The blockchain technology behind cryptocurrency makes it possible to create currencies and programs which would be impossible to make using regular technology. One of these unique cryptocurrencies is called Ampleforth. It is modeled after a theoretical currency called the Ducat proposed by famous economist Freidrich Hayek. The Ducat would be able to adjust its supply based on demand. Ampleforth uses cryptocurrency technology to make this possible.
Ampleforth was created by the Ampleforth Foundation. The Ampleforth Foundation consists of about a dozen people from reputable institutions such as Harvard, MIT, Stanford, and Yale. It was coded by Evan Kuo and Brandon Iles, who are part of the Ampleforth Foundation. Evan studied at UC Berkeley and specialized in robots. Brandon used to work for Google’s machine intelligence team.
Ampleforth (AMPL) is an ERC-20 token built on the Ethereum blockchain. For those unfamiliar, Ethereum makes it possible to easily create new cryptocurrencies (called ERC-20 tokens) using a template instead of coding them from scratch (which is what you would have to do otherwise). These cryptocurrency tokens can have smart contracts built into them. Smart contracts are programs which automatically execute and often cannot be modified once released.
As mentioned in the introduction, Ampleforth is a cryptocurrency which changes its supply based on demand. This is why Ampleforth is often referred to as an elastic currency. Ampleforth’s AMPL token smart contract is designed to adjust supply based on demand to keep its price around 1$USD in 2019. This is important because the US dollar as well as other fiat currencies generally lose value over time due to inflation as more money is printed.
The first thing that makes this possible is the Ethereum blockchain. Since all of the wallets holding AMPL tokens are connected to the same network (Ethereum), the AMPL smart contract is able to adjust its supply directly in the wallets of everyone who holds the cryptocurrency. This is obviously not possible with regular fiat currencies, primarily because a lot of fiat currency supply is in cash.
If you think this sounds like a horrible idea, consider this: you will keep the same percentage of the AMPL currency regardless of its supply. Although the amount of currency you have in your wallet is adjusted, since you have the same percentage of the total supply your purchasing power does not change. This is assuming everyone is using AMPL, which is the long-term goal of the project – to become the world’s currency.
Once upon a time, money was backed by gold. While going off the gold standard has since caused incredible inflation for currencies around the world, there was really no other option. Why? Because governments were not able to adjust to the demand for their currency. In short, there was simply not enough money in circulation to meet demand. If more was printed, foreign governments would start to wonder if you really have the gold you need in reserves to back it.
Ampleforth provides a solution to this problem. When economic conditions are good, it can increase its supply to meet demand without losing its value or purchasing power, which is what has happened to fiat currencies like the US dollar. When economic conditions are bad, it can decrease its supply again without losing its value or purchasing power. That being said, the project is still very new and there is a lot of work to be done on it. For the time being it is no more than an experiment. Still, it has a lot of potential.
