Freicoin - easy-to-use demurrage currency(freico.in) |
Freicoin - easy-to-use demurrage currency(freico.in) |
Q: You said that Freicoin is decentralized. But the Foundation makes it centralized! A: You are right. But we have no other solution. Initial coins should be distributed to the society.
Q: Why can't you just give these coins to miners (as in Bitcoin). Why do we need a bureaucracy? A: The mining community consists mostly of enthusiasts, not ordinary people who use computers to browse the Internet.
Q: How many coins does the Foundation have? A: The Freicoin Foundation distributes 80% of the total Freicoin money supply through grants. The remaining 20% is a reward for miners, who support the network with their computing power.
Hahaha... no.
But this doesn't look like the answer.
Is the "whole early adopters win" thing only sucky because you are not an early adopter? Note that I'm not an early adopter either, but it seems a bit nonsense.
Also, BTC is still pretty young, you could still be a relatively early adopter. You could spend a few months researching, and a few tens of thousands of USD to purchase a competitive mining rig, and you could still make a fortune, or you could lose it all. It isn't the same "anybody can do it" world that it used to be, but it certainly is still low barrier to entry. Is this really a dislike of systems that reward personal risk taking?
I don't see any reason to give money, buy, or sell, or do anything with freicoin. To me, the fact that freicoin decays when not used is a bug, not feature.
They made a great attempt, but sometimes one's best try is just not enough.
Care to explain?
Might interest you: http://www.lietaer.com/2010/03/the-worgl-experiment/
I think that saving money for both unexpected problems and future investments is an important part of social responsibility, and I would not adopt a currency that was deliberately designed to make saving difficult unless it was forced on me. Even then, I'd probably try to turn it into some kind of commodity that I could sell again later in order to dodge the losses.
There are a few assertions on the main page that I find interesting, in particular the one about money value vs goods value being "the underlying cause of the boom/bust cycle." I don't have time to read the linked book about it, is there a quick version of the explanation?
I never doubt your goal, just the ability of your currency to achieve what you are trying to get.
Might interest you: http://www.lietaer.com/2010/03/the-worgl-experiment/
I have no reason to doubt the story as told there(other than my theoretical complaint), but I am not a historian or economist.
Taken to an extreme, it's move back to hunter-gather societies when you had to work every day - no stored capital.
Perhaps the advantages of bitcoin but without the instability.
If bitcoin continues to go through boom and bust cycles that change its value by orders of magnitude, then ironically an alternative with demurrage might prove to be a better store of value. You might lose some of your savings, but at least it'll be predictable.
I'm not calling the concept of BTC-style cryptocurrency a deliberate, malicious pyramid scheme in itself. I think this is an unintended side-effect.
So in effect, the demurrage fee goes to the miners.
Also what makes me really suspect of it is the fact that Freicoin foundation centralizes the whole thing, so it's a bit pointless. I mean, why have an centralized P2P network? Another worrying thing is that under Silvio Gessel's original idea Freigeld is a local currency NOT a global one.
Q: Why does Freicoin use demurrage? I'm worried that my coins will just fade away.
A: Worried? It's a good thing. If the amount of money was stable, people would prefer saving it as opposed to spending it. This would decrease the quantity of money circulated, which in turn would act against the main purpose of money - a medium of exchange. With demurrage in place, you should think about money as it's meant to be, not as a storage medium of wealth.
There are also some really odd grammatical errors:
Q: With a zero interest rate, investments will be impossible!
A: It's already possible, for example, in Islam banking...
Funny thing is in Iran, which considers itself an Islamic country and says it follows Islamic laws in banking, interest rates are as high as 20%.
[1] http://en.wikipedia.org/wiki/Islamic_bank [2] http://en.wikipedia.org/wiki/Riba
Interest rates can be high (or exist at all) in Iran because legally it's not actually interest. I understand it to be some sort of equity arrangement legally where the interest is actually dividends. But for macro purposes, it's interest rates.
The fee is really no different from inflation in fiat currencies. Why would anyone save dollars when they are worth 1-2% less every year?
I think the issue with bitcoin is that it's very very new. My guess is that it will eventually stabilize. On top of that, I hold the Rothbardian view that competing currencies are a good thing. Freicoin would only work if it had a monopoly on currency adoption.
Edit: I found this: https://bitcointalk.org/index.php?topic=35705
Looks like demurrage is implemented simply by a rule for block validation: transaction outputs have to subtract from inputs based on the age of the coins. Don't know how they calculate age unambiguously.
There seems to be a lot of centralization in this particular implementation...eg., 80% of new coins go to the foundation for the first three years, which says it will distribute based on ideological motivations.
We all agree central banks stink in a recession, they are somewhat limited in what they can do, but during growth they double the fun.
I see the creator is intending income equality, and I think that's definitely just and purposeful. More research required.
Where do the coins taken for this fee go?
How can I apply for a grant from the foundation?
Given that my PC is obsolete crap, should I even bother getting the client?
Two; Freigeld was advised as local and not global currency. The more its spread over the world the easier it is to manipulate.
The equilibrium is predictable:
http://news.ycombinator.com/item?id=2608891
[Y]ou can create an arbitrarily high number of bitcoin-like electronic currency units. [These new varieties will have] guaranteed scarcity, anonymity, and a new goldrush phase -- so if you got dumped rather than pumped, you have a new opportunity to start at the top of the pyramid scheme this time.
The equilibrium is that sooner or later expected returns on starting a new distributed pump-and-dump dwarf expected returns of getting in late on bitcoins. And then poof.
Bitcoin is a wonderful engineering achievement: a spontaneously organized, decentralized, peer-to-peer boiler room from which arises a mediocre transaction processing network.
I think that demurrage proposed by Freicoin adds no value because hoarding isn't a real problem for Bitcoin or for any other currency. I suppose that the fear of hoarding comes from the fact that we still live in the world full of harmful keynesian ideas.
Sure, by getting others involved I increase the likelihood of it succeeding, but...that's everything.
Some of these cryptocurrencies appeared in 2011, if I'm not wrong, in the middle of the first bitcoin price hike but they proposed different algorithms to generate coins, so I do not know if we can attribute their design to malice.
My main problem with it all is that users from these currencies built an identity around them, which mixes politics, ideology and hoarding of this currencies.
Economists have not proven themselves credible.
The value today comes from the expectation of future value, based on something as subjective as the opinions of a subset of society.
If you have already decided that a savings account with interest is an even better way to store value, then my argument indeed doesn't work.
> Q: You said that Freicoin is decentralized. But the Foundation makes it centralized!
> A: You are right. But we have no other solution. Initial coins should be distributed to the society.
Of the demurrage however, it is perpetually destroyed and recycled through the miners.
* Disclaimer: I'm one of the creators of Freicoin.
Now if you convince me to get into collectible model trains, say pre-war Lionel models, the supply of which is fixed, that will raise the after-market value of your pre-war Lionel models. Whether or not that increase is significant depends on a lot of things of course.
Ponzi scheme was not what I wanted to say. Pyramid scheme is what I wanted to say.