Topic: FreiCoin haters thread (Read 1591 times)
I like this one more.
That said- demurrage. Seriously?
Anytime there is centralization it is a bad thing. Especially when it is a centralization of a majority of the currency supply into a few hands.
+1 
Anytime there is centralization it is a bad thing. Especially when it is a centralization of a majority of the currency supply into a few hands.
You can see there was some debate over these issues while the coin was being developed. The Freicoin Initial Proposals forum is linked in below which makes for interesting reading. Time will tell whether they made the right choices.
http://www.freicoin.org/initial-proposals-f2.html
My major concern is that the 80% may not end up being distributed properly however good the intentions of the Freicoin Foundation.
http://www.freicoin.org/initial-proposals-f2.html
My major concern is that the 80% may not end up being distributed properly however good the intentions of the Freicoin Foundation.
I promised to stop conquering the FreiCoin thread and I wouldn't consider myself a FreiCoin hater in the sense of hating demurrage money with a good cause and so the discussion went on via PM:
High vs. low vs. negative interest rates
The argument was that Freicoin allows low interest rates. Calculating the interest rate relative to buying power shows though, that the demurrage has no influence to the real interest rate and even negative interest rates on Freicoin might be acceptable but result in high interest rates relative to the buying power.
Yes, negative interest rates make sense if it saves me from loosing even more. I consider 5% demurrage cosmetics as it is vastly dominated by volatility, so please don't take 90% as a feature-request but just for sake of argument to get an idea what's happening:
If Freicoin had 90% demurrage, I would happily use a hosted wallet guaranteeing to only loose 10% aka giving me 9x the Freicoin I would have if I kept them in my laptop's wallet.
100 Freicoin in my wallet. Next year they would be 10 Freicoin.
100 Freicoin with some third party giving me -10% interest rate. Next year they would be 90 Freicoin.
Yes, with a demurrage, for anything other than a wallet, negative interest seams unacceptable assuming I can buy gold and Bitcoin with Freicoin without paying a markup but I guess getting people to sell Bitcoins for Freicoins will cost a markup that makes slightly negative interest rates very likely. Said wallet provider might do the gold and Bitcoin shifting in the background for you.
Demurrage coins being destroyed would not be demurrage
Problem is that the market cap of the Freicoin economy doesn't care if you have 5% demurrage or 90% demurrage as long as you don't give these coins to somebody. The miners for example. Giving them to the miners guarantees that in any year, 5% of the market cap is spent on mining. If you don't give the demurrage to somebody, you loose a point of reference. Imagine 90% daily demurrage. Sounds dramatic, huh? It isn't if you don't do something with these coins. If you just destroy them, users would just have to shift the decimal point once per day and they wouldn't loose any buying power as their respective share of the market cap would stay the same. By spending the demurrage on transaction security, market value moves.
The Wörgl was coupled to the existing fiat currency so destroying it proportionally, actually meant something to the users. With a bitcoin based currency that is not coupled to a backing something, you have to redistribute in order to achieve something like demurrage.
Mining is a necessity and not a good cause
Redistributing towards mining and having some 80% of the initial stocks for some good causes is Freicoins design.
Guess what, I would consider it far far more worthy considering using it, if it was 10% demurrage going towards good causes with proof of stake mining. So the Freicoin government would have a permanent tool to keep the demurrage meaningful without taking 80% upfront.
Freicoin Government
I have a problem with this entity that will decide on what to do with the coins. My medium of exchange should not be subject to political modifications no matter if I can take a vote, too or not.
How a demurrage could maybe some day work
The only way to redistribute a demurrage that I would deem fair would be to give it to every person in the world regardless if the person has a receiving address or not. Everybody should be able to claim his wallet with 1000 Freicoin² already in it (initial distribution) and 1000 Freicoin² would be the equilibrium from the redistribution. People with more than 1000 Freicoin² would loose them over time and people with less would regain asymptotically to that value. Mining could be done by proof of stake and without block reward for miners. Those with a larger stake in the currency have a natural incentive to secure transactions and proof of stake is not computationally expensive. Additionally the demurrage would constantly take power from those with huge stakes, so the 51% attack can not be prepared over a long time.
World government as a prerequisite?
If there already was world government with a digitally signing ID chip implanted into every person on earth I would definitely prefer this kind of Freicoin². Luckily we are not yet there so all that I can make up that gets anywhere near a demurrage crypto currency is doomed to implement compromises that I'm not willing to take. Please proof me wrong.
High vs. low vs. negative interest rates
The argument was that Freicoin allows low interest rates. Calculating the interest rate relative to buying power shows though, that the demurrage has no influence to the real interest rate and even negative interest rates on Freicoin might be acceptable but result in high interest rates relative to the buying power.
Yes, negative interest rates make sense if it saves me from loosing even more. I consider 5% demurrage cosmetics as it is vastly dominated by volatility, so please don't take 90% as a feature-request but just for sake of argument to get an idea what's happening:
If Freicoin had 90% demurrage, I would happily use a hosted wallet guaranteeing to only loose 10% aka giving me 9x the Freicoin I would have if I kept them in my laptop's wallet.
100 Freicoin in my wallet. Next year they would be 10 Freicoin.
100 Freicoin with some third party giving me -10% interest rate. Next year they would be 90 Freicoin.
Yes, with a demurrage, for anything other than a wallet, negative interest seams unacceptable assuming I can buy gold and Bitcoin with Freicoin without paying a markup but I guess getting people to sell Bitcoins for Freicoins will cost a markup that makes slightly negative interest rates very likely. Said wallet provider might do the gold and Bitcoin shifting in the background for you.
Demurrage coins being destroyed would not be demurrage
Problem is that the market cap of the Freicoin economy doesn't care if you have 5% demurrage or 90% demurrage as long as you don't give these coins to somebody. The miners for example. Giving them to the miners guarantees that in any year, 5% of the market cap is spent on mining. If you don't give the demurrage to somebody, you loose a point of reference. Imagine 90% daily demurrage. Sounds dramatic, huh? It isn't if you don't do something with these coins. If you just destroy them, users would just have to shift the decimal point once per day and they wouldn't loose any buying power as their respective share of the market cap would stay the same. By spending the demurrage on transaction security, market value moves.
The Wörgl was coupled to the existing fiat currency so destroying it proportionally, actually meant something to the users. With a bitcoin based currency that is not coupled to a backing something, you have to redistribute in order to achieve something like demurrage.
Mining is a necessity and not a good cause
Redistributing towards mining and having some 80% of the initial stocks for some good causes is Freicoins design.
Guess what, I would consider it far far more worthy considering using it, if it was 10% demurrage going towards good causes with proof of stake mining. So the Freicoin government would have a permanent tool to keep the demurrage meaningful without taking 80% upfront.
Freicoin Government
I have a problem with this entity that will decide on what to do with the coins. My medium of exchange should not be subject to political modifications no matter if I can take a vote, too or not.
How a demurrage could maybe some day work
The only way to redistribute a demurrage that I would deem fair would be to give it to every person in the world regardless if the person has a receiving address or not. Everybody should be able to claim his wallet with 1000 Freicoin² already in it (initial distribution) and 1000 Freicoin² would be the equilibrium from the redistribution. People with more than 1000 Freicoin² would loose them over time and people with less would regain asymptotically to that value. Mining could be done by proof of stake and without block reward for miners. Those with a larger stake in the currency have a natural incentive to secure transactions and proof of stake is not computationally expensive. Additionally the demurrage would constantly take power from those with huge stakes, so the 51% attack can not be prepared over a long time.
World government as a prerequisite?
If there already was world government with a digitally signing ID chip implanted into every person on earth I would definitely prefer this kind of Freicoin². Luckily we are not yet there so all that I can make up that gets anywhere near a demurrage crypto currency is doomed to implement compromises that I'm not willing to take. Please proof me wrong.
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