system that runs PayPal is based on Open Source and it is nothing special to duplicate. It's simply a transactional database which is kept under a decent amount of security. The system does have its problems, but in the end it's nothing which can not be replicate. Another thing which really bugs me about PayPal is its insistence against processing payment for certain things that it deems immoral -- what right does anyone have to tell you what you may use your money for? In looking over the system I see a huge oppurtunity for open source lovers, libertarians and alike.

There are two options: a very low transaction cost service, or a equivalent service which uses the majority of its profits for good causes such as the EFF, charities, and defending people's rights against litigation from the various lobbying groups working for various interests against people. The plan would simply include introducing an online currency that is carried by a number of merchants. The transaction costs would be used to do good.

To be continued.