Topic: Freicoin (was Re: Deflation and Bitcoin, the last word on this forum) - page 3. (Read 7189 times)
September 26, 2011, 10:15:06 AM
Market is a centralized place, do not looking for bitcoin related answer here
September 26, 2011, 09:23:39 AM
You are saying that trade and production are competing for the same pool of capital, and that the interest rate in total is higher than it would be for either of them individually. And because of this, society loses out on production that would have been profitable if not for trade.
Your solution is to change the rules so that borrowing money for trade is no longer profitable, so that loans for construction don't have to compete with trade for capital.
Am I right? Is that a good summary of your argument?
Your solution is to change the rules so that borrowing money for trade is no longer profitable, so that loans for construction don't have to compete with trade for capital.
Am I right? Is that a good summary of your argument?
Yes, that's kind of what I'm saying. But trade would still be profitable (the merchant will keep "his wage"), with free-money. What happens is that the costs of commerce in concept of interest are eliminated. Wares have storage costs, perish and are by definition a thing its producer doesn't want to hold. So to be exchanged for money (which is cheap to hold, doesn't perish and is like a wildcard) he must "pay the interest". The merchant can't simply sell the products for the costs of production plus his labor, he pays for the liquidity he needs to move wares around.
The main point is that capital-money (scarce and everlasting) prevents capital yields from dropping to zero.
But the essential point is that traders should not be competing with producers for capital in a single unbiased market. Right?
September 26, 2011, 09:01:27 AM
You are saying that trade and production are competing for the same pool of capital, and that the interest rate in total is higher than it would be for either of them individually. And because of this, society loses out on production that would have been profitable if not for trade.
Your solution is to change the rules so that borrowing money for trade is no longer profitable, so that loans for construction don't have to compete with trade for capital.
Am I right? Is that a good summary of your argument?
Your solution is to change the rules so that borrowing money for trade is no longer profitable, so that loans for construction don't have to compete with trade for capital.
Am I right? Is that a good summary of your argument?
Yes, that's kind of what I'm saying. But trade would still be profitable (the merchant will keep "his wage"), with free-money. What happens is that the costs of commerce in concept of interest are eliminated. Wares have storage costs, perish and are by definition a thing its producer doesn't want to hold. So to be exchanged for money (which is cheap to hold, doesn't perish and is like a wildcard) he must "pay the interest". The merchant can't simply sell the products for the costs of production plus his labor, he pays for the liquidity he needs to move wares around.
The main point is that capital-money (scarce and everlasting) prevents capital yields from dropping to zero.
September 26, 2011, 08:04:37 AM
Hang on a second. Why are interest rates 4% in your model? I know you just made up 4% as a stand-in for X%, but why does X have whatever particular value it has?
The interest does not only depend on growth and potential profits from investments. There's a minimum yield that can be obtained "from the wares".
The advantage of money over barter make it be able to profit directly from trade, and that's the source of the basic interest/liquidity premium:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
No, no links. Make your own arguments.
In your own words, what causes the minimum level of interest?
Since you can profit from liquidity by "renting it to the people who need it to trade", you won't lend your money unless the borrower gives you at least that same profit in concept of interest. If the products don't include the basic interest in their selling price, they're not sold, because money demands to be payed for the service it provides (it is a convenient tool for trade). Even without innovations and profits, there would still be capital yields and interest. A wrote an islands story about interest here:
https://bitcointalksearch.org/topic/m.392389
I can link to my own posts, right?
The last time we had this debate, I got lost reading the books you linked, and forgot to get back to the thread. I'm trying to prevent a repeat of that.
You are saying that trade and production are competing for the same pool of capital, and that the interest rate in total is higher than it would be for either of them individually. And because of this, society loses out on production that would have been profitable if not for trade.
Your solution is to change the rules so that borrowing money for trade is no longer profitable, so that loans for construction don't have to compete with trade for capital.
Am I right? Is that a good summary of your argument?
September 26, 2011, 07:00:04 AM
Hang on a second. Why are interest rates 4% in your model? I know you just made up 4% as a stand-in for X%, but why does X have whatever particular value it has?
The interest does not only depend on growth and potential profits from investments. There's a minimum yield that can be obtained "from the wares".
The advantage of money over barter make it be able to profit directly from trade, and that's the source of the basic interest/liquidity premium:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
No, no links. Make your own arguments.
In your own words, what causes the minimum level of interest?
Since you can profit from liquidity by "renting it to the people who need it to trade", you won't lend your money unless the borrower gives you at least that same profit in concept of interest. If the products don't include the basic interest in their selling price, they're not sold, because money demands to be payed for the service it provides (it is a convenient tool for trade). Even without innovations and profits, there would still be capital yields and interest. A wrote an islands story about interest here:
https://bitcointalksearch.org/topic/m.392389
I can link to my own posts, right?
September 26, 2011, 06:38:37 AM
Hang on a second. Why are interest rates 4% in your model? I know you just made up 4% as a stand-in for X%, but why does X have whatever particular value it has?
The interest does not only depend on growth and potential profits from investments. There's a minimum yield that can be obtained "from the wares".
The advantage of money over barter make it be able to profit directly from trade, and that's the source of the basic interest/liquidity premium:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
No, no links. Make your own arguments.
In your own words, what causes the minimum level of interest?
September 26, 2011, 04:36:18 AM
Well, as I already said, I don't consider interest a flaw (if indeed a flaw) of gold because it's not a feature of gold at all, but a product of contracts. Bitcoin is likewise. Even Freicoin, for that matter. All of these currencies are independent of the interest rates that individual users charge. I can see now how you intend to suppress the general interest rate, but I don't agree that is an advantage worthy of a new fork. You certainly cannot force the market interest rate to below 0%, otherwise the user base of freicoin will flee to any alternative, the relative value of Freicoin would crash, and your fork would fail. So even a 4% demurrage is dangerously high. I wouldn't invest in any cryptocurrency with more than 1% APR demurrage. Probably 0.5% would be high enough for the other advantages of demurrage; i.e. rotting away the value of lost addresses as an example.
I wouldn't buy freicoins to hoard them neither, but I would accept them as payment. And I would spend them first and the bitcoins later. But this doesn't mean that the price of the currency must collapse. Remember that its initial value will be zero, just like with bitcoin. It price can only rise from there.
I don't care if it doesn't reach 5 usd as long as it can be used for exchange. If I can fund my investments with freicoins, I will prefer to borrow them than bitcoins, because I'm sure I will get a cheaper interest rate that with bitcoin and expocoin.
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With ripple, the producers can sell their wares even if "there's no liquidity". Money exacts the basic interest from the wares:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
I'm aware of how ripple works. It's a web-of-trust mutual credit system. It's well done, for what it is. But it's a credit network, not a currency. It cannot work at all without a commonly established currency, whether that is US$, silver ounces or pounds of wheat berries. Ripple doesn't have a metric, which is what currencies are at root. Ripple only records, and consolodates, the trust that people will put in people that they know on behalf of other people that they know, and expresses that consolodated trust as credit available.
Ripple can use any denomination that their participants agree to use, for example, hours, carrots or terras (a reference currency defined as a basket of commodities), but the denominations doesn't have to exist as a currency. Ripple doesn't need parallel currencies to work. Like LETS, ripple can perform the medium of exchange function and that's why I call it money (not currency).
If you don't know that you can use ripple (instead of cash) to pay, you're not aware how ripple works.
I see. But if demurrage fees are unavoidable, then you are limiting how the system can encourage users to use the currency. For example, this reduces the incentive to consolidate multiple transactions into a single transaction. If the users have a grace peroid, say three months, that security is considered paid for by the transaction fees, then some will make an effort to avoind transactions growing older than three months so long as the cost of consolidating into a new transaction is cheaper than just taking the demurrage hit. This encourages old transactions to update and also encourages miners into improving security buy participation. If thedemurrage fee is a flat fee applied to each transaction in the blockchain, then users with many transactions are further encourages to freshen their holdings and reducing the blockchain load. I really don't think that a ridgid percentage is really demurrage. Demurrae is a cost of security in real currencies such as gold. Literally the cost of renting a saftey deposit bos to hold the gold, which still costs the same no matter how much is eing kept. Percentage fees aren't demurrage.
But with your solution everybody could avoid the demurrage fees and they wouldn't have any effect on interest.
I called this property of a currency demurrage because it's the most extended term, how should I call it?
http://en.wikipedia.org/wiki/Demurrage_(currency)
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So would you borrow bitcoins and freicoins at the same interest?
No, but not because of some theoretical 'basic interest' that you are trying to avoid. Because of arbritrage. I'm not likely to be lending in freicoin if I never bother to buy any, due to the losses that I can forsee. Really, you can't see the problem with this plan?Why you won't accept freicoins as payment? Once you have them, you can spend them or lend them, but there's no point in keeping them.
If you can buy all the things you need to start your business with either bitcoin or freicoin. Why would you borrow bitcoins instead of freicoins? You know you will spend both fast to buy your capital, why are you worried about freicoins losing value if you're going to spend them?
You will prefer to borrow freicoins because of its cheaper interest.
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We're proposing a 4% or 5% demurrage rate. Hoarding is what makes V that unpredictable.
That is a amaturish view on velocity. There is simply too many variables to make such a blanket statement. I can't een say if this is true or false in general, but I'd guess that it's likely false.You keep saying to many variables but you don't say what variables. What makes V be volatile in your opinion?
Okay, I read your link. And if this guy is representative of the "Free Money theory of interest" then I'm calling that theory bunk. I'm not even going to bother to break it down. If you wish to try to defend that crap, feel free, but otherwise don't refer to this crank as the basis for any more of your ideas. I'll just lose more respect for your mind than I just did.
That attitude is disappointing. Yes, Gesell was the originator of the free money theory on interest.
If you arguments are just "this is crap" then we shouldn't keep on discussing, because we're not going to learn much.
I guess you're another time preference believer. "abstinence theory" in Gesell's words.
I understand why you think the way you do but you can't understand how I can think the way I do. Don't you feel the need to understand where I'm wrong or what am I missing?
Many people "believe this crap". For example, in Germany and Austria. Many austrians prefer this theory over the very "Austrian school theory on interest".
If you want to try break it down some day I'll be here to point out your errors.
I hope you can open your mind to new ideas you haven't thought deeply enough some day.
September 26, 2011, 03:54:19 AM
Hang on a second. Why are interest rates 4% in your model? I know you just made up 4% as a stand-in for X%, but why does X have whatever particular value it has?
The interest does not only depend on growth and potential profits from investments. There's a minimum yield that can be obtained "from the wares".
The advantage of money over barter make it be able to profit directly from trade, and that's the source of the basic interest/liquidity premium:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
September 22, 2011, 07:17:45 PM
Anyways, I'm not going to rehash all of it here, there is a proposal and some actual discussion of encoin starts around page 3.
https://bitcointalksearch.org/topic/announce-encoin-an-alternative-with-a-completely-different-paradigm-44682
https://bitcointalksearch.org/topic/announce-encoin-an-alternative-with-a-completely-different-paradigm-44682
This is off topic.
That said, what info that I can find is light on details. What I can find doesn't fill me with confidence.
If fees are destroyed, how are miners encentivized to mine?
And why destroy them? This isn't clear.
What is the point?
September 22, 2011, 06:42:14 PM
Would any of the more economically minded minds care to review my proposal for EnCoin?
Instead of demurrage (which is a concept not based around a virtual currency), EnCoin employs transaction fees that are not awarded to the miners. The currency is destroyed. So saving is preserved, spending has a fee (a fee that will most likely be borne by the receiver). There is of course no limit on the amount of coins that can be produced, which I think is the only sane way to make a currency not based around enriching the early adopters.
Anyways, I'm not going to rehash all of it here, there is a proposal and some actual discussion of encoin starts around page 3.
https://bitcointalksearch.org/topic/announce-encoin-an-alternative-with-a-completely-different-paradigm-44682
Instead of demurrage (which is a concept not based around a virtual currency), EnCoin employs transaction fees that are not awarded to the miners. The currency is destroyed. So saving is preserved, spending has a fee (a fee that will most likely be borne by the receiver). There is of course no limit on the amount of coins that can be produced, which I think is the only sane way to make a currency not based around enriching the early adopters.
Anyways, I'm not going to rehash all of it here, there is a proposal and some actual discussion of encoin starts around page 3.
https://bitcointalksearch.org/topic/announce-encoin-an-alternative-with-a-completely-different-paradigm-44682
September 22, 2011, 04:30:14 PM
Okay, I read your link. And if this guy is representative of the "Free Money theory of interest" then I'm calling that theory bunk. I'm not even going to bother to break it down. If you wish to try to defend that crap, feel free, but otherwise don't refer to this crank as the basis for any more of your ideas. I'll just lose more respect for your mind than I just did.
September 22, 2011, 04:24:16 PM
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Demurrage directly attacks the inflation premium, the profit you can do by using money to "move wares" better than barter. With abundant-money that profits tends to zero by competition, everybody can issue money. The payer can pay without cash. That's why capital money will have always a minimum sustained profit that Gesell called basic interest (gross interest = basic interest + risk premium + inflation premium).
I don't understand your explaination here. And I don't agree that 'basic interest' is not trivial, or even always a postive number.
Well, you may not consider the interest as a flaw in gold. But since I think it is, demurrage (supressing interest) is a feature.
Well, as I already said, I don't consider interest a flaw (if indeed a flaw) of gold because it's not a feature of gold at all, but a product of contracts. Bitcoin is likewise. Even Freicoin, for that matter. All of these currencies are independent of the interest rates that individual users charge. I can see now how you intend to suppress the general interest rate, but I don't agree that is an advantage worthy of a new fork. You certainly cannot force the market interest rate to below 0%, otherwise the user base of freicoin will flee to any alternative, the relative value of Freicoin would crash, and your fork would fail. So even a 4% demurrage is dangerously high. I wouldn't invest in any cryptocurrency with more than 1% APR demurrage. Probably 0.5% would be high enough for the other advantages of demurrage; i.e. rotting away the value of lost addresses as an example.
A demurrage system that is rigid is not likely to achieve the social goals, if the users can take no other actions for reducing their loss other than leave the currency in favor of another method of storage of value. In this respect, a rigid demurrage fee system isn't much better than a rigid/predictable inflation target.
Are you saying that freicoin is equivalent to expocoin (with exponential monetary growth, constant monetary inflation rate)?
For miners, yes. But...
constant monetary inflation rate:
1) Rises the nominal interest rates but does nothing against real interest rates.
2) Creates price inflation
demurrage with stable base:
1) Lowers real interest rates
So would you borrow bitcoins and freicoins at the same interest?
Quote
We're proposing a 4% or 5% demurrage rate. Hoarding is what makes V that unpredictable.
That is a amaturish view on velocity. There is simply too many variables to make such a blanket statement. I can't een say if this is true or false in general, but I'd guess that it's likely false. September 22, 2011, 10:12:16 AM
The flawed assumption is that without interest rates people would have no incentive to invest ..
As if people needed interest rates to be creative, productive and to think about their kids and the future in general.
As if people needed interest rates to be creative, productive and to think about their kids and the future in general.
I think people would invest with zero interest rates, that's why I want demurrage. What you fail to see is how capital yields and interest rates are related.
With non perishable cash, money won't participate in investments unless it receives at least as much as it can get from liquidity.
Let say you want to build a factory that will yield 0.1%. That yield is profit, and that means the investment is good for the consumers of the products of your factory (plus you're creating jobs, maybe you even hire yourself as the factory manager). If interest rates are at 4%, that factory won't be constructed. You can say, well, that's because there's another more profitable factory competing with yours for the resources. But I claim that capital-money will never (let's forget manipulations from the fed for this discussion) allow real capitals to compete between them to the point of them yielding under say, 2%. Money can yield through the wares, so means of production must yield at least that much or won't be produced. Because means of production need money to be produced. You cannot organize the construction of a factory with barter.
Hang on a second. Why are interest rates 4% in your model? I know you just made up 4% as a stand-in for X%, but why does X have whatever particular value it has?
September 22, 2011, 07:02:13 AM
The flawed assumption is that without interest rates people would have no incentive to invest ..
As if people needed interest rates to be creative, productive and to think about their kids and the future in general.
As if people needed interest rates to be creative, productive and to think about their kids and the future in general.
I think people would invest with zero interest rates, that's why I want demurrage. What you fail to see is how capital yields and interest rates are related.
With non perishable cash, money won't participate in investments unless it receives at least as much as it can get from liquidity.
Let say you want to build a factory that will yield 0.1%. That yield is profit, and that means the investment is good for the consumers of the products of your factory (plus you're creating jobs, maybe you even hire yourself as the factory manager). If interest rates are at 4%, that factory won't be constructed. You can say, well, that's because there's another more profitable factory competing with yours for the resources. But I claim that capital-money will never (let's forget manipulations from the fed for this discussion) allow real capitals to compete between them to the point of them yielding under say, 2%. Money can yield through the wares, so means of production must yield at least that much or won't be produced. Because means of production need money to be produced. You cannot organize the construction of a factory with barter.
September 22, 2011, 05:49:46 AM
Demurrage (negative interest rate) or interest rates belong to the same family of what I would call "threadmill knobs": they allow government, banks, corporations, whoever is setting the rate, to put people on the threadmill and set the speed without them having a say.
With demurrage, you can have them run backwards
The flawed assumption is that without interest rates people would have no incentive to invest ..
As if people needed interest rates to be creative, productive and to think about their kids and the future in general.
With demurrage, you can have them run backwards
The flawed assumption is that without interest rates people would have no incentive to invest ..
As if people needed interest rates to be creative, productive and to think about their kids and the future in general.
September 22, 2011, 03:03:54 AM
3) Capital-money needs to be everlasting and scarce.
I disagree already.Quote
Freicoin is perishable and ripple is abundant.
I consider a perishable trade currency a bug, not a feature; and ripple is a p2p credit system, it's only as abundant as users are credit worthy. Quote
Demurrage directly attacks the inflation premium, the profit you can do by using money to "move wares" better than barter. With abundant-money that profits tends to zero by competition, everybody can issue money. The payer can pay without cash. That's why capital money will have always a minimum sustained profit that Gesell called basic interest (gross interest = basic interest + risk premium + inflation premium).
I don't understand your explaination here. And I don't agree that 'basic interest' is not trivial, or even always a postive number.
Well, you may not consider the interest as a flaw in gold. But since I think it is, demurrage (supressing interest) is a feature.
With ripple, the producers can sell their wares even if "there's no liquidity". Money exacts the basic interest from the wares:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/3.htm
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4) The implementation is quite simple in my opinion. All accounts are charged with demurrage automatically each block (without writing anything in the block chain).
But how? I mean how is that actually enforced? Is it taken as a fee once the funds are spent, or is there some other mechanism? Can a miner chose to ignore it, like a miner can presently choose to favor a transaction dispite a higher fee offered by another, or is there some mechanism that requires the miner to enforce demurrage for all transactions?Quote
When the monetary base is stable, miners will be rewarded with the same amount that is charged in concept of demurrage. It is charged through the protocol. For a transaction (and therefore the block that contains it) to be valid the following condition must be true:
Sum(output) >= Sum( input * ( (1 - demurrage_rate_per_block) ^ (current_block - input_block_number) ) ) )
Does this mean that miners cannot waive the demurrage fee? A universal demurrage fee isn't useful for encouraging desired behaviors either. In order for the desired effects to occur, there has to be an alternative to paying full costs.Sum(output) >= Sum( input * ( (1 - demurrage_rate_per_block) ^ (current_block - input_block_number) ) ) )
Just as miners (the protocol to be more accurate) doesn't let you spend more than 100 btc from an output that contains 100 btc, the protocol won't let you spend more than 95 fcn from an output that contains 100 fcn and is in the block chain for a year (assuming a 5% annual demurrage rate).
You're assuming that my desired effect is just to recover lost coins and save storage. But I want economic effects that need the demurrage to be unavoidable when holding the currency. To avoid the demurrage loss, you must spend, lend or invest.
Rewarding miners perpetually is another nice side effect, like recovering lost coins, but that's not the main purpose of demurrage here.
A demurrage system that is rigid is not likely to achieve the social goals, if the users can take no other actions for reducing their loss other than leave the currency in favor of another method of storage of value. In this respect, a rigid demurrage fee system isn't much better than a rigid/predictable inflation target.
Are you saying that freicoin is equivalent to expocoin (with exponential monetary growth, constant monetary inflation rate)?
For miners, yes. But...
constant monetary inflation rate:
1) Rises the nominal interest rates but does nothing against real interest rates.
2) Creates price inflation
demurrage with stable base:
1) Lowers real interest rates
So would you borrow bitcoins and freicoins at the same interest?
When negotiating, the borrower knows that the lender will have a nominal loss if he doesn't make the deal.
Actually, I expect the basic interest to drop to zero through 5% demurrage. Of course, the risk premium will still be there for risky investments.
You could say that it would be the same with inflation, but no.
If you lend 100 freicoins you will be payed back with 100 freicoins (the same percentage of the money supply).
If you lend 100 expocoins you will be payed back with 100 expocoins (a lower percentage of the money supply). So you will demand the inflation premium.
You will demand 105 expocoins (plus interest, say 110 expocoins).
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2) Makes V (in the equation of exchange) more stable
I question this as well, velocity is effected by so many variables that I don't think you can claim that velocity is stablized in any great degree via demurrage. Certainly not with a 10% APR demurrage that is inflexible and unavoidable.We're proposing a 4% or 5% demurrage rate. Hoarding is what makes V that unpredictable.
Also, I'm not against arbitrage, but everlasting money allows way more speculation. Inflation also encourages especulation because all prices are not affected at the same time and in the same way by the inflation.
Read this:
http://www.community-exchange.org/docs/Gesell/en/neo/part4/5f.htm
In general, I recommend you reading the whole book. I'm not very convinced with the free-land proposal, you can skip the first two parts.
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3) Recovers lost coins making M really stable (this is good for storage too, since old blocks can be forgotten)
How is this? Do you just delete the transactions if they reach zero? How?When no transaction can take a certain output as an input, there's no point in keep storing that output. Is like it had a zero in it.
The initial proposal with some introductory links to the the free-money concept is here:
https://bitcointalksearch.org/topic/freicoin-bitcoin-with-demurrage-3816
I still owe you an explanation on how interest causes business cycles.
September 21, 2011, 10:58:44 PM
But that is a contradiction. In order for there to be investing and spending in relation to a currency, it must also be fairly good as a storage of value. At least as good as the Euro or US $. Otherwise, your spenders are never going to spend in Freicoin, because they never have an incentive to earn it.
We have some semantic confusion. I don't consider any currency that loses purchasing power over time, even if very slowly, a storage of value. I wasn't implying that the faster it loses value the better it is for investment as that would be claiming that an hyperinflationary currency is optimal for investment. But you are right, Freicoin should conserve value better than the mainstream currencies to have an incentive to earn it.
Credit works in our debt laden economy because the credit is based upon the US $, which is still a decent store of value compared to a demurrage rate of 10% APR.
This depends on the GDP growth rate of each economy. If the currency with 10% demurrage experiences an annual GDP growth of 7% then it would hold its value better than the dollar (inflation is at ~3.6%). Btw, we are not advocating 10% demurrage, you probably read that from my proposal on the Freicoin forum which I made a while ago and haven't bothered to update. At least jtimon and I only support for enough demurrage to bring down basic interest to 0%, which should be around 4 to 5%.
September 21, 2011, 08:26:44 PM
3) Capital-money needs to be everlasting and scarce.
I disagree already.
A demurrage system that is rigid is not likely to achieve the social goals, if the users can take no other actions for reducing their loss other than leave the currency in favor of another method of storage of value. In this respect, a rigid demurrage fee system isn't much better than a rigid/predictable inflation target.
Are you saying that freicoin is equivalent to expocoin (with exponential monetary growth, constant monetary inflation rate)?
For miners, yes. But...
constant monetary inflation rate:
1) Rises the nominal interest rates but does nothing against real interest rates.
2) Creates price inflation
demurrage with stable base:
1) Lowers real interest rates
I question this assertion. At least, I question that it's effects on the market interest rate is not negligble.
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2) Makes V (in the equation of exchange) more stable
I question this as well, velocity is effected by so many variables that I don't think you can claim that velocity is stablized in any great degree via demurrage. Certainly not with a 10% APR demurrage that is inflexible and unavoidable.
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3) Recovers lost coins making M really stable (this is good for storage too, since old blocks can be forgotten)
How is this? Do you just delete the transactions if they reach zero? How?
September 21, 2011, 08:11:05 PM
A demurrage system that is rigid is not likely to achieve the social goals, if the users can take no other actions for reducing their loss other than leave the currency in favor of another method of storage of value. In this respect, a rigid demurrage fee system isn't much better than a rigid/predictable inflation target.
You are missing the point. Freicoin is not meant to be a store of value, it gives up that property in order to encourage investing and spending.
But that is a contradiction. In order for there to be investing and spending in relation to a currency, it must also be fairly good as a storage of value. At least as good as the Euro or US $. Otherwise, your spenders are never going to spend in Freicoin, because they never have an incentive to earn it. Credit works in our debt laden economy because the credit is based upon the US $, which is still a decent store of value compared to a demurrage rate of 10% APR.
September 21, 2011, 06:23:26 PM
A demurrage system that is rigid is not likely to achieve the social goals, if the users can take no other actions for reducing their loss other than leave the currency in favor of another method of storage of value. In this respect, a rigid demurrage fee system isn't much better than a rigid/predictable inflation target.
You are missing the point. Freicoin is not meant to be a store of value, it gives up that property in order to encourage investing and spending.