I spent the late 90s selling Pokémon cards on Yahoo Auctions. Did you know that Pokémons used to come in card form? And that Yahoo used to be more than just a carcass container for Alibaba shares?
Yahoo Auctions was the Silk Road of the internet. I’m talking 7th century Silk Road here, not darknet Silk Road. This was the go-to place to buy Beanie Babies, baseball cards, and any other small-ticket collectible. Most importantly, it was where I could offload extra Pokémon.
Paypal didn’t exist yet, but I was too young to have a bank account or credit card anyway. The average sale price was a dollar. Some of my customers paid by mailing cash; most paid in unused postage stamps equaling the amount due.
Postage stamps were the perfect currency. As a Yahoo Auctions Power Seller, I was always in need of postage to distribute my products. Plus, the exchange rate is printed right on the stamp! If I had a surplus, I could trade them in at the central bank of Mom and Dad. In the case of “Forever” stamps, they’re even guaranteed to keep up with inflation.
Unfortunately, sound money does not always guarantee a stable future. Today USPS is having a rough go, with a negative net income for the last five years.
I know what you’re thinking: Who the hell uses USPS anymore?? If you find yourself unable to answer that question, maybe it’s time to shut down the Postal Service.
No, I’m kidding. Anyone that sells physical goods on the internet needs USPS. Amazon sends 40% of its shipments via US Post. Even UPS and FedEx outsource 30-40% of parcels to USPS. How else could they make money on deliveries to the boondocks? That’s what public utilities are for.
Ordinarily when the competition outsources its business to you, that’s a sign to rethink your going rate. In this case, it’s not possible: Postage rates are mandated by the Postal Regulatory Commission. (Why are my tax dollars paying for this agency??)
While I certainly appreciate the efficiency of central planning, in theory a viable business should have total revenue exceed total expenditure. USPS is a public utility, so we’ll let them slide at break-even. 99% of Postal revenue comes from postage (the rest is from P.O. boxes and money orders). And the total value of postage issued should equal the total value of services demanded. Then to reach sustainability, the Postal Service should cease postage sales and instead pay all its expenses in postage stamps.
This doesn’t necessarily mean physical stamps. USPS recently released a silly report describing potential postal blockchain applications*.
The report covers many ideas but misses an obvious one: Blockchain postage! Let’s call it PostageCoin. Make it a colored Bitcoin, or issue a digital token. The benefit of a blockchain-based postage stamp is that it can be verifiably exchanged.
The Postal Service can cover payroll and expenditures with PostageCoin, and let the resellers determine its value. Right now, USPS must sell postage at the PRC-mandated price, but resale outlets are free to mark up (or down) as they like. Sure, the stamps might be tagged at 47 cents, but Cuba also spent half a century insisting that their national currency was pegged to the dollar. The state employees earning four centavos on the peso all knew better.
As long as people buy stuff on the internet, e-commerce merchants will need postage. And if merchants need postage, they should accept PostageCoin. Given that over half of US households have an Amazon Prime membership, most people will accept income in a currency that Amazon considers legal tender. Then postal workers will be able to spend their PostageCoin almost anywhere. It becomes a virtuous cycle.
These closed-circuit transactions are required for a sustainable decentralized currency. The way things work with Bitcoin, is that miners mine bitcoin and sell most of it on an exchange. Customers buy bitcoin from the exchange when they need to pay merchants. Merchants receive bitcoin and sell it again to get dollars. Each transaction is an open circuit.
Exchanges provide liquidity at the endpoints, but also a point of failure (See Also: BitFinex, Mt. Gox, Bitstamp, &co). Regulators looking to tamp down Bitcoin go straight for the endpoints.
Someday, specific Bitcoin cycles will emerge. Maybe due to the spread of Bitcoin ransomware in banking and healthcare, although I hope we see something more positive than that. Until then, there’s always PostageCoin.
*More importantly, why is the post office researching blockchain applications?? They should obviously be researching drones!