Decentralized utilization incentives in electronic cash

Abstract

Many mechanisms exist in centralized systems that incentivize resource utilization. For example, central governments use inflation for many reasons, but a common justification for inflation in practice is as a means to incentivize resource utilization. Incentives to utilize resource may stimulate economic growth. However, the asymmetry of economic control and potential abuses of power implicit in centralized systems may be undesirable. An electronic cash design may be able to create resource utilization incentives via decentralized mechanisms. Decentralized mechanisms may be economically sustainable without centralized and potentially coercive forces. We propose Hourglass, a novel electronic cash design that provides a decentralized mechanism to encourage utilization via expiration dates. Constructed in this way, decentralized utilization incentives may have less potential for coercive abuses than more centralized methods, but may be similarly effective in their ability to incentivize utilization. We present the Hourglass system at multiple levels of detail: a design overview, a minimal kernel framework, a series of descriptive refinements, and a concrete implementation as a fork of Bitcoin (a popular electronic cash protocol in common use). We also present several potential applications of Hourglass, such as renewable resource markets, spectrum allocation, stock issuance, and currency.