Dogecoin, an altcoin known for its Shiba Inu logo and its association with memes, has caught the attention of many politicians and neighboring media outlets. Although it is a paradox that Dogecoin, a coin intended to spoof Bitcoin, may soon receive funding from one of the most dire branches of the federal government, it is a fact that the National Science Foundation may provide up to a $250,000 grant to “research the impacts of error in permissionless cryptocurrencies, particularly as related to wacky coins like Dogecoin.”
As Senate Democrats unveiled their proposal for dogecoin funding, they named it the Doge Trust, after a cryptocurrency that has become popular among online audiences. The Doge Trust would allow companies and nonprofits to raise money for research into cryptocurrencies with a low-interest loan backed by the value of their dogecoin-based assets.
The biggest-money item in the proposal was $600 million for the Department of Defense’s military cyberspace program, known colloquially as the “cyber warfare” budget. The Doge Trust would provide an additional $15 million for the program, much of which would be spent on researching the effects of typos and other human errors in cryptocurrencies.
The proposal landed in the Senate in the midst of a meme-related cryptocurrency-boom that has seen much of bitcoin’s allure drain away. Similar proposals for dogecoin funding have already been introduced in the House. The Doge Trust, should it become law, could help undercut much of the hype around altcoins like dogecoin and spark some much-needed, responsible research into the blockchain’s potential.
Meanwhile, Canadian psychiatrist Dr. Christian Thalmann, who quoted a Newsweek article about dogecoin in his research paper last summer, speculated that a funding increase applied to cryptocurrency research at Canadian universities might eventually spur similar academic interest in Dogecoin.
According to Eric Pan, director of the DOE’s Office of Scientific and Engineering Intelligence, these findings helped woo several European governments to double their funding for the DOE’s High Energy Physics (HEP) program. If Congress allocates some of the extra funding for cryptocurrency research to DOE labs, then DOE scientists would look favorably on researching other ventures, like decentralized finance.
“The beauty of dogecoin right now is that, by no means is it ready for wide-scale adoption, but it’s got all the building blocks necessary for a fully-functional digital currency,” Pan said in a presentation at the Computational and Mathematical Methods (CMM) technical conference last month.
The Senate proposal also includes a $25-million line item for the DOE to research the effects of typos and other human errors in cryptocurrencies. The lead author on this grant would be Dr. Carroll Sanders, a cryptocurrency expert at the University of Texas at Austin who initially popularized “The Spell of Hierarchy” model in 2017.
The lead author on this grant would be Dr. Carroll Sanders, a cryptocurrency expert at the University of Texas at Austin who initially popularized “The Spell of Hierarchy” model in 2017. According to the model, hierarchies and networks create their own internal incentives, as human behavior can lead to hierarchical order. One version of this model describes how teams construct their own social hierarchy in the same way that cells in complex organisms differentiate themselves.
This would involve identifying the socially-influenced reasons why roughly 1 percent of bitcoin holders acquire about a third of all bitcoins. Although some scientists already are collecting data on this question, as well as other questions related to social incentives, digital currencies, and hierarchies, additional funding might help provide added data that could lead to better theories (and theoretical models) for explaining the phenomenon.
Sanders argues that, while “Typos are poison” for most blockchain entrepreneurs, they might help orchestrate two new trends for digital currencies. One is the use of digital cash for transactions that people might not otherwise disclose in public. The other is a more generic shift toward tying up digital currencies to some future utility, such as a video-game character or a casino token.
Prior recipients of DOE funding for this research can point to congressional funding increases as a reason to collect even more data about the effects of human error on blockchain technology-related transactions. For instance, an earlier recipient of DOE funding for this research noted that, by investing in scenarios where typos could change the value of cryptocurrency assets, one could create entire ecosystems of interlinked cryptocurrencies that depended on the likelihood of typos. In time, he argued, banks could offer their customers “error bonds,” which would allow customers to exchange cryptocurrencies for tokens with localized transaction errors, such as flipping a coin’s 0’s and 1’s, flipping a coin’s CVA’s and CVB’s, or even swapping two coins’ enclosures.
Additionally, DOE-funded researchers have already shown how errors could provide a more efficient taxation method for government agencies than the current tax-collection method, which generally requires tax-paying entities to calculate their earnings, declare their earnings, and then remit some portion of their earnings as a tax.
Instead, banks could automatically withhold any gains tied to some account holder’s taxable event. The same error-arcade models-which showed how investment assets could provide returns independent of any investment’s returns-could also lay a foundation for designing error-based tax-collection systems.
Another DOE-funded researcher is exploring the possibility of using which units to attribute to a given set of networked resources, such as servers, virtual machines, or storage nodes.
At present, units of storage and processing units exist as essentially unlimited quantities in the digital realm. Over time, some cryptocurrencies that started with small units of processing and storage could eventually converge with other cryptocurrencies that started with larger units. Additionally, cryptocurrencies can receive fresh inflow of capital in the form of so-called “reverse-spoofing,” in which someone might purchase a unit of storage or processing at an inflated value, then “un-reverse-spoof” it at a later point in time, either to a deliberate human miscalculation or an error.
In the former case, someone might deliberately construct such a model around an investment portfolio that aimed to earn maximum returns by exploiting human errors. In the latter case, someone might purchase a fake blockchain node, and then later sell it once partner-networks inadvertently assigned it the ownership of some number of tokens.
The National Science Foundation (NSF), meanwhile, will set aside up to $250,000 for additional cryptocurrency-research, with up to $100,000 for research efforts linking digital assets to the real-world economy. As part of its companion funding initiative, the NSF will fund research on orphaned tokens, tokens that lack an active mining community, and tokens that suffer from “reward creep,” the phenomenon where fixed tokens exist alongside continuously-created tokens.
While Congress has tended to shy away from hyperbitcoinization-related doctrine, Canada has taken some small steps in this direction. The 2017 budget for Canadian universities dedicated up to $250,000 to research into the psychology of memes. Another $500 million went to digital-currency-related research.
This has allowed Canadian universities to acquire small quantities of, for instance, Canadian Tulip Coins, the University of Victoria’s first digital-currency experiment. According to a university press release, participants in the Tulip Coins experiment earn “Candies,” which can be used to create art depicting historic tulip manias.
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