Topic: FreiCoin (FRC) discussion (was FreiCoin (FRC) for TRC, PPC, LTC or BTC) - page 14. (Read 42655 times)

I did indeed

Updated it:

You missed a point. 



68GH/s!!

Demurrage occurs on a per block basis despite coins being moved. It is applied on the chain only when is moved.
But the user doesn't really care when it is updated on the chain, he can't do anything to avoid paying the demurrage fees while hoarding freicoins.

So what does that mean? The coins will just always be subject to demurrage? When does Demurrage actually happen?

My new bid is 0.0003 BTC per freicoin.
PM if interested.

I made a quick graph of the hashrate so far. 

Next difficulty will be 16,384!

I'm selling 1,000FRC for 1BTC. Anything less and I'm keeping it.

Dammn. Freicoin difficulty spiked up a lot, I can feel it.

I'm still buying FRC if anyone has some to trade

please pm me if interested

cheers

I'm selling FRC at .0003 BTC per FRC (0.3 btc per 1000frc), Feel free to PM me if interested

SOLD!!!

PS

Demurrage is calculated based on block height, so it won't work. The demurrage isn't technically applied until you try to make a transaction.

Shuffling won't help with demurrage - because it's resolved per block, right?

So about this demurrage..... What is to stop people from doing the obvious: creating a script that just shuffles FRC coins back and forth between different addresses/wallets to avoid demurrage?

Thanks so far. Seems I got some reading to do before I understand freicoin (http://www.community-exchange.org/docs/Gesell/en/neo/). Bitcoin was easy to understand - because it was modeled after gold.

@Sunny King
As Imapler has said, I was assuming a risk free loan. So the options if you're paid with freicoin and don't want plan to spend them soon would be:

1) 0% risk free loan
2) loan at risk for some interest
3) convert them to bitcoins and hoard them.

You're assuming that the third option is free, but it has costs too. Apart from the exchange's fee, you will lose something from the spread between bids and asks.


To complete other answers...When you receive money, you've made some good to society (to someone) and you deserve to be compensated back. But why does the rest of society have to wait for you to decide how? How long should we wait?


As I explained you before, the basic interest represents an artificial barrier for investments that causes unemployment, higher prices for products, rents (unearned income) and cycles. This is how production goods owners (capitalists) benefit from the operation of capital-money:

http://www.community-exchange.org/docs/Gesell/en/neo/part5/4.htm


They achieve low interest by manipulating the financial market. There's no interest free loans for everyone though, just for the privileged banking cartel.
Even if that were the case, they just moving the rents somewhere else, not suppressing it. But basically is just that, market manipulation is always wrong and has unintended consequences. Besides it is not sustainable. Here's Gesell predicting the hyperinflationary collapse of the current monetary system (global fiat paper without demurrage):

http://www.community-exchange.org/docs/Gesell/en/neo/part3/13.htm

To reiterate, our aim is to suppress unearned income.


I recommend to read the whole book or at least the three parts on money, but in this chapter he explains the 4-5% number:

http://www.community-exchange.org/docs/Gesell/en/neo/part5/8.htm

The other question...I just don't think that a money needs to store value.


To complete Mark's answer, since there will be less speculation (practically reduced to arbitrage), there will be less opportunities to manipulate markets. Why there will be less speculation? Because they will be losing money while sitting on cash. People won't sell their investments so quickly if they don't know where their putting their money later. Maybe this helps:

http://www.community-exchange.org/docs/Gesell/en/neo/part4/5f.htm

The primary factor in rate selection is the basic interest / liquidity premium, which demurrage is meant to exactly compensate for. Although there are models for determining what this rate should be, pragmatically we should look to history. For the past century (and the 19th century which Gesell looked at in his analysis) the basic interest rate has stayed stable around 4-5%. Even the Great Depression, both World Wars, hyperinflation, and numerous revolutions around the world don't seem to have affected the liquidity premium by more than a percent or so. Basic interest appears to be a general property of money anywhere and anytime.

For simply illustrative purposes, let's put our Keynesian central-banker hat on. The central bankers watch economic indicators and set interest rates in an attempt to control inflation. Why? Not because inflation is bad - they shouldn't print money at all if that were the case - but because historical experience shows that 2-3% inflation combined with 2-3% GDP growth is most likely to result in a sustainable economic growth. Keynesian economists do not satisfactorily explain why this is; they just do it because it works.

Silvio Gesell, on the other hand, does provide the unifying underlying theory. In The Natural Economic Order he explains how the non-perishable nature of money gives rise to the liquidity premium, how the usurious liquidity premium is an unjust negotiation advantage of money-holders over money-borrowers, and how while this does not create economic disparities, it does increase social stratification and entrenchment of the monied elite. Look to the Rothschilds for the most obvious example - Nathan Mayer Rothschild understood this principle very well.

The goal is not to prevent large capital build up, not to coercively equalize society, or anything like that. It's simply to level the playing field, allowing fair competition, in the process creating macroeconomic incentives that will lead to long-term sustainable growth.

Regarding market capitalization, one can expect that the steady-state situation with any demurrage currency is each participant only holding what they need for cashflow purposes. Velocity will be very high but steady, as money doesn't stay in any one account for very long, cashflow needs tend to rather stable, in aggregate. So yes, market capitalization will be lower but stable. However since most coins will be kept for cashflow purposes they won't be listed on an exchange either. So you'd have a hard time executing such an attack.

First, congrats to starting a new blockchain with interesting economic properties.

I am still a bit pessimistic about the long-term viability of the chain from a network security perspective: Every chain which feeds off the bitcoin mining network (same hashing tech, but not merged mining), can be pushed out by bigger players in the bitcoin community using ordinary attack vectors. However, since freicoin rather complements bitcoin instead of competes (money-as-exchange vs. money-as-value), this CAN be ok.

Regarding demurrage: Sorry if that question was asked already - why 4%/year and not 3%? As far as I understand, the purpose of demurrage is to create a strong inflationary force to prevent large capital to build up within the freicoin money supply and thus limit it's use to money-as-exchange. But how does that help freicoin compete against currencies like bitcoin, where you have have both properties? Aren't you effectively "removing" a property from the currency and claim that this is beneficial for other properties?

Regarding market capitalization: With money-as-value you asymptotically increase market capitalization until a saturation point. Ideally the market capitalization is high, which makes it impossible for anyone to manipulate the price levels easily. How does this work in a system where you systematically converge against a low market capitalization (since you have no store-of-value)? Don't you expose yourself to serious economic attack vectors?

Your now come on to the concept of 'Liquidity premium' which you have keenly stated is the "ability to use money as I wish at any time".  It is this liquidity premium that a lender is losing and that the borrower is essentially buying and the 'cost' of the liquidity premium is basic interest.  Demurrage is a means to cancel out that natural liquidity premium, now you really get to the crux of the issues, WHOM deserves to reap the rewards of the benefit of liquidity premium, I think we can all agree that the person/s that CREATE the liquidity premium deserve to enjoy it, and if someone else were to be receiving it that would be unfair.

Now consider what liquidity premium IS, "ability to use (aka spend) money at any time", to spend money you need two things, first money (duuu) and secondarily you need someone willing to accept that money in exchange for something of actual use value (food for example).  But just one seller isn't providing much choice, you need a multitude of sellers selling everything under the sun to have true freedom to spend money as you wish.  It takes an entire economy of people willing to accept a money to give that money liquidity, it's very much like the network effects were trying to get in Crypto-currency, more merchants, more customers etc etc.  When you look at it from that perspective it's clear that its the wider network that creates liquidity not the individual spender, thus the holder of money has no claim on receiving the liquidity premium and it should rightfully go to those that are expending effort to create it.

Now for your second point, why is all of this 'good', besides the basic point that usury is an illegitimate transfer of a socially created good (liquidity) to private hands, it is bad in a broader sense in that it prevents capital yields from reaching zero as they should, Jt has been over all that in earlier posts.  What your calling the maladies of a 'debt society' I see as the maladies of 'usury society', the inability to pay off debt is almost entirely the result of usury, the systematic pushing of debt on people who can't handle it is motivated by a finance industry that has become 'predatory' (a euphemism for usurious we hear all the time).

You are. If you make a 1-year loan at 0%, then 1 year later you get your full freicoin balance back with no demurrage applied. In essence you got a 4.89% return, exactly cancelling the loss due to demurrage.

Let's go back to the apples. Let's say you have 1,000 fresh apples and don't know what to do with them. Most of them will rot before you can eat them, and you don't have any equipment or know-how to preserve them. I own a grocery store and I make you an offer: give me your crates of apples for safekeeping, and I'll give them back one small quantity at a time when you need them. Not the same apples, mind you, but ones of equal quality to the ones you gave me. In other words, I've given you free pass to walk into my store at a time in the future of your choosing and walk out with an apple, without paying, a total of 1,000 times, at which point I will consider the debt repaid.

Have we not both benefited? You're now able to enjoy your apples fresh without fear of rot, and I've acquired inventory/capital for my business. And I did it without charging interest. We both gain because we found a mutually beneficial relationship that allows us to avoid asset depreciation by investing in real capital. That is the essential value of demurrage.

Good. Now we can focus on the concept of basic interest. First of all I don't agree that basic interest constitute 'usury' and should be eliminated. When I lend money out, even if it's completely risk free (although I doubt there is such a thing but that's another topic), I still sacrificed my ability to use these money as I wish at any time if instead I just kept them. So why shouldn't I be compensated for the sacrifice? Maybe you could argue that under perfect competition that the rate should be tending to 0%, then again I don't see how demurrage is going to help much at all.

Can you tell what's the 'basic interest rate' under the current fiat system? I am sorry but no the US treasury is not risk-free to me 

The other issue is that even if you can manage to lower basic interest rate with demurrage, why is it such a good thing? If we say that the current fiat system with central banking already reduced real (basic) interest rate to negative, so isn't that already a solved problem (albeit through state coersion)? So I assume that advocates of Gesell's theory all agree that central banking with fiat is a superior system than gold because it can lower basic interest rate? Instead I could argue it's bad because it distorts the free market interest rate and encourages a debt society which has it's own set of malaises.