Topic: Freicoin: bitcoin with demurrage - page 2. (Read 31339 times)

The transaction fees will trend downward, which will drive down the hash/s, which will drive down the difficulty, until they are in balance. It will all take care of itself.

We discussed starting with lower demurrage rates before launch and we choose to have it constant from the beginning:

http://freicoin.freeforums.org/initial-proposals-f2.html

Now it would be a very polemic hard-fork and the plan is to only have one more with merged mining and freimarkets, once it is developed.

I don't think many people like to see their amount of money getting less. (with the USD if they print more money, people don't see their money decreasing)

Any thoughts on a different timeframe for the demurrage?

~20 year shelf life then?  
/\not that bad lol

equilibrium at 0

There's no charts because that's a constant: 2^(-20)% per block or a little bit less than annual 5%.
The demurrage FEE is constant over time.
What is "destroyed" increases with the total supply, until the equlibrium is reached at 100 Million FRC.

Not as bad as a 80% crony tax on mining.

Bermuda triangle ~ Toronto somewhere how many you want? we will skin you alive LOL +1

Where can I go to short this thing?

thanks bud tho that's only the PPC(price per coin) chart~\//\~
====>ya what i'm looking for a historical chart that shows the demurrage coin-kill rate in relation to friedcoins' PPC! tia!

indeed

http://www.cryptocoincharts.info/period-charts.php?period=alltime&resolution=day&pair=frc-btc&market=vircurex

FRC = "hot potato" coin !!!  

_?_do you have a real time freidcoin demurrage chart?...what about physical FRCs with a timer? LOL

Sure, and any business would also rather pay 0% on any of that.

So, then, you're saying that demurrage penalizes the merchant for no good reason? Isn't the stated purpose to ensure that velocity is maintained? If it's maintained without it, what use is it?

Why do you assume that debt is more beneficial than savings? Isn't debt how the world got into the dire straights it's in now? Hair of the dog is not the answer, my friend.

Somehow, I doubt they would prefer demurrage to not losing a portion of their proceeds in any way.

I don't know about you, but I prefer being able to save my money. I like to keep it when I want to keep it, and spend it when I want to spend it. Money needs to be a store of value, not just a medium of exchange.

A merchant will generally have a great deal of turn over in their money due to the nature of business, they have to pay expenses like rent and salary, get more product etc, so to them the cost of demurrage is actually very modest because it comes as a percentage of they working funds not a percentage of gross revenue.  This is also why sales taxes hurt business so much because they come our of gross revenue which is very large compared to profits, any business would prefer to pay 5% on profits rather then 5% on revenue.

Deflationary currency forces merchants to lower their prices because demand is reduced, the merchant have to offer very attractive bargains to get the potential customer to part with the currency (or sell black-market goods at huge markups).  But the merchant now must spend the revenue immediately to cover costs, acquire new product etc, so the merchant dose not enjoy the benefits of deflation because they are not in a position to hold the money and wait for deflation gain.

Lastly the potential for a low interest loan to finance a business with is also a major issue.  If a merchant can even get a loan under deflationary currency his debt burden is growing constantly and his profitability must be very high to pay back the loan.  If the option exists to take a loan in demurrage currency that loan will be at a near zero rate (some risk premium is legitimate) and the merchant will need to acquire that demurrage currency to repay with, and this acquisition is much easier both because customers willingly part with the money, but also because the real burden of the loan is not increased by deflation.

Most of the confusion your question embodies comes from projecting onto the merchant the situation and mindset of the standard BTC hoarder.  The hoarder dose not have a turnover of goods or overhead costs being paid in deflationary currency (any overhead for a miner is Fiat), they are instead in a position to sit on money and reap the benefits of deflation.  A real business is in exactly the inverse situation so their motivation is reversed and they prefer demurrage.

We as coin-holders if thinking shortsightedly would want deflation of course, but because all the material things we enjoy and consume are produced by business and investment then the truly rational thing is to prefer demurrage currency, it is the prisoners dilemma ware the seemingly individually rational behavior (always snitch) produces the worst outcome, but when viewed from a macro perspective the best solution is to do the opposite.

Just imagine you loose some of the streets over time - you could play on forever, just by a very small change in rules.

lol and yes i misunderstood your first post

  Well, because in the end those who are able to save money will be the ones owning all the money and there is no money left for trade (what is in my opinion the main reason for our world wide crisis). You could easily reconsrtuct this scenario by playing monopoly. In the end one person has everything and all the others nothing - the same basic principle.

I think, perhaps, you misunderstand. I was saying that the gentlebeing I quoted, fox19891989, does not understand the concept of demurrage, for s/he is holding onto a currency designed to trickle away from those who grip it the hardest, in the hopes of becoming rich. (rather like holding on to a handful of sand hoping to find a diamond in your palm when you open it)

And now, I think, it is my turn to not understand. Why would you not want to use a currency that is a good store of value to trade with? Certainly your trading partner will value more highly a currency which keeps or increases it's value over time, as opposed to something he'll have to get rid of as quickly as possible.

It is hard to understand in detail but it is well described, so just search in google (maybe plus Bernard Lietaer).


Maybe sounds litte confusing but that is exactly what happens right now. All the money is beeing hoarded and there is not enough money left in the economy (what is the reason of the recent crisis). This was exactly the same in the great depression. There were enough goods but no one had the money exept a few that had more than they ever could spend.

Money to save is a wounderful thing! Why not save money for bad times? But to use the same money for trade is nearly ridiculous. Its like using a Hammer to lumber a tree. You can do it but its so much harder.

Another argument against demurrage is that nobody would accept payments in that currency? In my opinion this is not true i know enough handcrafters that make beautiful things with high quality but they cant sell it because there is not enough money in the economy. Those people would be grateful because they are dependent on people that spend their money. So dont worry in the next krisis or maybe the one following there will be a market we just have to wait.

And: Inflation is NOT like demurrage! Over all it seems to have the same effect BUT: Inflation is mostly occuring the product Level. Meaning you get the same payment every month but the prices are rising (everybody could confirm that). Demurrage is just to keep the money running like the blood in our veins (selery and prices are stable).

@Founders of Freicoin:

I bow to your wisdom and knowledge!

This currency has the potential to change the world at a very high scale to produce long lasting peace and increase wealth in an amount we are not able to imagine right now.

Rik

 

Because hoarding is a non-explicit loan contract, but very strange.
When much value joins, it rises. When value "cashes out", it drops in
price. So the conservative saver is not "storing value" at all. You
can't just "store value" like that. If you want to travel to the
future, you need a counter-party to travel back to the present, to
take your cash from your hands. You can't just trust-less and
risk-free store "value".

Unless of course you have a bank you can trust to manage risk for you.
But I've heard those are missing, they've turned into paper minters.
Because bank's credit is equivalent to state cash by law.
Meaning...they don't really hold any risk and have no real incentive
to manage it properly.

Value can't be intrinsic. People value, only then things are worth.
Marx was wrong. Cash is a "let's all we trust this so we have no
counter-party risk for trust-less exchange", and it's not its fault to
change in value, you just shouldn't rely on cash for "storing value"
or even as a unit of exchange.
So called value is not only relative but immaterial.

The problem is that without demurrage, the medium of exchange and
lending are coupled. The fault's not on cash, it's on basic interest
of everlasting cash.

With everlasting cash, why would you lend at risk-free 0%?
Adding deflation, why would you discount the inflation premium (which
is negative for deflation) if you're the lender? You can apply it to
a certain extend, but certainly you will never lend on invest
capital-cash below nominal 0%, even if there's 20% deflation.

When money is lend, the saver doesn't consume in the present so that
the borrower can invest to be able to generate that value for the
lender in the future.

But when cash is hoarded, what's taken from consumption is not put
into investments. What does that hoarding then?

When capital accumulation and competition naturally lower yields and
interests (signaling an increased efficiency and the fulfillment of
the demand), some savers stop lending and prefer to hoard.
Even if the risk free interest rates are still positive, the free
insurance that represents a pile of wildcard cash to cover
uncertainties or take advantages of unpredictable future events is
preferable to low interests.

An increase in hoarding produces deflation, since less money
circulating needs to move the same wares. That makes lending even
less attractive, creating a positive feedback loop. The more
deflation, the better it is for the saver to hoard over lend, until
eventually the spiral stops.
The first hoarders in this self-fulfilling prophecy can now "cash
out" (to real capital instead of capital-cash) their huge gains. 
Note that many investments that would have had positive yields aren't
made during this deflationary period.
When the deflationary artificial scarcity of wares caused by the
lacks of investment rises consuming good prices in relation to
producing goods (real capital), interest rise again and savings can
be lent instead of hoarded again and profitable investments get
financed again.

A common alternative to deflation as the tool to restore the scarcity
needed to cover the basic interest rate is war. With more destroyed
buildings the remaining ones can yield more with a higher
rent/building_price ratio that has resulted from destruction.
The only equilibrium here is that capitalists must receive the basic
interest rent on all their real capital AND capital-money, how that's
achieved it's not important.

Gold is the first implementation of cash, before there was only
credit and barter. Later we've seen state-cash, but that's much more
complicated since it has a managed supply. That would be the so
called "debt-free" money. Today we have state and banks credit that
works like cash by law. The state enforces it but leaves the
signoriage to the banks.
Now we crypto-cash.

But all these new forms of cash and bitcoin have chosen to maintain
the design flaw that was mandatory for gold. Make it possible to the
holders to freeze the cash for as long as they want with now cost. All
of them have chosen to ensure price cycles and rents for the master
capitalists (the owner of production goods or medium of exchange that
enjoy a guarantied rent).

Freicoin in the other hand has chosen to tell the holders of the
medium of exchange to preferably save elsewhere and invest or lend
what you don't want to spend in the near future. Thus FRC loans at
risk-free 0% make sense. And -4% rates make sense with 4% deflation.


Why?

Maybe it needs to be like a pyramid scam where the demurrage gets paid to the people who signed up ahead of you.