We're asking for your help in creating a new crypto-currency, once with real value and lasting benefits. The idea of a demurrage currency has been raised before on this forum, but for those unfamiliar the idea is simple: apply a continuously-assessed fee to all accounts (4.4% APR, in this case), and distribute the proceeds from that collection to the miners.
Why on Earth would anyone want their money to lose value? The rationale is to separate money-as-a-store-of-value, a purpose Bitcoin serves very well, from money-as-the-medium-of-exchange, for which inflation/demurrage has significant benefits. These two functions are inherently at odds with each other, and there exists a rational economic theory put forth by Silvio Gesell a century ago which says that separating the two will cause (through economic self-interest) a lot of the ills of the current financial system and its effects on society to be fixed.
We're putting forth a proposal for a new crypto-currency with integrated demurrage and a few key improvements to the client (including trust-less block-chain pruning), which will be back-ported to Bitcoin as well. You can read the full details below.
To be clear, this is not
a competitor to Bitcoin. Should Freicoin be successful, Bitcoin will retain its critically important role as a long-term digital store of wealth. Should it fail, that would only validate arguments for a deflationary rather than an inflationary/demurrage currency.
We've been working on prototypes and proof-of-concepts for these and other features over the past year, but unfortunately the demands of full-time jobs, family, and other commitments has meant progress occurring at a relatively glacial pace. We're seeking your help to make this currency and associated Bitcoin improvements happen A.S.A.P. We've created an Indiegogo campaign
, and are of course accepting bitcoin donations as well, at the following receiving address:Donation address: 1HzH4YtFwBQXyF2NCCwyY2qFCCsBsmdN3jContribute with fiat: Indiegogo CampaignGOAL:
Here's the text of the campaign (geared towards those who may not have heard of Bitcoin), followed by the pledge rewards and a FAQ:
Freicoin is a decentralized, distributed electronic currency designed to address the grievances of the 99% movement and correct the excesses of the 1%. Whereas inflationary currency like the U.S. Dollar or Euro are controlled by central bankers under rules that benefit the establishment, Freicoin would be completely decentralized and self-regulating, with fees on stagnant or hoarded money (demurrage) paid in proportion to those community members who contribute work to secure the currency. It is an opt-in alternative currency to be used first by Occupy-supporting businesses and supply chains, then spread to the surrounding community across the globe. It includes a downloadable client for Mac OS X, Windows, and Linux, and an electronic network for transferring funds denominated in Freicoin world-wide.WhyDemurrage currencies
like Freicoin align incentives of bankers and financiers with the priorities of working class, forcing the wealthy through their own self-interest to invest in growth, jobs, and ventures with long-term thinking. An economy based on demurrage currency would not fall victim to to the same greed, excess, and short-term thinking that led to the 2008 crisis and financial collapse. Freicoin would instead continuously stimulate global growth through reinvestment, and dis-incentivize the hoarding by the 1% that caused the “credit crunch”.
The current systems of money, including the U.S. Dollar or Euro, are and always have been used to store value--money seen from the point of view of the holders, the wealthy. Freicoin emphasizes instead the view to that of the producer, the proletariat, the 99%: money as a means of buying the goods and services necessary to sustain life. These are contrary purposes--money cannot function properly as, nor should it ever be both a means of saving and exchange; it cannot be both accelerator and brake at the same time. Indeed, this confusion and conflict over the purpose of money is what led to the financial collapse of 2008 and the extended recession that followed.
Demurrage forces the entire stock of money to circulate irrespective of the desire of the wealthy to accumulate and store; banks, financiers, and corporations can no longer hoard money waiting for higher interest rates or a more favorable investment climate as the demurrage acts as a tax on stagnant money. Money is eternally losing value, so the incentive is to spend it as quickly as possible on the necessities of life or to invest in longer-term ventures that also provide stimulus for a growing economy, typically creating real jobs in the process. Real money becomes a sort of “hot potato” that is passed around as quickly as possible, in a virtuous cycle of investment. No longer are there incentives for financiers to withhold credit from those in need simply to what for fairer economic winds.
For the 99% who live paycheck-to-paycheck, the loss from demurrage is minimal and would be compensated for in wages and pricing. For those who manage to accumulate some savings and for the 1% who receive much more income than they reasonably spend, they can either save real wealth (gold, silver, Bitcoins, real estate, artwork and fine wine, for example) and accept the obvious limitations of wealth saving (loss, storage, rot, fire, etc.), or they can loan it out to borrowers at what ends up being near-zero basic interest. With sustainable near-0% interest loans the order of the day, businesses will boom and the economy will grow in a virtuous cycle.How
For the past year we have been working in our free time to produce a proof-of-concept prototype based on improved and expanded Bitcoin technology. The prototype is a re-implementation of a generalized form of the Bitcoin protocol which makes possible advanced features like demurrage, multiple currencies existing side-by-side (Bitcoin and Freicoin), and other improvements for future scalability. Extensive unit tests demonstrate the validity of this core component.
- What is Bitcoin? Bitcoin is a decentralized, peer-to-peer internet currency secured by strong cryptography and an open-source development process, and the foundational technology underlying Freicoin. Bitcoin enables anyone in the world to send funds to anyone else with minimal, fair fees on both consumers and merchants. Bitcoin is democratic in that everyone who uses the currency takes part in securing it (making sure the rules are followed and there is no fraud) by running a software program on their computers; they are proportionally compensated for this effort by collecting transaction fees, and in the case of Freicoin, demurrage. For more information about the benefits that come from basing Freicoin on Bitcoin technology, see the Bitcoin advocacy site We Use Coins.
What remains to be done, and what this campaign will fund is the following:
- Implementation of a block-chain pruning technology, reducing storage requirements and startup time and eliminating a major impediment to wide scale adoption of Freicon (and Bitcoin, for that matter).
- Re-purposing of Armory, the most advanced and user-friendly Bitcoin client, to work with Freicoin in addition to Bitcoin.
- Public-facing website and always-on “seed node” to help new users download the combined Armory/Freicoin core software and get connected for the first time.
- Initial “merged mining pool”--a service for Freicoin users to help secure the currency and receive rewards/compensation for that service.
- A Bitcoin/Freicoin exchange to enable supporters to convert existing funds into Freicoin (by first buying Bitcoin and then Freicoin).
- An animated film explaining what Freicoin is, what it does to fix the problems of the financial system, and how people can get involved in using and promoting it.
Once the above objectives are reached, Freicoin will be ready for adoption by Occupy groups and supporters, and other like-minded groups. The work can then begin to get Freicoin adopted as the first “global community currency”. As a peer-to-peer application, once completed Freicoin can be used by anyone in perpetuity without any required ongoing maintenance.
At the completion of this project Freicoin will be ready for individual communities to adopt, for businesses to accept as payment and for consumers to use. The initial freicoins will be in the process of being generated and fairly distributed to community members who participate in securing the network.
This campaign will directly pay for hardware and server time cover the first year of operations, materials used in the logo, branding, film, and initial marketing, and to keep the basic necessities of life as we decline contracting work to focus on Freicoin.
Join us and be a part of the reformation of global finance!GOAL:
$28,000 USDFiat donations: Indiegogo CampaignBitcoin address: 1HzH4YtFwBQXyF2NCCwyY2qFCCsBsmdN3j
Everyone gets access to the project upon public release, and a chance to participate in the creation of a new global economy.
Our heartfelt thanks and your name in the credits of the official client.
Receive a custom post card designed by the developers and sent from Silicon Valley with a personalized message of gratitude.
A beautiful silk-screened “Occupy Freicoin” T-shirt (add extra $10 shipping to Canada and $15 to other non-U.S. destinations).
You will be immortalized in the genesis block of the Freicoin block chain, where your name or short message will be preserved forever in the historical record.
Dinner with the developers, their family, and other backers in the Silicon Valley/S.F. south bay-area (transferable if you know someone who lives or will be in the area at the appropriate time).
Cameo appearance in the animated film introducing, explaining the Freicoin project and how to get involved.
Membership in our advisory circle--a group of visionaries that will meet (virtually) approximately once a month to be informed of our current efforts and from which we seek ideas and inspiration.
Membership in our advisory circle as well as recognition as official sponsor of the Freicoin project. Your logo, business name, or other mark belonging to you will be featured prominently on the official public-facing Freicon website.What is “Freicoin”, and how does it work, really?
Freicoin--literally “free money” in German--is based on the principles of economist Silvio Gesell's Natural Economic Order
. Freicoin is an electronic currency managed through a self-regulating, distributed electronic network based on Bitcoin technology. The network enforces a continuously assessed 4.4% APR fee on all account holders. This fee acts as a tax on stagnant money, driving up the rate at which money flows through the economy and acting as an economic stimulus, and discouraging unproductive hoarding by the 1%. The proceeds of the demurrage tax are repayed transparently and proportionally to the community members who donate computer time to running software that regulates and enforces the rules of the network.
Besides providing a virtuous cycle of rewarding positive long-term investments, demurrage currencies also reduce interest rates to near-zero (hence the “free money”), providing further job-creating stimulus and helping to reduce the magnitude of the boom-bust business cycle.Where can I learn more?
Here are some resources:You've based it on Bitcoin technology. Is this a competitor to Bitcoin?Absolutely not!
The two serve quite different purposes. The properties of Bitcoin make it analogous to precious commodities like gold or silver, and it will always function as a useful store of value. Freicoin, on the other hand, is meant to be used as a medium of exchange only, kept on hand just long enough to provide a cash-flow buffer. The demurrage fee encourages recipients of Freicoin to put their money to use as soon as possible in an exchange (even by buying bitcoins, for example), whereas the deflationary nature of Bitcoin rewards hoarding and serves a different purpose as a long-term store of value.How is this different from that other Occupy currency?
There have been a couple of monetary reform ideas floated by members of the Occupy movement, but most likely you are referring to “OCCCU”, another demurrage currency created by students at the Vorarlberg University of Applied Sciences and presented to members of the Occupy movement at Davos in January, 2012.
OCCCU's provision of “basic income” and the assessing of demurrage fees is accomplished by means of centralized regulators, the currently faceless OCCCU “general assembly”. This is hardly an improvement over the current system of centralized banking; as the great poet Pete Townshend once said: “meet the new boss, same as the old boss”. It is our firm belief that real monetary reform will only come when the system does not require trust in any individual or organization, and when all operations are made transparent. Freicoin accomplishes these goals with distributed self-regulation and automatic distribution of the demurrage pool on a fair and proportional basis.Who are you?
There are three of us that have come together to make this possible: engineer Mark Friedenbach, designer Aaron Blumenshine, and project manager Matt Everingham.
In his day job, Mark is a application developer at NASA. He builds large data visualization applications as well as web and database backends. Aaron is an accomplished and award-winning photographer and graphic designer. Matt is an aerospace engineer and project manager, also at NASA, who has designed and built a series of low-cost exploration rovers controlled over the internet.
We became aware of Silvio Gesell
and demurrage currency
through our research into Bitcoin, and for the past year we have been developing the prototype and proof-of-concept mentioned above in our free time.Will it be open-source?
Absolutely. In fact, the transparency provided by an open-source client is essential to the basic ideals of Freicoin and the Occupy movement. That said, it will certainly be possible to build closed-source software and businesses on top of the open-source Freicoin core.