Ripple: Use FRC instead of XRP?

[galambo]

Freicoin is flawed because it pretends that market participants have no time preference.

I don't get this comment. Freicoin has time value of money built into the currency. Where do you come up with your idea that we reject this idea? Freicoin uses the time preference (small negative interest, continously compounding, aka demurrage) to encourage longer term thinking on the part of market participants. The website is very clear on this.

[nethead]

lol u def search of ways to advertise that coin, dont you? 

Any post you make in the last days includes the word "freicoin"

[shamaniotastook]

Freicoin is flawed because it pretends that market participants have no time preference.

I don't get this comment. Freicoin has time value of money built into the currency. Where do you come up with your idea that we reject this idea? Freicoin uses the time preference (small negative interest, continously compounding, aka demurrage) to encourage longer term thinking on the part of market participants. The website is very clear on this.

I know i'm still a newbie here, and maybe it's best if I just keep silent, but I can't help but ask WTF? Seriously...you're going to make a thread and call-out on misterbigg because of this non-issue? Methinks your real intent is to drive discussion AWAY from ripple criticism, combined with a desperate attempt to justify pre-mine...However, of everything i'm reading, misterbigg is certainly one of the most articulate contributors with excellent critical thinking skills.

chalk this up to a difference of opinion on mathematical outcomes, and not oversimplify trying to pretend misterbigg can't read...fact, maybe what's written on the site does not correlate to mathematical reality--most likely.

[galambo]

I know i'm still a newbie here, and maybe it's best if I just keep silent, but I can't help but ask WTF? Seriously...you're going to make a thread and call-out on misterbigg because of this non-issue? Methinks your real intent is to drive discussion AWAY from ripple criticism, combined with a desperate attempt to justify pre-mine...However, of everything i'm reading, misterbigg is certainly one of the most articulate contributors with excellent critical thinking skills.

chalk this up to a difference of opinion on mathematical outcomes, and not oversimplify trying to pretend misterbigg can't read...fact, maybe what's written on the site does not correlate to mathematical reality--most likely.

misterbigg asked me to make a new thread for this subject rather than reply to it in the ripple thread. It is not a "call out."

...Where do you come up with your idea that we reject this idea? Freicoin...

I don't want this to turn into a Freicoin discussion. Please delete your thread and re-post it as a new topic.

[misterbigg]

Freicoin is flawed because it pretends that market participants have no time preference.

I don't get this comment. Freicoin has time value of money built into the currency. Where do you come up with your idea that we reject this idea?...The website is very clear on this.

From the Freicoin website

When business is conducted in Freicoin, participants value present and future holdings equally, and favor sustainable processes.

Note the wording: participants value present and future holdings equally. Perhaps you need to read your own website a little more closely. When participants value present and future holdings equally, it means they have no time preference. Do you get it now? Do you realize that your statements expose gross ignorance?

I think Freicoin is a system built on a foundation of false premises. I've read the "manifesto" and its populist nonsense. Stuff like:

"Demurrage currencies like Freicoin align incentives of bankers and financiers with the priorities of the working class"

or

Usurious non-zero basic interest distorts the free market, incentivises poisonous greed, excess, and short-term thinking, and perpetuates a vicious cycle of boom/bust recessions.

or

Zero basic interest encourages sustainable investments, as long-term investments tend to be, by removing the time preference implicit inflationary (U.S. Dollar, Euro) or deflationary (Bitcoin) currencies.

or in your own words "sustainable processes."

It is not a "call out."

Well, actually, yes it is. Why would you put someone's nick in the subject line? A more appropriate title would be "Does Freicoin assume that market participants have zero time preference?"

Please go away.

[galambo]

Note the wording: participants value present and future holdings equally. Perhaps you need to read your own website a little more closely. When participants value present and future holdings equally, it means they have no time preference. Do you get it now? Do you realize that your statements expose gross ignorance?

Freicoin is defined by this equation  

where n is the number of periods is the block height delta between the transaction input and claimed output, and r is a negative interest

This negative interest, or steady decrease in value, counteracts the time preference. This is by definition of the currency, it has a negative interest built in.

We don't argue existence of time preference. What we do say is that the way we have defined the currency counteracts time preference.

[misterbigg]

We don't argue existence of time preference. What we do say is that the way we have defined the currency counteracts time preference. [/b]

Yes, exactly. Anyone whose time preference is non zero is discouraged from using the currency. The Freidiots believe that having a time preference brings about all manner of evils and that we need to socially engineer a cryptocurrency to factor "greed" out of the money equation. One can hopefully assume (although you never know with these useless altcoins) that Freicoin was designed to be actually used. With this in mind, only people with no time preference will use Freicoin. This is perfectly reflected in the Freicoin market share.

Or, put another way, Freicoin was designed to discourage its use by anyone who has a time preference. It follows then that the Freicoin designers either 1) did not want their system to be used, or 2) assume that users have no time preference (i.e. a discount function that is always zero). We can rule out #1 (I hope), that leaves #2. Which brings us to my original statement: Freicoin is flawed because it pretends that market participants have no time preference..

Do you get it now?

So yes I do believe that Freicoin rejects users who have any time preference. Freicoin was designed that way and both you and the literature on the website make that expressly clear!!! For fucks sake, reading comprehension for the loss.

[galambo]

We don't argue existence of time preference. What we do say is that the way we have defined the currency counteracts time preference. [/b]

Yes, exactly. Anyone whose time preference is non zero is discouraged from using the currency. One can hopefully assume (although you never know with these useless altcoins) that Freicoin was designed to be actually used. With this in mind, only people with no time preference will use Freicoin. This is perfectly reflected in the Freicoin market share.

There is still a time preference. The benefit of Freicoin is it supports lower static interest rates

To put it simply, the goal is this:

High interest rate environment - Warren Buffet buys your century old company to demolish and liquidate the factory. The goal is to turn it into fixed income and insurance policies.

Low interest rate environment - Warren Buffet buys large, capital intensive locomotive company (Burlington Northern, Union Pacific, Norfolk Southern)

Which one of the above is actually better for humanity?

Please keep in mind that everything on our website has had contributions from non-native speakers and you may be reading too much into the website instead of looking at the product alone.

[Ignore@YourPeril]

So yes I do believe that Freicoin rejects users who have any time preference.

Time preference is not the only factor in financial decisions. It´s importance depends heavily on how much value is involved. An example: I use the subscription service Spotify for streaming music. I would spend less if I paid directly for every downolad I made, by using iTunes. My time preference for the 10 USD I pay every month is then weighed as less than the flexibility Spotify provides over Itunes, even as I sometimes have to wait for the music I am looking for to transit from Itunes only to Spotify . For any subscription of 2000 or even 200 USD, or If I was heavily into music, I´d rather not use a subscription service I might not find useful the coming month.

I think we safely can assume that the main adoption (in number of users) for a crypto-currency for years to come will be for making small online payments. So savings or larger transactions, where time preference is more important, is a smaller market. The latter also involves (on the current level of development) the user to take into consideration questions of data- and network security, with which most are very uncomfortable (and indeed incompetent to make.

On top of that I think the demurrage of 5% each year can be argued to be a reasonable price to pay for maintaining network security for a payment system for large volumes of small transactions.

[jtimon]

Time preference is not inherent to humans. It appears because of capital-money.
Time preference depends on the currency, but other monies without demurrage (for example, non-scarce mutual credit) don't produce neither.

Give me any explanation of how time preference is obvious (as you probably think it is) and then repeat the same examples with apples instead of something everlasting.

I agree with you that freicoin suppresses the time preference inherent in capital-money, but I disagree that is inherent to humans. It just happens that fish is so used to live in water that it often forgets it actually lives surrounded by water.

Time-preference is just another flawed explanation for basic interest. I would say it falls under the "Abstinence category" of theories on interest according to Gesell: https://www.community-exchange.org/docs/Gesell/en/neo/part5/6.htm

Note that the classification is based on the work of Boehm-Bawerk, Menger's disciple, so Gesell wasn't ignorant about Austrian theories on interest as it happens the other way around. If you know an academic critique to Gesell's theory on interest coming from Austrian economists, please, let me know, I've looking for it for years.

[Monster Tent]

I think freicoin would be more useful for borrowing than bitcoin because its not deflationary in nature. Its not likely to be worth 1500% more in a year which makes bitcoin hard to use for fiat based companies to raise capital.

[Bicknellski]

It is a true currency. You would use it as opposing to holding it for value. It is complimentary to Bitcoin in that you would rather have something like Freicoin as a medium of exchange rather than the limitation posed by the 'value' of Bitcoin which we all know is fairly volatile.

There have been many well measured responses to the questions and concerns posted and yet people seem to blatantly ignore that and continue to misrepresent Freicoin. Time will show it's ultimate value as a means of trade which is something Bitcoin may not be well suited for. It be great if people actually did a bit of research before simply regurgitating misinformation. I get that there is a learning curve with Freicoin but once you read more about the potential it has then more people would likely adopt it. Yet to see any argument that has not been addressed with a reasonable and well thought out counter.

[poly]

It is a true currency. You would use it as opposing to holding it for value. It is complimentary to Bitcoin in that you would rather have something like Freicoin as a medium of exchange rather than the limitation posed by the 'value' of Bitcoin which we all know is fairly volatile.

There have been many well measured responses to the questions and concerns posted and yet people seem to blatantly ignore that and continue to misrepresent Freicoin. Time will show it's ultimate value as a means of trade which is something Bitcoin may not be well suited for. It be great if people actually did a bit of research before simply regurgitating misinformation. I get that there is a learning curve with Freicoin but once you read more about the potential it has then more people would likely adopt it. Yet to see any argument that has not been addressed with a reasonable and well thought out counter.

Then please explain why I would want to use Freicoin instead of Bitcoin. If there is a value store currency, you don't need a currency that continuously loses in value.

[Bicknellski]

Would you rather spend 1 BTC today or 3500 FRC for a game?
Which do you think will hold or gain in "value" in the next 2 years?
Which would be a better as currency for everyday trade as opposed to holding as an investment?
How does FRC lose value please explain, you did read above I hope?

http://polimedia.us/trilema/2013/bitcoin-prices-bitcoin-inflexibility/


Now let’s remodel : what happens when a 300% increase on the supply side meets a 5% increase in the demand side ? There’s pretty much literally nothing those extra dollars nobody wants can do to increase the Bitcoin supply. It’s very, very inelastic, and consequently the only stability point is when equilibrium is reached. Two billion dollars divided by 600`000 Bitcoins comes to three thousand dollars and change per Bitcoin.

[nethead]

Would you rather spend 1 BTC today or 3500 FRC for a game?

Well, if thats the current rate send me 0.3 btc and i send you 930 frc

[Bicknellski]

Sure you send me .3 btc... deal.

Ignore the point at your peril or go buy $300,000 pizzas.

I really don't see how the BTC is going to be a reliable currency in terms of using it to buy anything given how volatile it is and will likely trend upwards and then correct before heading upwards again.

Would FRC have this issue? Given that it is built for the specific purpose to be used not held I think there are advantages to adopting it over BTC for day to day purchases. Also currencies like Freicoin have been tested and adopted in the "real" world and performed as expected.

What is the problem?

[misterbigg]

I really don't see how the BTC is going to be a reliable currency in terms of using it to buy anything given how volatile it is and will likely trend upwards and then correct before heading upwards again.

You're under the influence of the money illusion.

[pyra-proxy]

Then please explain why I would want to use Freicoin instead of Bitcoin. If there is a value store currency, you don't need a currency that continuously loses in value.

While I believe there are issues with freicoin, it is not that it "continuously loses in value"....  It actually pretty innovatively fixes one of the big problems with bitcoin in the form of lost/destroyed coins, in doing so, freicoin maintains a static coinbase whereas bitcoins will be continuously shrinking from it's max.  Thus both coins will be deflationary but bitcoin may be "too" deflationary in time.  Freicoin will be deflationary because it has a static base amount of coins and the user count adoption rate can increase in time, but conversly the effect of lost/destroyed coins is mostly mitigated, so deflation in time will be slower (?slow enough?)

[pyra-proxy]

I really don't see how the BTC is going to be a reliable currency in terms of using it to buy anything given how volatile it is and will likely trend upwards and then correct before heading upwards again.

You're under the influence of the money illusion.

No he is arguing the rate of change between nominal value and purchasing power .... that is not money illusion....  I don't believe from what he stated that he was expecting 1 BTC to buy an egg today and in 100 years should still buy an egg.... he seemed to be arguing that its bad when 1 BTC buys an egg today, in a couple months it buys 4 eggs and then a month after that it only buys half an egg...

[Deprived]

Would you rather spend 1 BTC today or 3500 FRC for a game?
Which do you think will hold or gain in "value" in the next 2 years?

There's no difference - if we assume 1 BTC has same value now as 3500 FRC.

If I only have 1 BTC and 0 freicoin then I'd spend the BTC.  I would NOT convert the BTC to FRC then spend the FRC.
If I had 0 BTC and 3500 FRC then I'd spend the FRC.

If I had 1 BTC and 3500 FRC then I'd spend the FRC - but if I wasn't going to buy the game I'd convert the FRC to BTC, making the end result identical to if I'd had 2 BTC and 0 FRC in the first place.

The problem with the idea is that people use BTC to save/hold cash and FRC to do transactions is that if all my savings are in BTC why on earth would I want to convert to FRC before spending them?  Unless FRC becomes more widely accepted by merchants than BTC there's zero reason for anyone holding BTC to pay via FRC and incur a second set of exchange fees.  Only other reason to use it would be if it grew in value faster than BTC - i.e. the entire concept behind it totally failed.

If BTC appreciates in value faster than FRC then there's no way I want to EVER hold FRC rather than BTC unless it's for some purpose that I can't achieve with BTC.