2012-06-27 newscientist.com - Freicoin: Occupy's online currency for the 99 per

[julz]

Freicoin: Occupy's online currency for the 99 per cent

Jacob Aron
2012-07-27

http://www.newscientist.com/blogs/onepercent/2012/06/freicoin-occupys-online-curren.html

...
 Freicoin, created by NASA engineers Mark Friedenbach and Matt Everingham and photographer Aaron Blumenshine, uses a version of the Bitcoin software with one key difference - all account balances are charged a 4.4 per cent annual fee, which is distributed to all of those running the software.
...

Of course, convincing the rich to adopt such a system will be difficult, as there is no benefit to them and significant costs.

Difficult to convince the rich??   Try convincing the poor who don't have a regular income.
I recall my absolute fury at bank fees eating up my very small account when I wasn't earning.
It'd floor me if this freicoin gained any traction.

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[John (John K.)]

No interest in this one. This is no different with my fiat sitting in banks - they both devalue and get nibbled off by fees and so.

[cbeast]

I'm all for it as long as you can use it to buy Bitcoin.

[giszmo]

In case you wonder: The 4.4% are put into mining. So if the Freicoin-economy ever reaches a market cap like the USD, this is an insane amount that can not be reduced just like that. Even worse, at the start they most likely also have the 50 Freicoin block reward(?). And if they ever switch to proof of stake, the 4.4% flow right back to where they came from

I was thinking hard about how to implement demurrage in bitcoin but with anonymous account holders I doubt it is possible at all. If you don't give the 4.4% to anybody, it has straight no effect at all. For a serious effect it is actually by far too little anyway. The Wörgl had more demurrage per month. Also like stated in the article, who would ever accept decent amounts in Freicoin? In Wörgl it was decided by law that people working for the city get this currency and all others had to accept it no matter what at a predefined exchange rate to the official currency.

I love the Wörgl experiment but I doubt it is possible without a state or at least city running it in a similar way and as long as we don't implement pay to DNA it is not a bitcoin thing.

[cbeast]

At first I was a fan of demurrage. I think it originally addressed the incentives for miners later in the game. That's also the main argument for Proof-of-Stake. However, incentives for miners down the road when block rewards are small can be addressed by real-world solutions in network management and transaction fees. As the former decreases in cost, the latter increases in value. They should maintain equilibrium. As a last resort, there can be some change to the protocol, but nothing as drastic as demurrage or PoS. Besides, the usefulness of Bitcoin will help the global economy grow in real ways, not through hypothecation. We'll see real progress, invention, innovation, and freedom foster a much higher quality of life and those fees we pay for using Bitcoin will feel well worth it.

[kiba]

Did this guy talks to only yes-men when he started his project?

[giszmo]

As a last resort, there can be some change to the protocol, but nothing as drastic as demurrage or PoS.

Oh, don't be that sure. For me, PoS is a pretty logic thing to do and apart from people that invested a lot of money in mining hardware (BFL for example), the average user of bitcoin would profit a lot from PoS. Demurrage would be 100% contrary to why many of the people use bitcoin in the first place and would worsen the problems PoS would fix (too much money burned in mining).

[cbeast]

As a last resort, there can be some change to the protocol, but nothing as drastic as demurrage or PoS.

Oh, don't be that sure. For me, PoS is a pretty logic thing to do and apart from people that invested a lot of money in mining hardware (BFL for example), the average user of bitcoin would profit a lot from PoS. Demurrage would be 100% contrary to why many of the people use bitcoin in the first place and would worsen the problems PoS would fix (too much money burned in mining).

Here we go again. Demurrage is basically printing bail out money for the miners who will be like the big banks under this model. PoS will ensure that a 51% monopoly will form to conspire to block transactions from people they don't like. You might as well call this the King's Coin.

[giszmo]

As a last resort, there can be some change to the protocol, but nothing as drastic as demurrage or PoS.

Oh, don't be that sure. For me, PoS is a pretty logic thing to do and apart from people that invested a lot of money in mining hardware (BFL for example), the average user of bitcoin would profit a lot from PoS. Demurrage would be 100% contrary to why many of the people use bitcoin in the first place and would worsen the problems PoS would fix (too much money burned in mining).

Here we go again. Demurrage is basically printing bail out money for the miners who will be like the big banks under this model. PoS will ensure that a 51% monopoly will form to conspire to block transactions from people they don't like. You might as well call this the King's Coin.

I wouldn't worry too much about that. If 51% of all BTC are in the hands of some asshole, I wouldn't want to hold BTC anyway. Why not swap them for Namecoin or whatever fork there is.
No matter how much money you have, it will be hard to buy 51% as there are no 51% for sale.
There are examples how it is cheaper to buy hardware for a 51% attack than BTC. With BFL pushing the speed by magnitudes right now it is even cheaper than last year, which is a dramatic draw back in my eyes. We can only hope that the massive orders they got were not from some evil institution.

[Boussac]

Demurrage is a naive way to create artificial velocity by twisting the arm of the unfortunate freicoin holders..

Artificial monetary velocity serves only consumerism. It's as if freicoin advocates would like to hang on forever to the suboptimal elastic money concept.

Arm twisting and arbitrary constraints (why 4.4% demurrage rate why not 10% or 5% ?) are precisely what we are trying to get rid of thanks to bitcoin.

[Realpra]

I love they call it "frei" = "free", when it's less free than bitcoin.

People are always enslaved using such nice words.

[herzmeister]

Also discussed here, OP by the Freicoin creator: https://bitcointalk.org/index.php?topic=89843.0

[Spekulatius]

Anyway,
As soon as it goes online, Im gonna mine the shit out of it, so I CAN BE THE KING OF COIN
MUAHAHAHAHAHAARRRR!

[deepceleron]

"NASA Engineers", if the definition = an app developer with no degree listed under education, another app developer with a 2009 Society of Jesus physics degree  + two years as an app developer.

"are now hoping to crowdfund money - in US dollars - to fund development of the full system"

If only they could pay for more developers developers developers!?

[Meni Rosenfeld]

This isn't the first time we hear about Freicoin, of course. It can be traced as early as Feb 2011, though I haven't heard about it until April that year.

PoS will ensure that a 51% monopoly will form to conspire to block transactions from people they don't like.

I don't believe in PoS either, or at least, not in that thing which you call PoS and has all these awful problems. Since getting 51% of all bitcoins is harder than getting 51% of all hashrate, it will be harder to perform an attack in any of the proposed PoS systems than in a pure PoW system. Not to mention they have some resilience even for 51% of bitcoins by one party.

[cbeast]

This isn't the first time we hear about Freicoin, of course. It can be traced as early as Feb 2011, though I haven't heard about it until April that year.

PoS will ensure that a 51% monopoly will form to conspire to block transactions from people they don't like.

I don't believe in PoS either, or at least, not in that thing which you call PoS and has all these awful problems. Since getting 51% of all bitcoins is harder than getting 51% of all hashrate, it will be harder to perform an attack in any of the proposed PoS systems than in a pure PoW system. Not to mention they have some resilience even for 51% of bitcoins by one party.

I'm not sure that 51% of the current BTC are not already in the control of just a few people. There is no way to know. At least in a PoW if there is a 51% attack, you'll know which miners are sending altered block chains and they can be isolated.

[interlagos]

Freicoin would probably work if it was the only medium of exchange and representation of value.
In this condition large hoarders would be forced to mine instead of just sitting on their capital.
I don't know if more miners is good or bad, depends on who controls the mining HW market.

But since it's not the only currency out there people would be more inclined to convert freicoins into something more stable.
Of course if somehow conversion or exchange of freicoins is made hard or cumbersome then it might develop into economy of its own.

[Meni Rosenfeld]

This isn't the first time we hear about Freicoin, of course. It can be traced as early as Feb 2011, though I haven't heard about it until April that year.

PoS will ensure that a 51% monopoly will form to conspire to block transactions from people they don't like.

I don't believe in PoS either, or at least, not in that thing which you call PoS and has all these awful problems. Since getting 51% of all bitcoins is harder than getting 51% of all hashrate, it will be harder to perform an attack in any of the proposed PoS systems than in a pure PoW system. Not to mention they have some resilience even for 51% of bitcoins by one party.

I'm not sure that 51% of the current BTC are not already in the control of just a few people.

Maybe so, but they have an interest in the well-being of Bitcoin. This is true now with the supposed concentration in early adopters, and will remain true in the future - the only ones with a limited ability to mess up a PoS system are those with the least incentive to do so.

At least in a PoW if there is a 51% attack, you'll know which miners are sending altered block chains and they can be isolated.

We don't know anything about miners other than their Bitcoin address and maybe IP address (which can be concealed with a proxy).

And, whatever you can know in a pure PoW system, you can know in a PoS system. In cunicula's method stakeholders are also miners, and they broadcast blocks just like in PoW. In my method, miners and stakeholders are separate, but stakeholders broadcast signatures just like miners broadcast blocks.

How well did you study the particular PoS proposals that you are criticizing?

and apart from people that invested a lot of money in mining hardware (BFL for example)

If there is a move to PoS (or a different hash function for that matter), it will be gradual so as to not antagonize hashholders.

[giszmo]

Arm twisting and arbitrary constraints (why 4.4% demurrage rate why not 10% or 5% ?) are precisely what we are trying to get rid of thanks to bitcoin.

"We" are all quite different. You might want BTC as a store of value which Freicoin just isn't. I would love to have an anonymous fast flowing digital cash as I don't like the concept of storing value for generations to come. That's inherently unfair. Demurrage would increase the flow speed.

I guess the makers of Freicoin would prefer to have more demurrage (30%) but their problem is what I described above: In an anonymous currency, demurrage can only be realized via the miners. I'm sure they would prefer to give the demurrage to the state or better to every human being on earth (basic income).

[nevafuse]

This is what I love about Bitcoin.  It benefits the rich & poor. 

And what is worse, Freicoin doesn't even benefit the poor.  In a system like this, the smartest idea would be to spread your wealth into as many accounts as possible.  If that is done, you will never lose a dime because you will be given back what has been taken.  But if you don't do that, you will lose out on a percentage of wealth that was taken from you.  Therefore the smartest will be the richest (which I would argue is already the case) & the dumbest will get poorer & poorer until they have nothing left.

No matter how you dice it or try to redistribute the wealth, the most intelligent will be the richest.  Bitcoin is the only currency that treats both equally giving the poor a better chance than all other currency.