Topic: [ANN] Freicoin: demurrage crypto-currency from the Occupy movement (crowdfund) - page 17. (Read 67928 times)

Now I have not been a fan of proof-of-stake, but in this case, if demurrage is included it could work. This would allow Freicoin to grow slowly without the worry of a 51% attack, yet would also encourage mining. Meni's proposal for proof-of-stake leverages mining blocks generated by Proof-of Work against stakeholders that control actual transactions, but not new blocks. This would allow hashrate to shift the power of stakeholders in the case that a malicious monopoly ocurred.

My guess is that freicoin would need to be pushed rather than pulled. Notably absent from the nice book with all the nice stories from different types of people about why they like it how good it is for them etc is a detailed examination of the circumstances of its printing. Some magical money-management office supposedly watches some kind of price indicators or something and prints as much or as little as is needed to stabilise prices, but no examination is there of how much their buddies benefit from being the first people to get their hands on the newly printed money type of effects which seem to be one of the main complaints about the "print more money" method of making money constantly drop in value.

If people actually want money, rather than merely wanting the match-up-with-trading-partners function money in its capacity as a medium of exchange provides, they presumably would choose bitcoin. So it seems to me likely it is up to those who are giving out the money to push freicoin, so that bitcoin is just another thing one can choose to spend it on. Given bitcoin, I am not sure how to motivate people to spend it on freicoin, but presumably who-ever is printing it, which usually seems to be assumed to be the government or community services offices, is going to prefer to spend it than to spend bitcoins.

Since the current implementation seems to plan to have the miners print the stuff, maybe some of them will buy hardware instead of buying bitcoins?

Normally the printer of a currency is the initial main backer of it; the government that prints it for example also offers to accept it in lieu of taxes.

So maybe we need mass production of dirt cheap ASICs one can buy with freicoin in lieu of a government that does the mining and accepts the coins as taxes? The ASIC factory runs lots and lots and lots of ASICs itself and sells them dirt cheap in limited quantities per family or something to try to make sure individuals or families hold, between them all, at least 51% of the total hashing power?

The whole business of the decay of the value of money forcing people to spend it seems to pre-suppose that someone does stick them with that kind of money in the first place. Thus that it is pushed rather than pulled: people don't go looking to buy some, they get stuck with it when they try to sell other things, presumably because it becomes easier to find someone willing to pay you in this stuff than it is to find someone who is willing to pay you in gold or silver (or, nowadays, presumably bitcoins or maybe even some kind of fiat whose inflation rate is less than the freicoin's demurrage rate).

Merged mining seems to make most of the altcoins that can be merged-mined almost free. It seems believable that people would prefer to pay you in coins they get pretty much free alongside the bitcoins their mines are primarily intended/used for than to give you bitcoins. I had in fact imagined that simply by occassional adding of yet more new blockchains to the merged mining mix the values of the merged altcoins would tend naturally to fall since more chains can be added any time supply of altcoins falls low enough for them to start growing in value. Freicoin would just be an altcoin specifically designed to go down in value even faster than most altcoins...

-MarkM-

FYI, I added Freicoin to the Wikipedia article about Demurrage.

I still don't get the distribution plan of Freicoin. How do you plan to make it wildly used? There are clear incentives to acquire Bitcoin, while I see no incentive to acquire any Freicoin. Without such incentives, the project will die out eventually, won't it?

I wasn't understanding what you meant. Let me think more about it.


The public address should be visible for recipients to be able to check the current value and the holders can include add funds instead of sticking stamps if they want to keep a round denomination. Not very practical.
Yes, physical bitcoins are superior. Is that really so important? People are paying with phones in Kenya.

TSA agent: "What is that device in you pocket counting down numbers?"
FRC holder: "That's just money I'm going to use where there is limited internet."
TSA Agent: "Place your hands on your head."
 

A physical freicoin could instead of periodically applied stamps like old paper implementations of demurrage currency sometimes used instead have a display on it and a clock in it, so that it constantly counts down the number of freicoins it is worth moment by moment, graphically showing its constant decay.

Internally though, it has private key of a fixed number of epochal coins. It is the constant demurrage of that constant number of epochal coins that causes the change in the given-moment number of at-that-moment freicoins.

This might even be better for urging people to spend quickly than the stamps systems were, since instead of "it is friday, remember tonight they go down in value" people will see moment by moment the constant eating away of the value.

-MarkM-

So how would you make physical Freicoin like Bitcoin can? If you pay someone with a physical Freicoin, a Freicoin created last month would be worth less than one created this month. Seems like there really is no convenient way to use Freicoin offline.

We cannot know the actual new block; that could change at any time, depending on the discovery of alternate branches, resulting in re-orgs.

That is why I am suggesting the blockchain use constants; on the blockchain, 10 still says 10 no matter what block it ends up in. The demurrage is coded into the display/interpretation of what the value 10 actually means at different times.

Basically I am suggesting the numbers in the blockchain record how many "at the time of the epoch" d-coins are involved, not how many "at some other moment in time" d-coins are involved.

We could use the unix epoch even, recording in the blockchain how many January 1st 1970 d-coins are involved. The number of as of that block coins that amounts to can be computed for display by comparing that block's datestamp to the epoch, and the amount as of today can be computed for display by comparing the number recorded in the blockchain to the current unix time.

The number of epochal coins need never change, all that needs to change is how many coins that would have amounted to, does amount to, or will amount to at any given moment.

The chain thus need not care how long it takes a transfer of 10 epochal coins to get recorded in the chain; that number does not change. ten epochal coins arriving today or ten epochal coins arriving next year are still ten epochal coins.

What changes is how many actual d-coins that many epochal coins amount to at each moment in time. That goes down. But the blockchain need not care about that. If you want the number of actual as of that time d-coins minted each block to stay the same, increase the number of epochal (blockchain-recorded; blockchain-notation) coins minted in that block to compensate for the demurrage (the conversion rate at that time between blockchain-notation aka epochal coins and at-a-given-moment-in-time d-coins).

To the users, this will look the same, but to the blockchain, it eliminates all the problems of re-orgs causing changes in numbers recorded in the chain. I still send you X number of this-moment d-coins which by the time you receive them will have demurred to less d-coins, but the blockchain is entirely unecumbered by all that, as it need only exist in the display and input conversions/functions.

-MarkM-

That's to be decided. If the reward was constant, it would take to long for the monetary base to converge to the maximum. See the discussions abouve in this thread.
What we want is to stop inflation earlier, but there's many possibilities for that.


Yes, this is how it works.
What is written in the chain is the amount at that block. To calculate the amount of "real" coins of an output at a given block you only need to know the output's value and the block number in which that output appeared.

Example:

In block number 100, it is written 10 in the chain.
A year after, the chain still contains 10. But if you move them, the new block will put 9.5.

Ok so how many coins per block are to be created and will that number ever change if so how much and on what schedule?

Also, in line with someone else's question, I too am interested in how exactly the demurring is to happen.

I still think it might be easier to always relate quantity to time, so that one can write constants in the blockchain and compute the actual number those constants represent at any arbitrary moment in time by reference to the calendar. That way the blockchain never has to care that the X binary number transferred from one account to another happens to represent 10 dcoins one year, 9.5 dcoins the next year and so on.

When for example we write contracts saying "will pay 10 dcoins on 3 years time" the binary representation of the number will reflect the fact that the underlying binary number today read/displayed as 10 would not read as 10 in 3 years time. The contract would thus, if expressed in the constants the blockchain uses, show a value that will only be equal to 10 in three years time; at the current time that same presentation would actually be displayed as more than 10.

This will in fact serve to constantly emphasise to anyone who actually looks into the internal workings of the system the fact that future money is worth more than current money. (9.5 a year from now is the same as 10 now, in the internal representation.)

-MarkM-

Although the coins "are still there" accounted in the chain, not all of them will be spendable. For example, if an output contains 10 fcn but has been frozen for a year, anybody (not only the owner) can know that the owner will spend at most 9.5 fcn (considering 5% demurrage). So anybody can know at any given time how many freicoins can be spent. Lost wallets can be ignored after all the funds have been consumed through demurrage, effectively recyclign them.


I've been asking for this many times in the deflation thread (locked in the economic subforum, interesting discussions about it there), but it seems that no austrian has really taken Gesell seriously enough for a formal critique. The few times you find it is to say something like "Keynes listened to him, but he was even crazier". Followed by some stupid thesis that didn't really belonged to Gesell.
I think Mises, Gesell and Keynes were more or less contemporary, but I don't think that Gesell and Mises knew each other's theories. Keynes and Gesell talked to each other through letters and Gesell predicted the failure of "Keynes-money" (actually he wasn't the first to propose it).
Although Gesell was mostly libertarian, he believed that money was a natural monopoly and thus one of the few legitimate functions of the state.
I like E.C. Riegel critique to statist money, I have to end his "The new approach to freedom" and his other books.
I've been trying to synthetize austrian theory with Gesell's theory on interest and I've come to the conclusion that an elastic money supply is not necessary (or desirable), only demurrage. You don't need to maintain stable prices, just avoid runaway deflation caused by hoarding. Well, just discourage hoarding through demurrage. Thanks to all the bitcoiners that have been (and currently are) discussing it with me in the deflation thread, it has been really useful and instructive for me.


Take into account that 5% of the market cap is not the same with velocity 1 that with velocity 20. Velocity pushes prices high, so the coins that miners get are worth less. The percentage of the economy that are the miners is lower with a higher velocity, and we expect a high velocity.
5% of the money supply with V=20, would be 1/400 of the GDP (well, not really the GDP, as the austrian Jesús Huerta de Soto tells us, that's not gross at all, it's focused in final consumption instead of production). I'm making up the numbers, it's just an example.

Of course, we also rely on merged mining. That allows all chains involved to save resources at no cost, not having it would be wasteful.

Transaction fees are allowed but since miners are already rewarded, they won't be as sensible to fees as bitcoin (after the whole base is issued).
I expect low fees and many transactions without fees at all (after all, users are already paying demurrage fees).
The reason for the number is an historical analysis made by one authout I don't remeber and that Gesell cites to have an estimation of the "basic interest", discounting inflation and risk premiums somehow. Of course, that analysis excludes after-Keynes money, in which rates are directly manipualated by the issuing authority.

To those of you wondering why I'm posting these graphs, heres a little hint as to my motivation...

Having a little fun at the moment



Figure 1. Frequency Characteristics




Figure 2. Impulse Response (Broadcom logo, dont let the exCEO know about the silk road)

Wow, really interesting read, though I have the impression I have read much of it before or read some other stuff maybe that says much of the same.

I am guessing that he is not of the/an "Austrian" persuasion? If not (as seems to me a reasonable guess), can anyone point me to the most apropos, direct, pithy, and relevant "Austrian" counterargument (or "debunking", maybe, they might say imply or imagine)?


You want something like 4% to 5% of the market cap per annum to go to securing the network?!?!?! Sheesh, consider merged mining or something, please! Such a percent seems a ridiculously expensive proposition.

EDIT: Bear in mind too that if you do in fact stimulate greater "velocity" that likely also means more transaction fees? Or is the plan to have no fees just the demurrage?

Please do make it merged-mineable, if you must give 4% to 5% to miners each year, it might really help small miners who scrounge up the cash for a Jalapeno coffe-warmer to cover their coffee-warming costs once everyone and their dog has at least a few Jalapenos and maybe a larger unit or few in the family (footwarmers and such, y'know...)

-MarkM-

Perhaps you can add this questions to your FAQ:
When would the demurrage penalty be executed?

Based on this answer, will follow a question about how the penalty will avoid exploits, but it depends on when and how demurrage occurs.

[edit] I found in another thread that it is assessed at the time of transaction based on how long it has been held. What is to stop someone from simply holding it indefinitely as a backing for another currency like for instance, phycical bitcoin? If everyone did that, it would be a nightmare knowing how much a physical coin would be worth.

You seem to be talking specifically about arbitraging the value of bitcoin (speculating) rather than the insurance that comes with all the cash-monies.
You can also speculate with freicoin, if it rises from zero to 6$ you would make money despite demurrage.
The point is why the rest of the users of hte currency (the people who actually give it the value it has) give you that liquidity insurance for free?
Can't we chose the rules of the money we use? The rules are the same for everyone just as in bitcoin, you're free to chose the system you prefer or use of or none.

I refuted your previous "Whenever a demurrage currency seemed to "work" it was the only option available."
To refute it only one counterexample is enough, and I gave you two of them (you can find more here).
Now you're saying "Whenever a demurrage currency seemed to "work" it was backed."
I didn't demonstrate with logic that freicoin will work.
I'm still having problems demonstrating that same thing for bitcoin, even when it's proven by facts.
Go to the mises institute forum to talk about bitcoin and see the results. Didn't you ever heard "bitcoin is not backed" by any goldbug?
Bitcoiners are one step ahead, they only need to understand that the store of value is not a desirable or even possible function of money.
We austrians know that you can't create prosperity by inflating the supply of cash, but we gesellians know that you can hold it back if you allow money to be hoarded, if you allow it be the bridge keeper of trade, and tax every ware preventing the supply of real capital goods from satisfying its full demand (basic interest or so called "time preference" = 0%).


Wait for your glorious moment of laugh, and let us work for that to happen.
If you don't want to understand our points of view, like others here that don't share our conclusions, get out of the discussion.
Your criticism is sterile in all senses. Your noise is completely useless for everyone here.

Because I put my faith into it by hoarding it. If you remove bitcoins from circulation the remaining ones will become more valuable.

LOL, you didn't refute anything. You keep citing the chiemgauer as a shining example of a demurrage currency but it is NOT and here's why: The chiemgauer is BACKED by euros. They deposited euros at a bank and then they issued chiemgauers that are BACKED by euros. THAT is what gives it value. Were it not backed by euros it would be WORTHLESS.

Go on and release your shitcoin already, it will be fun watching it fail.

You said "Whenever a demurrage currency seemed to "work" it was the only option available." And I wrongly assumed that "the only option" implied fiat. I doubt that the grain option was the only one in egypt, but, anyway, your sentence is refuted with my previous examples.


But the chain security must be paid by the currency users somehow. Why transaction fees are more legitimate than demurrage fees?
"Because gold doesn't rot" doesn't seem an answer unless you worship gold or something.
And "while you don't use it" is arguable. You're holding a wildcard, you're using it as an insurance against uncertainty. You enjoy the liquidity that the rest of the users provide you by accepting the currency, why should that be free?