Bitcoin + TEM = BitTem?

[Phinnaeus Gage]

A few months ago, an alternative currency was introduced in the Greek port city of Volos. It was a grass-roots initiative that has since grown into a network of more than 800 members, in a community struggling to afford items in euros during a deepening financial crisis.

http://www.bbc.co.uk/news/world-europe-17680904

From jewellery to food, electrical parts to clothes, everything here is on sale through a local alternative currency called TEM.

It works as an exchange system. If you have goods or services to offer, you gain credit, with one euro equivalent to one TEM.

"It's a very good idea because we need to make people realise we can all buy and sell something; we don't only need euros."

"We have reached the bottom of our lives and we now have to think in a different way," says Tasos, a vegetable-seller.

What are the chances of this Greek community, among others, reaching out to Bitcoin?

~Bruno~

[kiba]

You can't afford items in euro yet a TEM equals a Euro? 

[3phase]

Too convoluted system. Not anonymous at all (you have to give your ID card to participate).

Their website is down for the last few days (maybe Orthodox Easter holidays). (www.tem-magnisia.gr). You could find some of their page in Google Cache and then translate them but many things will be lost in the translation.

It's a zero sum currency. There are as many TEM debits as there are TEM credits at any time. The fact that everyone has a 300 TEM credit limit (they cannot spend more than that without acquiring some), makes it inflationary by design.

Examples given suggest that this is a mediocre attempt to revitalize the local economy, without much of actual value. They suggest that shops should give a discount in Euros and collect the discounted amount in TEM. Too easy to cheat with this. Apart from personal barter of products and services, it doesn't offer much of a benefit.

No talk of security measures for their "centralised database" of transactions. If it grows enough it will soon be the target of the University of Volos Computer Department. Or the government itself. Too easy to kill.

That's my first view. I'll try to monitor it (f they come back online) and report more here.

[FreeMoney]

It's nothing new. Either it is just the EUR with a mask on because they keep the EUR to cash people out or they don't keep it all and it's a bank in disguise.

[apetersson]

People have no EUR because of too much debt? give them a 300 EUR loan and tell them its not really EUR its now called TEM!
that will fix the economy.

ok, i'm half-joking here because its an intrest-free loan which only circulates locally. maybe it helps some people to get food on the table for some time.

[Etlase2]

People have no EUR because of too much debt? give them a 300 EUR loan and tell them its not really EUR its now called TEM!
that will fix the economy.

it's the helicopter effect of giving money away in a new system of money. a certain cryptocurrency you may or may not be familiar with is in the process of doing the same thing right now.

ok, i'm half-joking here because its an intrest-free loan which only circulates locally. maybe it helps some people to get food on the table for some time.

I have not delved into it, but it does not appear to be a loan.  "It works as an exchange system. If you have goods or services to offer, you gain credit, with one euro equivalent to one TEM."

It's a zero sum currency. There are as many TEM debits as there are TEM credits at any time. The fact that everyone has a 300 TEM credit limit (they cannot spend more than that without acquiring some), makes it inflationary by design.

Could you explain what you mean by zero sum? And perhaps expand on "inflationary by design"? If they had said, "we will start with 10 quadrillion TEM and give a 300 TEM credit to each person who signs up" is this system more or less inflationary than one that just adds 300 credits to the economy for each person that signs up?

Apart from personal barter of products and services, it doesn't offer much of a benefit.

Isn't this the absolute foundation for money?

[3phase]

It's a zero sum currency. There are as many TEM debits as there are TEM credits at any time. The fact that everyone has a 300 TEM credit limit (they cannot spend more than that without acquiring some), makes it inflationary by design.

Could you explain what you mean by zero sum? And perhaps expand on "inflationary by design"? If they had said, "we will start with 10 quadrillion TEM and give a 300 TEM credit to each person who signs up" is this system more or less inflationary than one that just adds 300 credits to the economy for each person that signs up?

Apart from personal barter of products and services, it doesn't offer much of a benefit.

Isn't this the absolute foundation for money?

Zero sum means this:

Every account starts at 0. Let's say we agree that I'm a plumber and I will clean your drainpipes for 30 TEM. Then your account balance will become -30 TEM (debit) and my account balance will become +30 TEM (credit which I can spend in another transaction).

I put it wrongly in my previous post, there is a maximum debit of 300 TEM that someone can have, not credit. Members can have unlimited credit.

There is no "starting amount" of TEM. It's zero for everyone and the total sum of member balances is always zero. It is still inflationary however.

Regarding your comment about the foundation of money, I would answer definitely yes, if we're talking about Ancient Greece. But if you just try to think about the economic forces that have contributed to the existence of this very forum and those that have made possible the 900,000 or so posts herein by people all over the world, I think you might agree that personal barter doesn't help much.

[Etlase2]

Zero sum means this:

Every account starts at 0. Let's say we agree that I'm a plumber and I will clean your drainpipes for 30 TEM. Then your account balance will become -30 TEM (debit) and my account balance will become +30 TEM (credit which I can spend in another transaction).

I know what zero sum means, but explain why you brought it up or why this is something significant to even mention, I guess.

There is no "starting amount" of TEM. It's zero for everyone and the total sum of member balances is always zero. It is still inflationary however.

Ok, I see that you just want to say "it's inflationary" because that's a dirty word around here.

[apetersson]

zerohedge just brought this article:
http://www.zerohedge.com/news/birth-barter-how-one-greek-town-dropped-euro-and-moved
with a short video from BBC. they seem to absolutely not get it.
 
i made a comment about bitcoin at the video (http://www.youtube.com/watch?v=RI38zFz9WTM) , maybe some youtubers can "sticky" it by liking

[RodeoX]

Maybe someone should set up an exchange between Bitcoin and TEM.  If I were in Greece, I would want to turn some of my TEM into BTC.  Anyone have an idea of a TEM / BTC price?

[apetersson]

Anyone have an idea of a TEM / BTC price?

Since TEM is pegged to EUR.. same as EUR. atm 3.9 EUR/BTC

[Etlase2]

zerohedge just brought this article:
http://www.zerohedge.com/news/birth-barter-how-one-greek-town-dropped-euro-and-moved
with a short video from BBC. they seem to absolutely not get it.
 
i made a comment about bitcoin at the video (http://www.youtube.com/watch?v=RI38zFz9WTM) , maybe some youtubers can "sticky" it by liking

So far the only evidence I see that this is "debt-based" is from the posters in this thread. In fact, the OP even quotes part of the article where it says "you earn credit by offering goods and services."

Telling people to buy bitcoin when they can't buy food because they have no euros has got to be some of the most short-sighted shit I've ever seen on here. And you claim somebody "doesn't get it."

[lonelyminer (Peter Šurda)]

Etlase2,

So far the only evidence I see that this is "debt-based" is from the posters in this thread. In fact, the OP even quotes part of the article where it says "you earn credit by offering goods and services."

I would say that this is distributed debt (as opposed to centralised through the banking system). Now on its own, there is nothing wrong with debt, centralised or not. The problems are elsewhere. The problems, as I see them, are that its value is pegged to the euro, so it's affected by the problems of the euro. Second, it increases the elasticity of the money supply which causes a misallocation of resources.

[Etlase2]

Man I don't even know why I bother.

I would say that this is distributed debt (as opposed to centralised through the banking system).

I would say you have absolutely no idea what you're talking about. There is no interest owed and there is no bank, centralized or not, that has to be repaid. Explain to me how this is a debt. Explain to me in what way you could bootstrap a currency without requiring work performed that isn't debt-based under this ridiculous definition. Helicopter dropping money? Ah well, here is the same helicopter except it is slightly more discerning about where it drops its money: to people who provide goods and services.

The problems, as I see them, are that its value is pegged to the euro, so it's affected by the problems of the euro.

It is not affected by the problems of the euro because, newsflash, it's not the euro. Nor is it pegged to the euro by any matter other than convenience and as a way to bootstrap. Collapse of the euro would not cause a collapse in TEM.

Second, it increases the elasticity of the money supply which causes a misallocation of resources.

This means you literally believe the following: the euro wealthy should be able to buy up as much property and other material wealth as possible while greece is in a recession and many people starve, all due to the incompetence of politicians. What a revolting statement. I can see why you're so fond of bitcoin. And I can see that your posts are not ever again worth reading.

[Phinnaeus Gage]

Man I don't even know why I bother.

I would say that this is distributed debt (as opposed to centralised through the banking system).

I would say you have absolutely no idea what you're talking about. There is no interest owed and there is no bank, centralized or not, that has to be repaid. Explain to me how this is a debt. Explain to me in what way you could bootstrap a currency without requiring work performed that isn't debt-based under this ridiculous definition. Helicopter dropping money? Ah well, here is the same helicopter except it is slightly more discerning about where it drops its money: to people who provide goods and services.

The problems, as I see them, are that its value is pegged to the euro, so it's affected by the problems of the euro.

It is not affected by the problems of the euro because, newsflash, it's not the euro. Nor is it pegged to the euro by any matter other than convenience and as a way to bootstrap. Collapse of the euro would not cause a collapse in TEM.

Second, it increases the elasticity of the money supply which causes a misallocation of resources.

This means you literally believe the following: the euro wealthy should be able to buy up as much property and other material wealth as possible while greece is in a recession and many people starve, all due to the incompetence of politicians. What a revolting statement. I can see why you're so fond of bitcoin. And I can see that your posts are not ever again worth reading.

Watching!

I don't have an alpaca in this race, yet, but am learning something new from reading the dialog. Thank you, both.

~Bruno~

[lonelyminer (Peter Šurda)]

Etlase2,

I would say you have absolutely no idea what you're talking about. There is no interest owed and there is no bank, centralized or not, that has to be repaid.

Debt is not defined by the presence of interest.

Explain to me how this is a debt.

See wikipedia on Debt.

It is not affected by the problems of the euro because, newsflash, it's not the euro. Nor is it pegged to the euro by any matter other than convenience and as a way to bootstrap. Collapse of the euro would not cause a collapse in TEM.

TEM has a fixed exchange rate with the Euro (1 TEM = 1 EUR), in other words, there is someone who promises to redeem them at a predefined rate. If the market price of euro collapses, so will the market price of TEM. This behaviour is the same as other money substitutes, such as bank notes (in case of a gold standard) or current accounts (except it's not controlled by the banks). An attempt to decouple them would cause arbitrageurs to equalise them again. This arbitrage also serves as a limit on the creation of additional units. Due to transaction costs and small size of LETS economies, this is imperfect, so there is a certain level of disparity. But as soon as the disparity increases sufficiently to overcome the transaction costs, arbitrageurs will appear.

Only if the redemption ceased for some reason (for example, due to lack of reserves or market power), then the price would decouple. I think that this would cause a more rapid increase in the amount of TEMs in circulation (because it's a creation of new money at a zero interest rate) and a relative fall in the market price of TEM compared to EUR, but I am not completely sure about this. I was unable to find Austrian writings about LETS, so the only variable I can somehow find relevant is the interest rate.

Just out of curiousity, can you show me an example of a system like TEM or LETS that does not have a predefined exchange rate in units of other currencies or commodities?

This means you literally believe the following: the euro wealthy should be able to buy up as much property and other material wealth as possible while greece is in a recession and many people starve, all due to the incompetence of politicians. What a revolting statement. I can see why you're so fond of bitcoin. And I can see that your posts are not ever again worth reading.

You are imagining things. I never said that people should not use TEM. Austrian economics is not about should (normative statements), it is about is (positive statements). I claim that systems like LETS or TEM do not fix what I perceive the main problems in the current monetary system. I also said in the past that such systems reduce the scope of the economies. This also decreases the specialisation of labour, and that will make the society poorer. If people want that, alas, let them have it. However, as explained above, on a free market, I don't expect such systems to play a significant role.

Most importantly though, you did not address my points. Rather you react as if I objected to your ideological goals or something. However, I am indifferent to your goals. I'm merely analysing the the economic foundations of your position and attempting to derive the consequences thereof.

[Etlase2]

Debt is not defined by the presence of interest.

No, it is defined by the fact that there is a creditor, which there is not here. Why you can't see that, I don't know. Probably because you breath from the mouth.

TEM has a fixed exchange rate with the Euro (1 TEM = 1 EUR),

Link me to the evidence where this exchange rate is fixed. Because all I can find on google is the BBC article and it says no such thing. So unless you live in Volos and have experienced this system for yourself, or you have knowledge that I don't, you just made that up. Link me to any evidence where it is even exchangeable. What person in their right mind would ever exchange EUR for TEM?

Most importantly though, you did not address my points. Rather you react as if I objected to your ideological goals or something. However, I am indifferent to your goals. I'm merely analysing the the economic foundations of your position and attempting to derive the consequences thereof.

You don't have any points. You have Ludwig von Mises spew.

[lonelyminer (Peter Šurda)]

No, it is defined by the fact that there is a creditor, which there is not here. Why you can't see that, I don't know. Probably because you breath from the mouth.

The creditor is the person who sells the goods/services against a newly issued TEM. The debtor is the person issuing the TEM. Austrian school explains why: credit is an exchange of present goods for future goods.

Link me to the evidence where this exchange rate is fixed. Because all I can find on google is the BBC article and it says no such thing.

http://www.nytimes.com/2011/10/02/world/europe/in-greece-barter-networks-surge.html?pagewanted=all

The group’s concept is simple. People sign up online and get access to a database that is kind of like a members-only Craigslist. One unit of TEM is equal in value to one euro, and it can be used to exchange good and services. Members start their accounts with zero, and they accrue credit by offering goods and services. They can borrow up to 300 TEMs, but they are expected to repay the loan within a fixed period of time.

http://www.npr.org/2011/11/29/142908549/modern-greeks-return-to-ancient-system-of-barter

Volos is also one of several Greek towns with a more formal type of barter network, which uses a currency called Local Alternative Unit, or TEM in Greek. One TEM is equal in value to one euro.

http://www.bbc.co.uk/news/world-europe-17680904

It works as an exchange system. If you have goods or services to offer, you gain credit, with one euro equivalent to one TEM.

(emphasis added)

So unless you live in Volos and have experienced this system for yourself, or you have knowledge that I don't, you just made that up. Link me to any evidence where it is even exchangeable.

If there is free market, it's exchangeable. The peg is just obfuscated because there is no central redemption instance and no specialised markets. But, as I said, once the price discrepancy exceeds transaction costs, arbitrageurs will appear.

What person in their right mind would ever exchange EUR for TEM?

The person that sees an arbitrage opportunity and wants to make a profit on that.

You don't have any points. You have Ludwig von Mises spew.

You just discredited yourself.

[Etlase2]

The creditor is the person who sells the goods/services against a newly issued TEM. The debtor is the person issuing the TEM. Austrian school explains why: credit is an exchange of present goods for future goods.

So what you're saying is all money is debt, including bitcoin. That's fine. It's completely useless information, but that's fine. It is a complete non-sequitur to the post I was replying to, but you don't care.

(emphasis added)

So you quoted a bunch of articles that say one TEM is equivalent to one euro. That does not mean that there is a fixed exchange rate, as you claim. So again, you made it up. No authority is backing TEM with EUR, so the equivalency is only in the minds of TEM owners. Ergo, any logic you try to produce from this made up connection is flawed and completely dismissible.

You just discredited yourself.

LOL with you maybe. With common sense, certainly not.

[lonelyminer (Peter Šurda)]

So what you're saying is all money is debt, including bitcoin. That's fine. It's completely useless information, but that's fine. It is a complete non-sequitur to the post I was replying to, but you don't care.

Not all money is debt, because some money is a present good and is not created by a credit transaction between two market participants. This is particularly true for commodity money, such as gold. Gold is retrieved from, say, mines. This retrieval increases its supply, but it's not a credit transaction. Rather, it's a production process that creates a new good.

So you quoted a bunch of articles that say one TEM is equivalent to one euro. That does not mean that there is a fixed exchange rate, as you claim.

Of course it does. As I said, it's just obfuscated due to a lack of a centralised system and specialised markets. Let's say that someone in the community is selling radios for 100 TEMs and someone else apples for 1 TEM each. If a radio costs 90 EUR outside of the community and apples 1 EUR, if we ignore transaction costs, someone could buy a radio for 90 EUR, sell it in the community for 100 TEM, buy 100 apples with them, and sell the apples outside for 100 EUR. This nets him an arbitrage profit of 10 EUR. This puts a pressure on the community radio seller to decrease the price, and on the community apple sellers to increase their price. Since money is what connects all transactions, an increased number of products will shift the pressure onto the price system.

So again, you made it up.

Again, you ignore elementary economics.

No authority is backing TEM with EUR, so the equivalency is only in the minds of TEM owners.

The equivalency is also in their actions. They use it in trade for the equivalent value. There does not need to be a centralised authority for this (in fact, I explicity said that). But this is not automatic. If they deviate from the equilibrium (stop treating them as having the same value), either the arbitrageurs will reestablish the equilibrium again, or the whole system will collapse.

Ergo, any logic you try to produce from this made up connection is flawed and completely dismissible.

You have failed to provide a response to my points, and continue to ascribe to me positions which I never expressed.