A couple of years ago I had the idea to create an app which will it make very easy to pay with cryptocurrencies like it is with paying by coins. But I was looking for fair and stable currency which I have not found then.
So my idea was to create an own currency.
What I not wanted is that one is able to buy coins on the market, to protect this currency against speculations.
But I had no idea how and when to create coins…
A couple of days ago I had the great idea to create coins while paying them out as a basic income and I started the project ExpiringTimeCoins.
Like most of those ideas they are already mostly in others minds as well
So I found out about Grandido from Bernd Hückstädt which is really a great idea and almost similar to mine but lacks of security because its currently only installed on one server and it seems that he has not heard about block-chain or Sybil.
Nevertheless I also found out about circles which I find a very good idea with one exception. Don’t take it personal but you are replicating the same mistake, so to say, than the government is doing with real currencies.
With real currencies the problem is that the amount of money will be increased limitless.
And if I understand circles the same thing is happing.
My idea and also the idea of Bernd Hückstädt was to let the coins expire in value so that there is a constant amount of coins on the market.
There are other great effects. See the coins as the blood of the economy. If the coins will loose value over time then everybody wants to get rid of the coins faster and that keeps the blood floating through the economy faster.
You will get debts for no interest rates. Maybe one may say I will give you 100.000 circles today and you give me 80.000 back in one year because otherwise he will loose these circles over time.
My idea was to let the coins be worthless after one year. Bernd Hückstädt was talking about 50% a year.
His idea was to look at the nature. Everything dies one day and that is for a good reason and so should the money.
This is also a good protection against inflation and holds the prices stable.
Today we have got the chance to implement the expiring of value using computers.
Btw, expiring of the value of money is not a new idea. This was also done in Wörgl and had great effects on the economy.
I think the Wörgl demurrage fee was 1% / month, nowhere near 50% / year.
The problem with accelerated circulation within a basic-income supplied currency is that e.g. $1 of value that was minted, beyond the first time when it’s spent to buy a $1 bread, it will be spent dozens or hundreds of times before its value decays. So if it change hands 100 times before disappears, the value provided by basic income is just 1% of the entire market.
I think the biggest issue with inflation would be that people would get their money into safe havens, like bitcoins. In other words, every time the basic income is being paid, everyone would rush to exchange it into another coin and circles would be almost worthless.
If you want to design a coin that’s a accepted and used by people, you need something that has very low to zero inflation/demurrage, max. 2-3% per year.
We looked at the monetary increase (!= inflation rate) of the USD over the last 30 years. On average it was roughly 5% per year. So we are assuming 5% per year are fine…
I think you forgot about one thing.
Today money will be created while borrowing money from a bank.
When the money is paid back then the money will be destroyed, so that a limited amount of money will be available.
Also the Bitcoin is limited for a good reason.
So, when you create new coins each month, then the amount of globally available coins is increased each time. And the result is, that each coin is worth less. This is called inflation.
Keep in mind a company may have an yearly turnover many times the average amount of cash they keep any time on hand. The demurrage “penalties” are paid only for the cash they keep on hand.
When Freicoin was issued pre WWII in Woergl, the first 1500 shillings bought 5000 worth of goods in just 3 days. The cash changed hands faster than once every day.
At %1/month demurrage rate, the loss per transaction was less than 0.033% demurrage fee because everybody tried to get rid of cash asap.
That means if somebody would have had the idea to pay demurrage fees as basic income in Woergl, it could have paid for only 0.033% of all goods & services sold through this magic currency.
Totally insignificant both as BI or compared to all other taxes a merchant normally has to pay.
E.G. credit card merchant fees are around 2% / transaction. For high-flow retailers, even a 20%/year demurrage coin might be attractive if it skips credit card processing fees.
And for this reason (a high demurrage fee incentives a higher turnover) even an unusual large demurrage rate (e.g. 1% / week) might not be sufficient to pay a meaningful basic income.
To compare, for US at $18 trillion GDP, to pay $1000/month basic income US would need to get almost $4 trillion from somewhere.
I am not talking about to pay demurrage fees as basic income.
I am not talking about fees at all.
I mean we mint a coin today which is worth 1,- Circle for example.
After one year it is only worth 0,50 Circle. So if I want to buy bread with the price 1,- Circle I have to pay with two old coins.
No fees will be paid.
@Artanidos and what you describe in the first message here is called demurrage. That 50% lost by the coin in a year IS the demurrage fee (or may call it tax) that’s returned in circulation as basic income
@blimpyway call it what you want.
I don’t see it as a fee and nobody has to pay something. There is no transaction involved at all.
It is just a way to control the total amount of coins (worth of the coins) out there.
And of course a way to keep it circulating.
