Topic: [ANN] Freicoin: demurrage crypto-currency from the Occupy movement (crowdfund) - page 23. (Read 67988 times)

@herzmeister, @Bitinvestor, et al: my issue with Ripple isn't economic, it's societal. I don't want to take out a loan for a car and end up owing money to the people closest to me. That would poison relationships mighty quick. It's a fine idea for some circumstances, but not a universal panacea.

I'm not sure where you guys are coming up with these new transactions or what purpose they are supposed to serve. Demurrage is assessed in regular transactions by reducing the value of inputs based on the height of the block and age of the respective outputs. No new transactions are required, and it doesn't have to be any more complicated than that.

Precisely.

But in fact, with your promised payment of 1,000 F*Coins for the dozen bananas you can only be sure the the buying power of your F*C's is going to go down, because the value of it is pegged to a floating currency. You will enjoy the same bubbles, swings and wild ride, but only see the down side of everything, because there is an artificial pressure taking away your value arbitrarily.

The 1,000 might only be worth 989 on Saturday, and the banana vendor might be concerned that he will be stuck with 989 that will only be worth 971 on Monday when he can get to the exchange and swap them for BTC. Unfortunately there was a small run-up in the value of BTC on Sunday night, so now the exchange value of his F*C which began as one dozen bananas has now become 932 F*C because the power behind F*C cannot control all currencies. The banana vendor, in a move to recoup his looses from this weeks banana trading jacks the price of your dozen bananas to 1200 F*C next Saturday because he knows that the inevitable market forces of demurrage are constantly eroding his buying power. Unfortunately, your turn came up to have your wages reduced by the F*C'ers in charge, so your pay envelope only contained 900 F*C.

Furious that you have stiffed him on your contract to purchase the dozen bananas, the vendor gives you his badly bruised, and quite possibly contaminated older banana stock for the 9 bananas you can now afford. Fearful that this demurrage spiral might destroy your entire ability to feed your family, you eat the rotten bananas, get sick, and your wife leaves you with the children because let's face it, a bread winner who only comes home with rotten bananas is a pretty piss-poor mate, and moves back to her mother's house.

Moral of the story... if you want to end up broke, hungry and lonely, adopt F*C. The rest of the world will be happy with a functional coin.

Sub.

After reading the whole thread I'm unclear on one major thing. What is the incentive for me to exchange my bitcoins to freicoins in order to pay for something? I could just as easily buy everything with bitcoins and not worry about exchanging to freicons and then returning the change to bitcoins to avoid the 4.4% inflation. It just seems like an unnecessary extra step that, in addition to being annoying to end users, would require exchanges and merchants to add additional options for an additional coin to sell the same things that bitcoin already provides a secure and instant transfer of money for.

I understand the theory that people want to save their bitcoins and not spend them, but I don't see this really solving the problem. I don't think the problem is with bitcoin or any cryptocoin its' self, but with the availability of every day goods and services. Right now there is nothing I need for my every day life I can buy with bitcoins any easier than I can with USD. Once I can order my groceries and have them delivered to my apartment with bitcoins, I'll do so. This will lead to me converting more of my income to bitcoins. Not because it is a great long-term investment, but because it will be easier to use bitcoins than dollars to get my groceries.

Gesundheit!

Although I won't put any money in or use it, I still support the OP's initiative. If a demand exists for this kind of thing, then there's nothing wrong with an "inflatacoin" at all - just as long as nobody is forced to use it. That's what's great about a truly free market: anything goooooessssssss!

Whats that supposed to mean?

I also believe Freicoin would have trouble to catch on.

Von Mises said something along the lines that a commodity-based currency would have to be a good store of value first before becoming a medium of exchange. In that light, it can't compete against Bitcoin. Much like most other blockchains and forks, it will probably not gain significant value in order to become stable enough for its intended use.

Some regional currencies work with demurrage. This is to encourage spending the regional currency rather than the national currency and to push the local economy, and it works well. But it works because exchanging the regional currency back to the national currency is formally disallowed for consumers. Thus this is an authoritarian rule that cannot be implemented into a system like Freicoin.

I also don't agree with the notion that demurrage doesn't hurt the 99% as much like the 1%. Of course it does, it's basically much like today. The rich have plenty of options and room to switch to other assets. It's better than inflation though, because employees don't have to renegotiate their salaries anew all the time.

That said, all my nasty criticisms aside, I'd love to be proven wrong... I'm of course curious and welcome all initiatives to replace today's monetary system.

SUMMARY AND ANALYSIS

Hi maaku,

I appreciate your effort to build a sustainably economic system! (I mean it)

Bitcoin alone provides a nice savings opportunity, a great means of exchange and so on (we all know its merrits). The only problem with bitcoin is, that it offers no sustainable option for our economic future, as it is a deflationary currency by nature and slows economic activity down because people rather hoard their wealth than spend or lend it.

Thats where Freicoin comes into play. It sure would spark economic activity by its inherent inflationary nature,

BUT:
- people would be reluctant to use it, because of loss of wealth
- people would rather use alternatives, that INCREASE their wealth, rather then DECREASE it (e.g. using bitcoins)
- no apparent advantage over alternatives (like bitcoin) comes to mind from an individual point of view
- difficulties in determining which Freicoins would be taxed and which won't may turn out to be unsurmountable in the end
- it would also hurt the 99%'s savings, because in contrast to the percieved "1%" they have less opportunity to invest their capital. And
  THEY DO HAVE SAVINGS!

--> SO FREICOINS WOULD ONLY WORK IF THEY WERE THE ONLY ALTERNATIVE ALLOWED!

The same goes for any "Inflatacoin", basically avoiding the taxation problem and keeping the supply of it on a set rate (e.g. 4.4%)

WHAT FREICOIN WOULD IMPROVE:
- predictability of inflation, as money issuance rate is set and could not be changed
- is the elimination of the bank's/state's monopoly of money issuance (= bitcoin standard)
- distribution of the money supply in the community-> say miners (= bitcoin standard)
- anonymity of transactions (= bitcoin standard)
- duration of money transmissions (= bitcoin standard)
- cost of money transmissions (= bitcoin standard)
- blockchain pruning, which will likely be implemented in bitcoin's protocol also some time.

SUMMING UP: Freicoin won't change concentration of capital. It will stimulate the economy and create new jobs, but hurt the 99%'s savings more then the ones of the "1%". It has stark practical challenges to overcome. It offers no drastical technical improvements. Unexceptional use of it as legal tender will unfortunately not be enforced by governments in order for it to work. So it will never come to bloom. I value the idea, but strongly doubt the feasibility. Please keep improving of the concept, and as always:

Please correct me where Im wrong.

You're conflating the two points I wanted to keep separate, money as information and money as a unit in itself having value.

Maybe you're wondering how this information would be quantifiable without being target of speculation. Some local exchange systems (and also Ripple) use "hours of unskilled labor" for example (it's just an agreement, the rate against hours of other labor can individually be fluctuating, so it's a free market), but many other approaches are imaginable.

You might find it easier to understand what he is talking about when you investigate Ripple:

http://ripple-project.org/

I dont think you are making sense here. The information on who owes how much to whom may not be scarce at all, let it be public (like the blockchain). What is scarce, nevertheless is the credit people owe you. The owe it to you and only to you, making that particular piece of information unique and therefore laoded with value (the amount of credit you are owed). Isnt that what bitcoin is already, without the necessity of having to rely on anyone's liquidity (relying on the liquidity of those owing you credit)? Because the information the blockchain contains, basically is a record on how much bitcoin you have available to spend. AFAIK

I guess that the most likely use case for freicoin could be that of entrepeneurs, and every other capital manager or borrower, who would prefer to be indebted in a money with the lowest possible price and interest rate. Most likely those guys would take the debt, put the money on safer shores (bitcoin, for example, or any real stock that they are trying to manage), and then they would be buying back the freicoins when they need them, when paying for products or services, or at least when they have to pay back their debt. So freicoin, as opposed to bitcoin, could be like a "debt apt money", and in it's use case would be complimentary to bitcoin, no opposed at it.

I don't know if it could work, but I think it could be an interesting monetary experiment. And I kind of like experiments...

that's what i said myself more or less :·>

That makes it awfully difficult to trade with strangers. It might work locally in parallel with a money economy, but I can't imagine it replacing money completely.

Two suggestions :

Save users and everyone else a lot of trouble and do your inflation with a block reward that adjusts with difficulty to maintain some reasonable rate. To me 4.4% is a bit aggressive so consider 2-3% after an initial 50 per block phase of a year or four.

Second, choose a new name. Forget about coin being in it and think of the name as your key sales tool. Freicoin is too German-sounding for US users.

Good luck.

There is the information of what others owe to you from the past, which you can use to (partly) "pay" those who build your house. If you don't have enough "credits", then you will create the information of what you owe in the future to those who build your house.

Again, it's all just information, and it should not have a price in itself. I know it's impossible as it's merely theoretical. That was part of my point I tried to come across with.

Excuse me, how can I buy a house with money that doesn't have a price?

Money is information. That's all it is. Who owes what to whom.

Information is abundant. It's created with every transaction. It's not scarce, it's abundant, while at the same time not inflationary.

Now with today's currencies we cannot meet these requirements. They're impossible to reach with today's tools and technology, for all that we know. Today all money itself is scarce, has a price, be it fiat, gold or bitcoin. This shouldn't be. With an ideal informational currency, there for example wouldn't be any speculation with, as it's just information. But we cannot reach this perfection, only approach it.

Bitcoin is what it is. Maybe not perfect, but solves a lot of problems. To tackle what's missing, I believe an entirely different approach is needed, i.e. not a Freicoin building upon Bitcoin. Ripple comes close, but is based on peer-to-peer relationships of trust, but there are use cases for that (regional trade, business-to-business and supplier/buyer relationships).

Hence I believe it's a dual Bitcoin/Ripple economy that would approach perfection.

Right, that is a valid point. In the future when most bitcoins are mined miners will have to be compensated with transaction fees. But I'm far from convinced that the transaction fees would be so high that it would make sense to have a "checking account" denominated in Freicoin.