The Alberta Buck - The BuckBasket (v3)

Every kind of money eventually has to answer one question: anchored to what? Gold standards tied paper to a metal. Modern money is tied to a committee's judgement. Stablecoins are tied to the dollar, which is tied to the same committee.

The BUCK is tied to a basket of the things every economy runs on, and it is measured against that basket directly: one BUCK is, by definition, one basket's worth. There is no dollar in between. That matters more than it sounds. Measure yourself with a tape measure that shrinks a little every year and you will conclude that you are growing. Measure a currency in dollars and it inherits the dollar's shrinkage without anyone noticing. So the BUCK measures itself against the basket, and a slow on-chain controller adjusts how much BUCK the system lets people draw, so that the two stay together.

For that to work the basket has to be heavy. A light anchor is worse than none: one big trade, a thin market or a passing fashion could drag it. A heavy one – deep, wide, and constantly traded against the rest of the world – barely moves. Its weight is not a side effect. It is the product.

A share can compound to the moon or fall to zero; nothing in nature forbids either. A bushel of wheat is different, and the difference is physical.

The price of a basic commodity lives between a floor and a ceiling that markets cannot escape for long:

• The floor is thermodynamic. You cannot mine copper, smelt iron or grow wheat for less than the energy it physically takes. Sell below that and production stops, supply shrinks, and the price climbs back. The periodic table enforces the floor.
• The ceiling is substitution. When a basic gets dear, people switch (aluminium for copper, gas for oil), conserve, recycle, or do without. Demand bends. Human ingenuity, which is plentiful and impatient, enforces the ceiling.

Between them the real price of a basic – in hours of work, or joules of energy – wanders but does not run away. Over years it is noisy. Over generations it is remarkably flat: a barrel of oil, a bushel of wheat and an ounce of silver have bought roughly the same amount of human effort for a very long time.

Three things can break this: acts of God, war, and autocrats who seize a market by force. All three are real, and all three are historically local and temporary. A wide basket of independent basics is diversified against each. Coming back is not a hope about the future; it is what the physical economy does unless someone is shooting at it.

The simplest way to picture the BuckBasket is as a shared pantry.

You bring something to it – a commodity token, or BUCK – and you are given a share of the whole pantry for it. From then on your share rises and falls with everything in the pantry together, not just with what you brought. When you want out, you hand back your share and receive its worth in BUCK, whenever you like (or, on a day the basket is short of BUCK, your slice of what it holds). There is no lock-up, no notice period, and nobody to ask.

Two small rules keep it fair to the people already inside:

• You can't buy into yesterday's harvest. A newcomer's goods are valued at the cautious end of the market and the pantry at the generous end, so nobody joins at a price that quietly takes a slice of what others have earned. Leaving works the same way in mirror. The difference is a small fee, about what it costs to trade.
• The house takes a quarter of your winnings and none of your losses. When you leave with more than you brought, a quarter of the gain goes to the basket's treasury. If you leave with less, it takes nothing.

There is no fund manager, no forecast and no opinion about the market. The BUCK system cannot offer professional asset management and should never pretend to. What it offers is a published, mechanical process that anyone can inspect: less a fund than a mill, whose wheel turns because the water runs.

Here is the part that surprises people. A basket of things that wander but come back does not merely hold its value. Kept in balance, it earns.

  Two assets, each just wobbling around a flat average (no trend at all):

     hold either one alone ................ you end where you started
     hold half of each, kept at half ...... you end UP

  Keeping the halves even means selling a little of whatever just rose
  and buying a little of whatever just fell: buy low, sell high, done
  mechanically on every wobble.  The wobbles themselves pay.

Claude Shannon described this decades ago, and it has gone by many names since: Shannon's demon, volatility harvesting, the rebalancing premium. It pays most when the parts are volatile, keep coming back, and do not move together – which is a fair description of energy, metals and food. An oil shock is not a wheat shock is not a copper shock.

The BuckBasket earns from three places:

1. Tolls. Each commodity in the basket sits in a public trading pool, paired with BUCK. Anyone in the world who trades through it pays a small fee, and the fee is the basket's.
2. Keeping its own prices straight. Every time a commodity's price moves elsewhere, the basket's pool is briefly out of date. Early in this design we believed the world's arbitrageurs fixed that for free. They do fix it, but not for free: whoever brings a stale pool back to the market price pockets the difference, and in a market that keeps coming back that difference is almost exactly the rebalancing premium above. The demon works for whoever gets there first. So the basket goes for it too: it corrects its own pools, through a loop of three trades that needs no money up front and cannot lose, and keeps the change.
3. Timing the tides. New money does not reach every price at once. It reaches money-like assets first, energy and building materials in about a year, and wages and food a year or two after that – so the basket's commodities drift apart and come home again on a tide about a year long. A trading pool harvests the chop, the day-to-day wobbles, but it cannot harvest a tide at all. Only deliberate timing can: trimming a commodity that is rich against its own long memory, adding to one that is cheap, and never trimming one that is still rising. Let a run run, then lean against it once it turns. An optional director does exactly that, and nothing more clever.

The details – how the three trades close a gap, how the director decides a tide has turned, and the simulations behind every claim here – are in The BasketWheel.

The basket's pools sit in the open sea of decentralised finance. A trader hunting for a cheaper route from dollars to gold neither knows nor cares what a BUCK is. If the cheapest route runs dollars to BUCK to gold, they take it, and pay the basket's toll on the way. In our simulations such BUCK-unaware traders route through the basket's pools as a matter of course.

That is why weight and traffic reinforce each other. The deeper and wider the basket, the more routes run through it, the more tolls it collects, and the harder it is to push. A heavy basket is a busy basket, and a busy basket pays.

Everyone in the Alberta Buck system draws BUCK the same way: against something of value, up to a fraction of it. That fraction is called K, and it is the one number the on-chain controller moves to keep BUCK steady against the basket.

The basket gets no special privileges. It is an ordinary account drawing on a credit like anyone else's, and its collateral is its depositors' share of everything it holds. It may draw up to K times that worth of BUCK, and it uses the BUCK to pair its commodities in their trading pools. When K falls, the offer shrinks; nothing already drawn is called back. There are no margin calls, in the basket or anywhere else in the system.

The upkeep – placing new deposits in the pools, collecting tolls, trimming and topping up – happens on a work wheel: a small machine that anyone may turn with a transaction, and that pays whoever turns it out of what the turning captures. There is no keeper on a salary. If nobody turns it, new deposits wait in the basket's wallet and it earns less; nothing already in it is put at risk.

The controller that moves K steers like a supertanker. It works only through how much credit people may draw, and a book of credit takes months to turn. Someone with deep pockets can shove BUCK off course in days.

So beside the basket there may be a monetary desk: a tugboat. When BUCK is cheap it buys; when BUCK is dear it sells. Most of the time that is all it does, and the two cancel out as the price comes back. Only when a push persists for weeks does it do something permanent – retire BUCK it issued, or issue more – and then only within a published limit. That is how a central bank splits the work between its policy rate and its open-market desk.

The best thing about the desk is when it loses. Against an attack it buys cheap BUCK from the attacker and sells it back dearer, and in our model every attacker left poorer. Against a real change in the world – commodities genuinely worth more BUCK – it loses a little money and gets out of the way. A desk that seems to profit from everything has not been tested properly. An early version of ours did, right up until we noticed it had quietly bought half the pool it traded in.

The desk is a separate machine with its own account, its own credit and its own wheel. Two households, two sets of books: we learned that one the honest way, when a simulated desk's capital briefly counted toward the depositors' borrowing, and a test now guards the wall between them. The details are in The BasketWheel.

The BUCK is designed to circulate. Idle balances pay a small holding fee, demurrage, which keeps money moving (see Demurrage and the Jubilee Fund). That is good for the economy and mildly annoying for a saver, who would like a rainy-day fund to at least hold its ground.

The BuckBasket is the saver's answer. Savings parked in it earn the tolls and the harvest instead of paying demurrage, and remain available on demand. In simulation the harvest has run at roughly one to three percent a year over simply holding the same commodities, and less when prices wander off and do not come back. Treat those as a simulation's numbers, not a promise.

It is a medium-to-long-term proposition. On the day you leave, a commodity may be below its average, and you get what the basket is worth that day. Two things shrink that risk: time, because coming back is the physical default, and width, because the more independent basics the basket holds, the smaller the chance that they are all down at once. The basket rewards patience and diversification – exactly the habits a stable money should encourage.

Anywhere money has to stay available but should not sit idle:

• a household's savings account, earning the basket's harvest instead of paying demurrage;
• a business's working cash, kept liquid for payroll and suppliers, and working in between;
• an insurer's reserves, which prudence requires to be both available and preserved – the two things the basket is built to be at once.

Every honest design names the case in which it loses. The BuckBasket's is simple.

Rebalancing pays because things come back. If something in the basket simply rises forever, the basket keeps dutifully trimming the one thing it should have held, and a plain holder of that asset does better, permanently.

This is not hypothetical; it is the explicit pitch of an entire asset class. An asset designed to be scarce, like Bitcoin, is built to rise and not come back – "number go up" is the whole idea. Put much of it in the basket and you have installed a gear that turns the wrong way in a machine whose every gear assumes coming back. The rebalancing premium and the ever-scarcer store of value are mathematically opposed.[fn::None of which makes BUCK Bitcoin's enemy. Quite the reverse: hold your Bitcoin, draw BUCK credit against it to pay your bills, and keep accumulating. The BUCK is the Bitcoin maximalist's best friend – just not a basket ingredient.]

So the rule is strict. The BuckBasket admits only low-level, civilizationally basic commodities – energy, labour, structural materials, staple foods: the raw inputs every society needs and physics forces back toward their costs. It excludes anything whose value rests on scarcity by design, a network effect or speculation. Not because those things are bad, but because they are the wrong ingredients for this recipe.

The reward for the discipline is the BUCK's whole reason for being: value that holds across generations. A unit of money your grandchildren will recognise has to be tied to something with the weight of the physical economy, not to the fashion of a decade or the supply schedule of a protocol. The basket gives up the spectacular upside of speculative assets for the one thing a monetary base must have and a speculative asset can never offer: the near certainty of coming back.

A simulated economy runs the real contracts at savings-sandbox.albertabuck.ca: commodities on their real price histories, traders, savers, households refinancing their mortgages into BUCK, the controller, and the basket with its wheel. Deposit, watch your share, and leave when you like. It is play money, and it is the same machine.

The BuckBasket is a heavy, open, liquid pantry of civilization's basics. The whole world's trading keeps it priced, it corrects its own prices before strangers can profit from them, and it pays its depositors what reversion to the mean has always paid the patient.

It gives the BUCK the heavy anchor a generational currency needs, and savers, businesses and insurers a place for idle value to earn rather than decay. It needs no manager, no forecast and no promise – only a published mechanism, the appetite of strangers for a bargain, and the fact that the crust of the Earth and the laws of thermodynamics will not, short of catastrophe, let the basics run away.

It cannot manage your portfolio, and was never meant to. It does something rarer: it stands still under the weight of the physical economy, and lets you lean on it.