The last time money changed, it happened with a whimper, then a bang. In the twilight of the Second World War, 44 nations sent delegates to Bretton Woods to build a global economic system that could avoid depression, indemnity, and hyperinflation. After a month, they had built the World Bank Group, as well as what they hoped was a stable global financial system. And it worked: for 26 years, the world had a near absence of banking crises.
One of the system’s core features was the dollar’s use as a reserve currency, which created for it two contradictory uses: one as liquidity within the United States economy, the other as an asset held by foreign nations. The first use required low inflation and a stable price while the second needed more appreciation to maintain value. These tensions, made of contradictory policy promises, pulled the dollar in irreconcilable directions. Rather than wait for the snap, Richard Nixon announced in 1971 that the United States Dollar would no longer be indexed to gold, ending the Bretton Woods system and moving the modern world into an era of pure fiat currency. It also triggered a decade of stagflation.
Today, Bitcoin too faces Triffin’s Dilemma. While proposed as a peer-to-peer digital cash system, the first cryptocurrency has found more lasting traffic as an extremely unstable asset, less liquid than its creators would have liked but more fitting to its profile as “digital gold.” Those long-term holders would prefer that Bitcoin continue to appreciate so they can make returns on their investment. Many early adopters would instead prefer that Bitcoin stabilize in order to facilitate mass adoption in commerce. Bitcoin, caught between these two extremes, by design lacks either a board of governors to force a resolution or an internal design that can resolve the issues of dual use.
But Ampleforth has a solution to this dilemma. With these pressures in mind, we’ve created a cryptocurrency both decoupled from Bitcoin’s fluctuations and immune to the pitfalls of a fully deflationary currency. To do that, we’re building on George Selgin’s proposal of “synthetic commodity money,” an asset with a real cost of production that can still be adjusted in response to economic forces. In short: cryptocurrency. To overcome the limits of old money, we’re making something new, with a unique structure and movement pattern that makes it not only different than bitcoin, but potentially uncorrelated as well.
It took great minds to solve the currency shocks and crises of the past century, and now we are putting their Nobel-winning theories to work by creating Amples (AMPL). To learn more, please check out our Red Book, where we outline the economic principles guiding our design. Now, as before, money is set to change. Satoshi Nakamoto took the first great step in 2009. At Ampleforth, we’re ready to make the next leap.