[ANN] Freicoin: demurrage crypto-currency from the Occupy movement (crowdfund)

[galambo]

To those of you wondering why I'm posting these graphs, heres a little hint as to my motivation...

I'm curious. How this relates to freicoin or bitcoin?

If bitcoin protocol is going to start tracking interest rates in terms of numbers of blocks mined its a bit more important that the network stays at a 10 minutes per block rate.

[1714102856]

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[jtimon]

To those of you wondering why I'm posting these graphs, heres a little hint as to my motivation...

I'm curious. How this relates to freicoin or bitcoin?

If bitcoin protocol is going to start tracking interest rates in terms of numbers of blocks mined its a bit more important that the network stays at a 10 minutes per block rate.

So the charts were an answer to my "50000 blocks per year instead of 10 min per block"?

[galambo]

To those of you wondering why I'm posting these graphs, heres a little hint as to my motivation...

I'm curious. How this relates to freicoin or bitcoin?

If bitcoin protocol is going to start tracking interest rates in terms of numbers of blocks mined its a bit more important that the network stays at a 10 minutes per block rate.

So the charts were an answer to my "50000 blocks per year instead of 10 min per block"?

The charts were part of a design to a control system that will allow faster and more accurate adjustments of the difficulty.

[jtimon]

To those of you wondering why I'm posting these graphs, heres a little hint as to my motivation...

I'm curious. How this relates to freicoin or bitcoin?

If bitcoin protocol is going to start tracking interest rates in terms of numbers of blocks mined its a bit more important that the network stays at a 10 minutes per block rate.

The charts were part of a design to a control system that will allow faster and more accurate adjustments of the difficulty.

Now I get it.

[galambo]

Now I get it.

I'm basically done with it. Here is the output of my bitcoin test client on the current block chain. This is a sum of the accumulation of all "errors" that the controller would try to remove from the current system. The vertical scale is roughly time between blocks(the units are unspecified due to filter overlap), and the horizontal scale is block number/72. This means the network would readjust once every 12 hours (72 blocks)



Positive slope means easier difficulty, negative slope means harder than current controller. Zero slope means the current controller is good. This is inverted from the graphs on sipa's website you've probably seen before.

[jtimon]

Interesting.

[galambo]

Interesting.

What may be more interesting is that the entire community regards this as being impossible.

To those of you who are claiming what we are doing is easy or a cheap scam, think again.

[LoupGaroux]

Hard to believe it takes $ 28,000 to create a few graphs based on a very bad idea. Regardless of how technically talented one might be.

[maaku]

Super-big thanks to @jtimon, @galambo, and others who have replied while I was super-busy.

Okay, so how is freicoin better for a successful business than dollars, or bitcoins? What profit do they extract from whom by using it? Does it give them more leverage over their employees so that forcing employees to accept rotting/decaying/evaporating money? It is expected they will get more goods from suppliers per man-hour their laborers put in selling stuff for them or building stuff out of what the suppliers supply?

A demurrage currency results in lower interest rates, which benefits entrepreneurs and operators of stable businesses. Compared with other forms of currency it encourages investment in real capital and increases in productivity. It rewards sustainable enterprises and long-term thinking while punishing exploitative endeavors or shortsighted choices. With a demurrage currency cash flow, not immediate return, is king.

Perhaps you can add this questions to your FAQ:
When would the demurrage penalty be executed?

Based on this answer, will follow a question about how the penalty will avoid exploits, but it depends on when and how demurrage occurs.

[edit] I found in another thread that it is assessed at the time of transaction based on how long it has been held. What is to stop someone from simply holding it indefinitely as a backing for another currency like for instance, phycical bitcoin? If everyone did that, it would be a nightmare knowing how much a physical coin would be worth.

Thanks for the feedback; I will add a FAQ entry.

In the current implementation, all outstanding/unspent outputs decay in value slightly with each added block. For a transaction to be valid, it must include enough inputs to cover the specified outputs after accounting for decay. (Aside: this makes it possible for a transaction to ‘expire’ if it is not added to a block before its inputs have decayed to less than its outputs. We are investigating methods to transparently mitigate the consequences of this.)

If someone chose to hold the currency forever as a backing for another system, they would be free to do so. However the value of the coins they held would still decrease--even if that decrease never manifests in the block chain--because the loss would have to be realized should the coins ever be spent.

I am guessing that he is not of the/an "Austrian" persuasion?

Gesell doesn't quite fit into either camp; he and his theories stand alone.

You want something like 4% to 5% of the market cap per annum to go to securing the network?!?!?! Sheesh, consider merged mining or something, please! Such a percent seems a ridiculously expensive proposition.

Remember: Freicoin is not a store of value. Bitcoin or gold (or whatever) can be used for that purpose. Since freicoins are only kept between transactions and in enough volume to have a cash flow buffer, the actual Freicoin market cap will be rather low. It will consist mainly of the liquid wealth that people use in day-to-day transactions, not savings.

So yes, something like 4% to 5% of the market cap per annum will go to securing the network. But the market cap will probably be orders of magnitude less than GDP of the Freicoin economy.

Ok so how many coins per block are to be created and will that number ever change if so how much and on what schedule?

Currently there is a Bitcoin-like fixed subsidy that halves in value every four years, to which is added the total loss due to demurrage and transaction fees (if any). This means the generation curve looks exactly the same as Bitcoin, but the block-reward has an uniquely different profile. It'll grow exponentially until all coins are generated, although with the rate halving every four years with sharp discontinuities. Eventually it will reach an equilibrium at about 40% the original subsidy. value.

[markm]

I still don't see a need for the values used by the blackchain to change.

Only the disply and input interfaces need to adjust the numbers in accordance with whatever date+time is of interest. The blackchain can deal entirely with epochal coins. To keep the generation rate constant in terms of at moment block is made value, just apply the inverse of the demurrage rate to the number of coins generated.

That is, if the actual dcoin number/value of 50 epochal coins at some future block is 5 but that block is still meant to produce 50 that day coins, have it generate 500 epochal coins.

Eventually epochal coins will only be worth a that day satoshi each but that will be far in the future and the generation rate can still be climbing then.

For example if each block always generates 50 coins adjusted for demurrage to come out as 50 of that moment's coins in value, and coins fall in value 5% per year, eventually total quantity surviving will stabilise as the equilibrium between the minting and the demurrage. There should thus be no need to ever change how many (that day adjusted) coins are minted per block, but the number of epochal coins that many coins corresponds to will keep climbing as epoachl coins continue to fall in value.

-MarkM-

[maaku]

Blockchain values aren't changing.

What you propose would work, but it's more complicated. I'm sorry, but I really don't see the point.

One of us is probably misunderstanding the other.

[markm]

Blockchain values aren't changing.

What you propose would work, but it's more complicated. I'm sorry, but I really don't see the point.

One of us is probably misunderstanding the other.

You keep seeming to say that when you pass coins from one block to another you have to adjust them for demurrage.

I think that creates complications that are not needed. Demurrage can be done just in the client, the blockchain does not need to do anything about it except to grdually increase the number of coins minted per block just enough to make up for the demurrage so that once the equilibrium amount of money is in circulation the slowly increasing number of coins minted per block keeps that number in circulation.

You basically only have to change the input and output display of numbers so that the same number in the blockchain displays as a lower and lower number over time and the numbers people type in as the actual at that moment value they want to talk about refers to a larger and larger number of blockchain-representation (epochal) coins as time goes by.

Basically if at the epoch I tell a client to send you 100, the blockchain representation will be 100. A year later though if I still say to send 100, of that day's coins, then on the blockchain it will show something more like 105 or so (100 * 1/0.95).

Similarly, if the genesis block mints 50 coins as represented in blockchain-notation (epochal coins) then when someone displays that amount in ten years or so it will be displayed as some 25 or thereabouts of that day coins.

The whole complication of changing the quantities as they go from one block to another just makes it all harder by not changing the values until they move. Since the values actually change whether they move or not it is best to have the demurrage - the change of value - take place constantly simply by having it happen in the display routines. At any time anyone can thus select a date as of which to display the values and look at any transactions or balances in the blockchain in terms of the actual value they did have, do have or will have at the specified point in time.

-MarkM-

[maaku]

Hmm. Perhaps.

I have to think some more to give a full opinion.

[ripper234]

Remember: Freicoin is not a store of value. Bitcoin or gold (or whatever) can be used for that purpose. Since freicoins are only kept between transactions and in enough volume to have a cash flow buffer, the actual Freicoin market cap will be rather low. It will consist mainly of the liquid wealth that people use in day-to-day transactions, not savings.

ELI5 - if you admit Freicoin isn't a store of value, when in people's "money flow chart" do they buy Freicoin? If they store their wealth in Bitcoin in the first place, why not transact in Bitcoin?

When does a rational economical player decides to buy Freicoin?

[jtimon]

ELI5 - if you admit Freicoin isn't a store of value, when in people's "money flow chart" do they buy Freicoin? If they store their wealth in Bitcoin in the first place, why not transact in Bitcoin?

When does a rational economical player decides to buy Freicoin?

I think that a common option will be just accepting them.
Maybe people also buy them from fiat rather than from bitcoin.
Arbitraging could be another reason "I'll buy some of these freicoins and see if they get to half a dollar".
But the questions is, Why would the merchant not accept them?

[ripper234]

ELI5 - if you admit Freicoin isn't a store of value, when in people's "money flow chart" do they buy Freicoin? If they store their wealth in Bitcoin in the first place, why not transact in Bitcoin?

When does a rational economical player decides to buy Freicoin?

I think that a common option will be just accepting them.
Maybe people also buy them from fiat rather than from bitcoin.
Arbitraging could be another reason "I'll buy some of these freicoins and see if they get to half a dollar".
But the questions is, Why would the merchant not accept them?

I wouldn't. Why should I? They're a poor store of value, so it just adds the extra overhead for me of converting them to Bitcoin.

[markm]

They're a poor store of value, so it just adds the extra overhead for me of converting them to Bitcoin.

Yeah but the payment processor takes care of that for the merchant. For the merchant it should be simply "do you want to accept the full range of currencies supported by the payment processor or tell the payment processor to refuse customers who certain currencies (and if so which supported currencies do you want the payment processor to reject?)

Basically you tell your payment processor how much of what currency you the merchant want for each item you are selling and as long as the payment processor gives you that what skin is it off your nose if they choose to accept cows or chickens or diamonds or lead or copper or gold or fiat or even solidcoins as long as you get the quantity you specified of the currency you specified?

-MarkM-

[ripper234]

They're a poor store of value, so it just adds the extra overhead for me of converting them to Bitcoin.

Yeah but the payment processor takes care of that for the merchant. For the merchant it should be simply "do you want to accept the full range of currencies supported by the payment processor or tell the payment processor to refuse customers who certain currencies (and if so which supported currencies do you want the payment processor to reject?)

Basically you tell your payment processor how much of what currency you the merchant want for each item you are selling and as long as the payment processor gives you that what skin is it off your nose if they choose to accept cows or chickens or diamonds or lead or copper or gold or fiat or even solidcoins as long as you get the quantity you specified of the currency you specified?

-MarkM-

Fine, so in this low friction scenario the merchant has no incentive not to accept Freicoin because he can instantly convert it to BTC with almost no fees. What is the motivation for the user to pay using it? What is the kickstarting force?

Bitcoin has a network effect that translates into economic incentive to use/hoard it, plus real advantages over traditional payment options.

What is the benefit, to users, of Freicoin? The benefit should be stated as a local advantage of a single user that would drive him to acquire, use and hoard/save Freicoin over Bitcoin.

[jtimon]

They're a poor store of value, so it just adds the extra overhead for me of converting them to Bitcoin.

Yeah but the payment processor takes care of that for the merchant. For the merchant it should be simply "do you want to accept the full range of currencies supported by the payment processor or tell the payment processor to refuse customers who certain currencies (and if so which supported currencies do you want the payment processor to reject?)

Basically you tell your payment processor how much of what currency you the merchant want for each item you are selling and as long as the payment processor gives you that what skin is it off your nose if they choose to accept cows or chickens or diamonds or lead or copper or gold or fiat or even solidcoins as long as you get the quantity you specified of the currency you specified?

-MarkM-

Fine, so in this low friction scenario the merchant has no incentive not to accept Freicoin because he can instantly convert it to BTC with almost no fees. What is the motivation for the user to pay using it? What is the kickstarting force?

Bitcoin has a network effect that translates into economic incentive to use/hoard it, plus real advantages over traditional payment options.

What is the benefit, to users, of Freicoin? The benefit should be stated as a local advantage of a single user that would drive him to acquire, use and hoard/save Freicoin over Bitcoin.

I'll buy them as a speculator, because I expect their price to rise, the same reason why I own bitcoin.
The second reason is that they're easy to spend, just like bitcoins, much more convenient than fiat.
But you would say, why buy them INSTEAD of bitcoin?
Maybe ideology is needed for bootstrapping, the same happened with bitcoin.
After it has some value, merchants just don't have any reason not to accept them. And when they accept them and spend them directly for wares instead of using bitcoin as a proxy, they're turned into users.
Imagine I accept 100 fcn for a ware. I take 1 month to spend them, so I will pay (100 * 0.05)/ 12 = 0.416666 fcn on demurrage fees.
If I sell them directly for bitcoins when I get them, I may pay much more in fees and market spread. When the bitcoin base stops growing, you may pay the same or more in transaction fees. People will just try to minimize fees. If the don't need to have much liquidity for their business, freicoin can be cheaper for them.

[jtimon]

Thanks for the feedback; I will add a FAQ entry.

WTF?
I mean...Where's the FAQ?