About

The core idea of Towards Type Two compresses to the phrase: “Better markets. Better money. Better world.” Best read as a numbered sequence with a hidden step 4, stating “return to step 1.”

In practice it means to build a better world, don’t build for it directly, build for the conditions that support it.

There are different conditions that can lead to a better world, and not all roads there have to pass through better markets or better money. However, as markets and money act as broad civilization scale organizing forces, they do offer the potential for exceptional leverage in this regard. Due to that, these are the areas where Towards Type Two will concentrate its efforts.

1. Better Markets

People have things they want (demand) and people have things they can provide (supply). A market provides the interface and rules for both sides to match and an exchange to occur.

“People” in this regard is a stand in term for agents and could be extended to AI agents or other market actors. And what is exchanged doesn’t have to be money, goods or services; it can also be time, attention, emotion, or any other type of resource.

Examples of different markets range from conventional ones: stock market, job market, insurance market; to specific or non-obvious ones: housing market in a specific town, the admissions process for a certain college, a dating app, an organ transport waiting list, and a work visa application process.

Blockchains too each have their own market: the blockspace market. To manage this market, each blockchain has a native economic resource (a digital currency), interfaces (wallets, cli tools, etc.) and rules (private keys, validity, consensus, etc.) which permit/deny how to transact within that market.

This makes blockchains unique as its market is endogenous to the technology itself. It’s not something layered on top; it is the thing.

Extending this capacity further, a blockchain has the potential to act as A Market of Markets, defined as a meta-market which provides:

  1. Services: transactional settlement; infrastructure and primitives allowing markets to form, operate, and compete within it.
  2. Goods: its native digital currency, the markets contained within it, and the representation of assets used within itself and its containing markets.

Interestingly, each contained market plays a dual role. To the meta-market, it is a good: part of the inventory the meta-market “owns” and offers, like a product on its shelf. To the agents that interact with it, it is a service: providing functionality or a means of exchange.

This market-centric potentiality of blockchains is what makes them the perfect technological leverage point to improve markets.

To that end, Towards Type Two will build a blockchain.

This blockchain will have several key features that it must provide:

2. Better Money

When money fails as money, it most often does so because of a failure to store value. Better money, in that sense, is simply money that stores its value better.

People store value in the present to be able to use it in the future. That future can often be non-specific, and the exact point when value stored becomes value redeemed is rarely known in advance. It could come in a week, a year, a decade, or even longer than that.

Against this range of future possible redemption points, good money should hold its value well, with little regard to when its storage and redemption events actually occur. Yet throughout human history, there hasn’t been a money that has stored value well across the full range of possible storage/redemption time pairs.

Gold, for example, took 28+ years to recover its price and purchasing power from its 1980 peak. The US Dollar, while quite stable in the short-term, slowly bleeds value to inflation in the long-term. And Bitcoin, the new contender, has thus far had periods of 2-4 years where its redemption value was less than its storage value, often to the extent of an -80% difference.

The takeaway from looking at all these monies is that they are conditional stores of value. Under certain conditions, some store value well and under other conditions, they don’t.

The immediate temptation is to seek to create some new money that has the exact parameters and qualities to make it capable of unconditionally storing value. But such a search is akin to seeking the philosopher’s stone, and will leave its pursuers eventually empty-handed.

The alternative, which Towards Type Two proposes, is monetary composition.

At its core, let certain monies do well in certain conditions and poorly in others. That’s ok. But compose them together such that they store value better together than each can do individually. Portfolio construction applied to monetary design.

The rebalancing tokenized basket, as laid out in the Better Markets section, is the primitive that unlocks such an approach.

While portfolios often optimize for risk-adjusted returns, a monetary basket should instead optimize for risk-adjusted stability. When done well, it should deliver stable and gradually improving purchasing power.

Monetary baskets, in practice, can be understood like this:

3. Better World

The driving force behind Towards Type Two is to do work that leads to a better world.

Better markets and better money, when composed as a system, can lead to a better world when the following are both true:

  1. The system helps us learn what actually makes the world better.
  2. The system helps more people act on that knowledge, with greater capacity.

To understand what makes the world better is to raise the ceiling on money’s value. The value of money is always constrained by the world it finds itself in. Its world is its actual backing.

Money in a world overrun by war, hunger, disease, and sorrow is a money backed by things no one wants. The purchasing power of such a money is nothing good. And no digitized representation of scarcity can create actual demand to inhabit such a world. Conversely, in a world of peace, abundance, good health, and joy, that money’s purchasing power is of immense value.

If the initial aim is better money, the truer aim must be a better world.

When the world is fractured into uneven pockets of opportunity, the flow of progress towards a better world is kinked. When there is friction for any individual to act in service of a better world, it levies a cost borne by all.

Lack of financial resources and access is one such form of friction. That needs to be addressed. Any sincere effort towards better money must account for that and build towards its resolution.

Financial resources alone are not all of it. Understanding and knowledge must be shared as we embark on learning together.

When greater access and understanding are combined, our collective power as a species increases. We gain leverage towards better outcomes.

4. Return to Step 1

The idea behind “Return to Step 1” is that the work continues, it keeps going. Any gains in one area unlock potential gains in another. As we go, we learn and that learning uncovers some other potential area to improve. We implement that and things can compound further. Logically simple as an idea, while quite complex in actual execution.

Our orientation towards this whole process is reflected well in our company name: Towards Type Two. Conceptually, this borrows from the Kardashev scale for its naming inspiration. That scale, proposed by astronomer Nikolai Kardashev, measures a civilization by how much energy it is able to harness. At Type I: it’s the capacity to harness all energy of the civilization’s planet. At Type II: all the energy of its star. Type III: all the energy of its galaxy.

As a name, what Towards Type Two is doing is pointing.

It points towards progress, expansion, the potential for something greater in the future. Something so far off in the distance that none of us can single-handedly will into existence, nor even be around to see it come to fruition.

And yet we’ll still point to it, throw our energy into it, go for it. ’Cause that’s where the real juice of life is.

If it’s surprising that we’re not in the business of energy or rockets or anything like that, it’s because we don’t think those are the main operating constraints currently. Larger and larger levels of energy capacity require greater and greater levels of co-ordination and alignment, so we’ll focus on that first. Fast forward 100+ years and if we’re still around, then some of those operating constraints may have changed and our focus might have to shift as well.

Wherever it lands, our approach should remain the same: Design fair games worth playing. Get the right players in the game with their needed resources and pieces on the board. Then let it go.

Towards Type Two was founded by John K. Ferguson.

The rest of the founding team is currently being assembled.