Topic: Freicoin: bitcoin with demurrage - page 8. (Read 31323 times)

Well, we want bitcoin to be used for trade, right?
I don't care if people save in another currency.

It will not work - because there are another currencies without demurrage.
One can just switch to another currency for saving and then back for spending

When the 21M bitcoins are produced, miners are supposed to earn bitcoins only by charging fees.
I have another proposal. But probably is a change so drastic that can't be applied to bitcoin.

Freicoins can be created forever as an incentive and still have a fixed monetary base if the amount of newly created reward for miners is equal the amount of destroyed freicoins.
How can freicoins be removed from circulation?
Each time a transaction is done a percentage of the freicoins in the transaction are destroyed depending on how much time the freicoins have been hold since the last transaction. This is called demurrage.

It reduces interest rates. Concretely, it attacks the basic interest or liquidity premium. Defined as
gross interest = basic interest + risk premium + inflation premium
Demurrage has other benefits. For example, money with demurrage is crisis resistant: it will continue to circulate even with deflation. Deflation discourages real capital accumulation and demurrage can solve it.
Also, interest makes the financial market "think" in the short term.

For more information about demurrage you can read Silvio Gesell's main book on the web or in pdf.
I think the main flaw of Gesell's proposal is that he wanted the government to issue his freigeld, but there wasn't the block chain back then.

With merged mining, freicoin can co-exist with bitcoin.

One can say that demurrage is worse than inflation for savers, but I think that's not true.
Others claim that demurrage and inflation have the same effect. Inflation is worse at all lights.
Other common criticism is that no merchant would accept a money with demurrage, but there's many local currencies with demurrage operating today.

There's a forum for bitcoin with demurrage (not necessarily this exact proposal) here:

http://www.freicoin.org/

There's a bounty for its developement here:
https://bitcointalksearch.org/topic/73-btc-bounty-implement-demurrage-in-an-alternative-chain-with-merged-mining-36190

With 10 minutes per block, the formula for establishing the monetary base and the miner's reward would be:

(base * demurrage) / 52560 = reward

For example:

(21000000 * 0.03) / 52 560 = 11.9863014

** 52560 = 6 * 24 * 365

Freicoin is currently being implemented:

https://github.com/freicoin/freicoin
https://bitcointalksearch.org/topic/ann-freicoin-demurrage-crypto-currency-from-the-occupy-movement-crowdfund-89843