Twilight Sparkle trotted her way down the main hallway of her castle, humming happily. It was a beautiful day to be a Princess: all she had to do was sign a few edicts and write a letter to Princess Celestia, leaving her plenty of time to go and visit her friends.
Her ear flicked once as she picked up the sounds of furious scritching coming from her library. Tilting her head in curiosity, Twilight peeked around the door and smiled.
“Looks like you’re writing passionately, Spike,” Twilight greeted, almost unable to hide her glee at her assistant’s sudden interest in one of the liberal arts. “What’s got you so excited?”
The scratching of Spike’s quill stopped, but he didn’t look over to Twilight. “It came to me in a dream.”
Twilight’s eyes sparkled. “Were you inspired to write a novel filled with symbolism and philosophy?”
“No, No…” Spike shook his head. “It is so much bigger than that. Do you know what the problem with money is, Twilight?”
Twilight gasped, running into the library and screeching to a halt next to the young dragon. “Are you writing a political and/or economic treatise!?” She wrapped her hooves around Spike in a tight hug. “Ooooooh, I am so proud of you, Spike!”
“This is much more than that, mare!” Spike cried, pushing Twilight away. “This is a revolution!”
Twilight blinked. “Oh, it’s one of those political treatises. Just don’t go seizing the means of production, alright?”
“It’s a BUSINESS idea, Twilight!” Spike groaned, clearly antagonized. “And one that’s practically guaranteed to make me a billionaire!”
“Oh boy,” Twilight exhaled in skepticism. “What is it?”
“So you know our money, right?”
“What?”
“Bits!”
“Yeah, I know what bits are, Spike.”
“Our currency is the bit.”
“Yes, I understand,” Twilight spat. “Our money system is based on the bit coin.”
“Exactly. We exchange bit coins for goods and services. But, there are problems associated with the use of the coin which we refer to as the bit. The transactions are easily traceable and the coins can get really heavy if you’re carrying enough of them around.” Spike leaned over and began fumbling around in a saddlebag next to him. “But I’ve solved those problems! I present to you: the Ether Nickel!”
Spike pulled a glowing, purple crystal out of the bag and held it in front of Twilight triumphantly.
Twilight furrowed her brow. “That’s...just a magical crystal.”
“Not just any magical crystal,” Spike tutted, waving a finger back and forth. “It contains a record of all the Ether nickels I have. I had Starlight program the magic for me.”
“So, if I understand this correctly,” Twilight recited, her eye twitching as she tried to make sense of the new system, “you’ve created a shadow currency which doesn’t actually exist, except as digital information.”
“Exactly!” Spike crowed, his eyes glowing with inspiration. “Nopony has ever come up with something like this! And the money supply self-regulates; you can only get new Ether Nickels by answering progressively harder math questions. Check it out!” Spike tapped the crystal twice.
The crystal’s glow began pulsating, and an automated magical voice spoke from it. “Mining function activated. What is 3 times 4?”
“Twelve.”
“Correct. One Ether Nickel awarded. Current balance: 657893 Ether Nickels.”
“Nice.” Spike tapped the crystal again.
“Mining function activated. Let M be an n x m matrix of real numbers. Let ν∈Rn. Define the set S={MTμ | μ∈Rm and μ⋅ν≤0 }.”
“Uh...Numberwang?”
A cacophonous buzzing noise came from the crystal. “Incorrect answer given. No Ether Nickels awarded.”
“Shit.”
Twilight was sitting with her mouth agape, too engrossed by the sheer absurdity of the system to scold Spike for his language. “So you just have a massive leg up if you understand elementary set theory? I-I mean, who is even going to use this, anyway?”
“Lots of ponies. Enterprising businessponies looking to avoid paying taxes on big deals, organized crime syndicates that want their activities untraceable, foreign nationals looking to avoid exchanging currency-”
“-so you’ve created a black market currency that ponies can use to fund contract killings.”
Spike scoffed. “Can use? My dearest Twilight, I have cornered the market on contract killings.”
Twilight covered her face with a hoof.
“There are legitimate purposes too,” Spike pointed out. “Ponies with back problems trying to buy a yacht don’t have to lug around half a ton of bit coins anymore.”
“Yeah,” Twilight deadpanned. “They can carry one of those crystals around with them in their saddlebag, right next to their credit card.”
“That’s an identity fraud risk,” Spike pointed out, holding up a finger confidently.
“Look, Spike, I’m really proud that you’ve taken the initiative on a project,” Twilight started. “It’s just that this ‘Ether Nickel’ isn’t going to work. It’s a self-regulating, non-existent currency backed up by nothing and only of use by ponies involved in crime. Besides, it has to compete with an already established, government-backed currency. The value of the Ether Nickel will never rise 1500% in a few weeks, no one will ever take out second mortgages to invest in a flimsy idea like this, and there is no way that governments will start panicking because they lose control of the currency market to you. I mean, if you’re trying to get rich, you’d be better off trying to make more bits appear out of thin air!”
Spike narrowed his eyes angrily for a fraction of a second before his expression softened to one of interest. He scratched his chin and thought for a moment. “...Make bits appear out of thin air, you say?”