I got to say... that looks pretty hopeless. Complementary currencies [0] are not new and they have limited utility -- especially since the currency takers still have to pay taxes in fiat.

It's very easy to design systems where a single node captures the majority of the value in return for doing the majority of the coordination work. This goes deeper than politics. Look at the design of biological organisms and you find big brains capturing 20 percent of the energy. Look at the design of nation states and you find sovereigns capturing 20-30 percent of GDP. Central coordinators seem to inevitably capture 20-50% of the value. One might even argue that they "earn" it too. Distributed coordination is costly and in a world of scarce resources it's silly to entertain additional coordination costs if you can avoid them. Central coordination has a lot going for it -- in terms of speed, efficiency, economies of scale, and even reliability they are very hard to beat.

Decentralization isn't hopeless though. There exists a class of problems where distribution pays off. Problems that can be truly paralellized, indeed ones that when you examine them you realize they are in fact embarassingly parallel [1]. For these problems it's expensive to introduce a central coordinator. Rather than costs being decreased, the central coordinator now introduces costs intothe system. The central coordinator in fact must hire enforcers to go out and impose its will because there is a natural tendency to parallelize and devise local solutions.

Here's the tragedy of cryptocurrencies: currencies are not in this class of "embarassingly parallel" problems. It's just the opposite: currencies absolutely require a single coordinator with currency power. In the absence of a single coordinator the currency (which can be anything from gold to stones) is reduced to a commodity and is subject to mere supply and demand. And demand can always go to zero. This is what ultimately makes a real currency a real currency -- there exists an undying and infinite "demand" for the currency [2].

Playing games with decentralization and federation will not alter these dynamics. You can solve the double spend problem but you cannot generate infinite demand.

It's unfortunate because there are problems that the blockchain could solve that really are "embarrassingly parallel." The hope here is that all of the innovation going into blockchains will live on long after all the cryptocurrencies have gone to zero or been centralized behind trusted gateways. These innovations will be used to solve big problems that aren't currencies. Big problems like journalism (in fact all content generation a la Wikipedia, Youtube), transportation (Uber), lodging and logistics (ie Amazon and Walmart), resource overuse (this includes everything from overfishing to carbon credits) that are embarassingly parallel and are begging for blockchain-based solutions. These problems are truly global problems and it's quite likely no single central coordinator can solve them. The solution to these problems don't require a new currency and indeed if there's any hope for adoption the users will need to be able to transact in fiat. But these problems do require exactly the sort of real-time global coordination and consensus that blockchains can provide.

[0] https://en.wikipedia.org/wiki/Complementary_currency

[1] https://en.wikipedia.org/wiki/Embarrassingly_parallel

[2] http://neweconomicperspectives.org/2011/07/mmp-blog-8-taxes-...