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

[Technomage]

Freicoin seems like a horrible concept. While reading Schlichters book Paper Money Collapse, I'm actually becoming more confident that Bitcoin might just succeed in what basically no other currency has succeeded in modern times, it has a chance (how big of a chance, we can argue) to become a universal currency. Freicoin has no chance in hell because such currencies are generally not valued in a free market, with the exception of widely accepted state enforced currencies.

Currency competition, I realized, is actually bad. A system of multiple currencies is always suboptimal, it's a situation where we simply can't agree on an universal currency and we must exchange between different currencies. What all the exchanging is in the end is a business, a middle man that is not needed. Bitcoin has a shot at becoming a universal currency because it has strong features as a medium of exchange and strong features as a store of value.

If we unleash a free market of currencies there will of course be competition at first. More competition than we have now. But throughout history it's evident that societies will eventually use basically just one currency because it's better for money to be as universal as possible. I also argue that it's better for money to be as inflexible as it possible can, although flexibility in terms of being able to split it into smaller pieces is important.

I'm just putting this out there: Bitcoin is not only crushing these alternatives like flies, within 10 years it might be crushing the big brother alternatives like flies as well.

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[Technomage]

For the ASIC/PoW/PoS discussion I can only say that it's completely evident that at least the first round of ASIC's are going to be distributed in an extremely decentralized way. BFL has chosen a strategy in both distribution and pricing which is on the verge of giving rebirth to the whole mining boom. I know literally *so many* people who have ordered BFL hardware recently, even I ordered some even though I've basically quit mining. So much for quitting.

It makes little sense for ASIC manufacturers to do any different. Bitcoin users wouldn't react well to someone having the direct power to disrupt the network. Selling and distributing the chips to a wide audience is a good way to go. With ASIC entering the market we're basically leaving behind the era where botnets can do something to Bitcoin. That's soon history. Bitcoin is about to become safer than ever.

My personal preference is strongly on the PoW camp. I would not consider PoS based solutions unless it's proven that a PoW cryptocurrency is simply not viable. So far it seems very viable. It's the most fair system I can imagine. It's not an impossible nut to crack, but it is an expensive nut to crack and the expense scales up fairly well with the market cap / usage of the currency.

There is a challenge in the future which is keeping mining profitable enough to secure the network with low or insignificant block rewards. Transaction fees have to come into play more seriously. I believe that this approach will work and I believe the fees will be very competitive to any other currency systems even if the fees are increased in the future.

Also it's important to take into account that there is actually not that much tx activity yet besides SatoshiDice, it's still very marginal. Even with a 0.0005 tx fee the miners would get a good amount of reward if we actually had a significant amount of transactions. Right now, with the tx amounts we have, and the block reward we have, tx fees don't play a significant part. But that will change.

[Meni Rosenfeld]

Currency competition, I realized, is actually bad. A system of multiple currencies is always suboptimal, it's a situation where we simply can't agree on an universal currency and we must exchange between different currencies. What all the exchanging is in the end is a business, a middle man that is not needed. Bitcoin has a shot at becoming a universal currency because it has strong features as a medium of exchange and strong features as a store of value.

Exchanging one decentralized digital currency for another is inherently cheaper than with physical/centralized currencies, and with a lower barrier of entry to service providers. What's more, there are protocol features that could allow atomic exchanges without any middleman. I don't see a problem with multiple decentralized digital currencies being employed for different purposes.

[Boussac]

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.

My point is that the "flow speed" should not be set by the monetary system but by the will of the people deciding freely whether they want to spend or save their money.

Consumerism, encouraged by demurrage, is unfair to the next generation because it goes against sustainable development.

[Technomage]

Exchanging one decentralized digital currency for another is inherently cheaper than with physical/centralized currencies, and with a lower barrier of entry to service providers. What's more, there are protocol features that could allow atomic exchanges without any middleman. I don't see a problem with multiple decentralized digital currencies being employed for different purposes.

This is a very good point. It's one more thing that does differentiate cryptocurrencies from regular money.