Redefining Inflation Metrics with Blockchain

Aug 23, 2023Reading Time: 8 minutes

We have done a statistically utterly insignificant survey – 93% of respondents believe that real inflation is always higher than governments claim. But is it true?

Redefining Inflation Metrics with Blockchain

Stefan Rust does not believe in official government data either. That’s why he challenges the government’s monopoly on economic data with his project, Truflation.

Low unemployment rates, soaring GDP growth and inflation neatly tucked below the 2% mark – the cornerstones of a blissful economy. However, there’s a conflict of interest. Governments have a say in how this data is created. And positive economic data can be crucial for election outcomes. 

So it does not make sense for governments to have a monopoly on economic data. Does it?

This is why Truflation provides alternative inflation data to the Consumer Price Index (CPI), created by the Bureau of Labor Statistics (BLS) in the United States. 

Compared to the monthly CPI numbers, the Truflation index updates daily, tracks 225-times more items, and stores its data immutably on the blockchain. And while the BLS is incentivized to sugarcoat the statistics, Truflation is incentivized to tell the truth as accurate as possible. 

Does an inconvenient truth for the government present a chance for businesses, developers, FinTech and DeFi projects to make better decisions and create better products? 

We want to understand what it means to have better economic data on the blockchain and invited Truflation’s founder Stefan Rust to share the story of the project. 

Stefan Rust, Founder of Truflation

From the beginning of our interview, Stefan radiates an infectious and positive energy. 

To understand Stefan’s motivations and the source of this energy, it’s important to know that he sees himself as a global citizen. A part of something bigger. 

“I was born and raised in Hong Kong, but I traveled the world and experienced different cultures at a young age. I had friends from all over the world, and I didn’t make any distinction between them. I really didn’t know any other world, we are a global generation, right?” 

His journey should continue, spanning continents and technological eras, equipped with a gift for identifying technological trends before they mature. 

He shaped the mobile network landscape of China in the 1990s with his first startup. He brought apps onto mobile phones using JavaScript in the 2000s. And as its CEO, Stefan scaled to 20 million wallets.

Looking back, these projects were stepping stones to his current mission: to build Truflation – a decentralized source of truth.

Stefan, I know you have an interesting story to share. What was your trigger point? How did you end up on the blockchain?

I was running a developer agency in 2012. One of the developers wanted to be paid in bitcoin.

So I looked it up and saw that there was a bitcoinj wallet. A Java wallet. I knew the developer. He directed me to a merchant on eBay. And I bought my first 5000 bitcoins at that time for $5 each. I didn’t think much about it. The user experience was terrible. It was so complex. And I am a nerd, right?

I said, “this is not going to go anywhere.” But then, nine months later, another developer wanted to be paid in bitcoin!

Yeah, hang on, I got it. 

Find the wallet. 

Do I remember the keys? 

I opened it – and – it worked! 

And in the meantime, bitcoin was no longer worth $5…

By the time I paid him, it had shot up to $390. Of course, I’ll pay you in Bitcoin! 

What I really liked about Bitcoin back in 2012 was that I could send it between you and me during a call.  You send me your public key, I send you the money. Boom, you’ve got it. That’s what got me. No middleman, no need to go to the bank, no need to log into 500 different applications. 

Then, I met Roger Ver, who had the URL. I became the CEO to help it scale, focusing only on mobile. Mobile was my forte, and that’s where the growth was going to be.

I went out and found the developers who were building on top of bitcoin. Together, we helped reach 20 million wallets and 500,000 merchants.

And then the smart contracts came along. The opportunity to ensure compliance with smart contracts, the governance. That really got me excited. And that’s what brought me to where we are now at

Choose your competitor wisely, they say. You chose the BLS.  What inspired your choice?

In one sentence, we started Truflation because governments were treating us like dumbwits. 

Look, the US government is vertically integrated with the BLS. They peg the bonds they issue to the inflation number they announce, which they define through their own process and methodology. And the reporting and announcement align with the government’s desired outcome.

This shows that the inflation number isn’t just a statistic; the number the BLS creates directly affects the economy.

Right, and on top of that, I just felt that we as a society should have evolved and become much more financially educated. When excessive money printing coincides with economic shutdowns, the growth can’t keep up with the money supply in the market. You’re going to create inflation. 

It was time to do something independent. We had to start Truflation, an independent source of truth that you can’t go back and edit.

It is interesting to see that the “official” inflation rate is not a truth, but is changeable depending on the political will. It gives a sense of “1984”.

Recently, analysts like Jared Dillian, Cathie Wood and Raoul Pal are picking up Truflation data instead of the official BLS data. It seems there is demand for independent data. 

I think we hit the zeitgeist. We were in the right place at the right time. We have 6000 daily active users on and we’ve established ourselves.

Inflation data is not only inaccurate, it is also published months after the actual survey. You have solved both problems. Can you give us an introduction on how Truflation achieves this? 

It’s lagging. Everybody’s working with stale data. 

The BLS tracks 80,000 items and releases the CPI report monthly.

Whereas, we now track 18 million items and update most of them daily. With a two-day time lag, we write all of our content onto the blockchain. This way, we make the data immutable. Once updated, everybody sees it, it’s public. 

How do we democratize that? By transforming Truflation into a data DAO. Our community will govern it.

Is this transformation a way to create impact through blockchain? 

Democratization and immutability through blockchain is a matter of trust. The real impact happens when people use our data as the leading indicator, based on that trust. And as a result, we become less and less reliant on the BLS number. 

We’re still small. But we will get there. We want to create more voice, more metrics, more numbers. Until everyone realizes: “Oh, the government numbers aren’t that relevant.”

How can people use Truflation to make this realization? 

Inflation is a very personal metric. This makes CPI data even less relevant to individuals. To address this, we have built an independent inflation calculator. You enter your monthly income and spending distribution to see your individual inflation number and what you need to make up to maintain your purchasing power.

Source of data for the infographic:

Then we have a marketplace for developers to access all the different types of metrics that we have. If you want to get a sample smart contract, the hit of a button will load a remix for you. Copy and paste it into your smart contract, into your Remix IDE, and you can rock and roll with that data. It’s fully integrated into your developer environment. 

That’s ultimately what we’re trying to do. Simplifying the engagement and adoption of superior economic data.

A great example of what we can do with accurate inflation data is your new project, Nuon. Can you explain the idea behind it?

Nuon is a flat coin. Think of it as a stablecoin that constantly rises against inflation. 

It’s a product for savers who have suffered from negative interest rates (interest rate minus inflation rate) for too long. It’s a way to save your money and keep your purchasing power.

A cryptocurrency that is pegged to the cost of living. Sounds like the perfect solution for my risk averse parents.

Yes, people are busy with their day-to-day job. They don’t have time to trade. They want to buy, hold and save for the future. You don’t want to sit on cash, right? Cash is bad. People in crypto know this. Everybody feels it.

Okay, this is what we can do with accurate, real-time data. But what does it mean when we make decisions based on inferior data? What are the consequences?

It’s a competitive disadvantage, for governments and businesses alike. If you’re working with old data, you’re not making the best economic decisions, you’re not maximizing capital efficiency. 

If you are the incumbent, like the US. Dollar is today, you have the luxury of working with stale data because you are the monopoly. 

But as a business, you don’t have that luxury. And someone with better data will make better, more informed decisions and find new efficiencies based on that data.

And when a government uses manipulated data to appease its voters, trust in institutions will only continue to erode.

Speaking of governments, you said earlier that you were fascinated by the governance possibilities of smart contracts. Can we go a bit deeper into that?

Sure. The fascination stems from the fact that the centralization in the current system is too strong. It’s important to use blockchain to build and provide a decentralized alternative, which we mutually have a lot more emotional attachment to.

Who cares what Brussels is telling me to do? Who are these people to decide what’s right and wrong? 

But your friends and family, your community, you’re going to have a socialist view around them. Because they’re near and dear to you. That’s what we’re seeing in blockchain communities. People feel attached to their decentralized network. They care because they can participate. They can build, discuss, vote and even own a part of the network. It’s a new, better form of governance. That’s why we’re transforming Truflation into a data DAO, where the community can govern the project.

That’s what I love about crypto. It’s the diversity – the diversity in mindset that the people have. It’s not the religious and cultural differences between the people. That doesn’t matter. It’s just the backgrounds, the thinking, the perspective, and the opportunity that crypto has given us. And as a result, we are a part of this evolution associated with a specific blockchain. 

That’s what we really want to talk about – it’s an evolution.

Talkin’ ’bout an evolution! Before we wrap up our conversation – Where is this evolution headed? What is your vision for the future?

One year from now, I want to evolve Truflation beyond inflation. We have already started to provide economic data and alternative data sets. From here, we’ll build what we call True Data, a true data oracle. 

At a greater level, I want us to overcome the complicated bureaucratic system. The only people who win in such a system are more and more bureaucrats. More bureaucrats mean more lawyers, more administrators, more documentation requirements. We’re not building productivity. We’re just hiring for the sake of moving paper around, not for the sake of moving the economy forward.

And that’s why we need AI and blockchain. AI will increase productivity. Blockchain will change the whole system. All of this needs to go through game-changing innovation. 

The technology is already here. Nothing is stopping us from using it. We are a global generation. And now is the time to create a better, global, democratic system that works for all of us.

That’s why this is the most exciting time to be alive. 

Our day will shine again.

After our conversation, I realize that Stefan’s story is not just about redefining economic data. It’s about the essence of understanding progress and innovation. His vision isn’t just his own; it’s a tapestry he weaves with everyone he touches, inviting us all to be part of a better future.