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The conceptual GeoFlux currency

Wellbeing

What’s the basis for setting the improvement of wellbeing as primary goal of the economy?

But to answer your question: I think it’s the natural end result of any technology-improving economic activity to lead up to a state of easy optimization of wellbeing. The more and better technologies we have, the better our possibilities to improve our wellbeing by using those technologies become. The faster we develop the technologies we need, the earlier do we arrive at a stage where wellbeing is pretty much trivially obtainable.

So, the key is to optimize the economy for technological progress, because that’s a pretty good proxy for wellbeing. Humans are bad at trying to optimize wellbeing directly, so it’s generally a better strategy to try something else. I think that maximization of technological and social progress is the way to go.

How GeoFlux contributes to that is explained further below when it comes to your third question.

Liberty and Stability

Liberty and stability are supported by an economy that creates a lot of wealth and distributes that wealth relatively equally. As for why GeoFlux should accelerate wealth creation, see my answer to your third question. Now, let’s talk about an equitable distribution of that wealth: This is why there’s a substantial basic income component in GeoFlux. It lets everyone become a shareholder of the GeoFlux economy. So, if things work out fine for the GeoFlux community, everyone profits. This creates an incentive to do your best for the GeoFlux economy, even if that incentive may be relatively small, because it operates on the macro scale, and not so much on the micro scale. A basic income limits the extent of inequality that is possible in that system. It would allow everyone to be relatively free without being subject to political or economic pressures.

Also, the reputation aspect of GeoFlux creates an anti-incentive to do harm to others (at least in a visible way). Anti-social activities may be better punished by a reduction of Prestige (enforced by the public directly), rather than by laws, and a legal and bureaucratic apparatus. This should contribute a lot to stability. I’m not saying that QP and GeoFlux could easily replace the legal system, but that it would make the need for use of the legal system less frequent.

About the need for “economic growth”: Such a need is created by any kind of inflationary money system. Inflation makes it harder to get the same number of goods for a fixed amount of effort. The demurrage system of GeoFlux prevents inflation of the monetary base by eliminating money out of the system, so that the relative scarcity of money is maintained.

Still, I am wary of critiques of “economic growth”, because they usually don’t make a difference between economic growth from expansion, and economic growth from efficiency gains (usually from using better technology). While the first kind of economic growth puts our economic base (our planetary ecosystem) at peril, the latter is nearly universally beneficial.

Open source

The free flow of ideas and innovations encourages the mixing of ideas, so that they generate even better ideas. The more open ideas are spread, the faster the speed of technological (and probably societal) progress. Better technology enables more possibilities to increase our wellbeing, and do that so efficiently that our negative impact on the environment will be minimized, or even becomes negative (for example by doing reforestation via drone swarms).

So, open source ideas and technologies are really the central cornerstone that enable us to reach a better future in a shorter time. How can GeoFlux contribute to that?

Currently, creators of open source ideas and technologies do not have very great ways of generating money with their ideas and technologies, if they should stay open. In a reputation economy, those creators can spread their ideas and technologies out into the world, and get reputation in return. This reputation will generate GeoFlux for them. This enables the creation of for-reputation organisations which can focus only on creating open source stuff (spreading the world about that stuff might still be a necessity, though). The incentives to keep useful knowledge and technology hidden, or unused, will be greatly diminished, because the incentives for doing the opposite will be relatively high. If you release knowledge and technology openly, this will be seen as act very worthy of high reputation.

It will probably take very many years for the reputation economy to scale to all areas of economic activity, but eventually it should be able to get there. The result would be digital abundance. That kind of abundance will accelerate technological and societal progress, which will improve our abilities to do what we really want.

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My working definition of cryptocurrency is: An electronic currency that operates from a decentralized ledger.

The alternative of GeoFlux being a cryptocurrency would be the following: It would have to be a centralized currency, maintained by a single entity. In other words: The would be a global central bank for GeoFlux, if it was not a cryptocurrency. That central bank would have the power to set the rules of the currency. And it would in principle be able to manipulate the currency at will. This might create too much of a trust problem, especially if it’s relatively easy to set up GeoFlux as cryptocurrency.

Of course, the same arguments could be applied to fiat currencies versus bitcoin and other cryptocurrencies. If cryptocurrencies appeared to be more trustworthy and reliable, they could easily become dominant. There are still some technological and social issues around cryptocurrencies that need to be fixed. Anyway, in the long run, I don’t see a reason why cryptocurrencies shouldn’t become the dominant form of money.

No. Yes. Cryptocurrencies who use the “computer calculation race” type for establishment of consensus usually use what is referred to as “Proof of Work”. There are other systems that don’t necessarily use that kind of wasteful approach. One of the first alternative methods was “Proof of Stake”. I think there have been many more alternative approaches which bring down the energy requirements, but I haven’t been following them lately.

Yeah, perhaps a “Proof of Prestige” mechanism might work sufficiently well.

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This time I just came here to drop off this link. It feels like it’s related to this subject.

edit: perhaps these are more useful:
http://magazine.backfeed.cc/the-backfeed-protocol-an-introduction-for-mere-mortals/
http://backfeed.cc/

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Ah, this is wonderful:

At the heart of the protocol lay two dovetailed evaluation and
compensation systems: A reputation score and a virtual currency a.k.a.
token system, which operate independently and which are relative to
specific networks in the system (will get to the network thingy later).

So, they basically rediscovered (or found) the Quantified Prestige model of separating reputation scores from currencies. I see that as validation of the general QP approach.

It is important to understand that a user’s reputation arises out of the
total sum of their value-producing interactions with other users in the
system.

This distinguishes the Backfeed system from QP. In QP reputation does not need to be attached to specific actions. That gives QP a higher level of flexibility. In Backfeed, actions need to be captured in the formal system, first, which creates a bit of an overhead. On the other hand, it creates a useful history of the actions of each participant, along with a public reputational evaluation of that history. Anyway, it’s not like it wasn’t possible in QP to do the same, and also allocate reputation to actions or events. It would just be an additional optional layer to the free base system. To sum it up: QP is the more versatile system.

This evaluation process has a certain responsibility mechanism designed
into it: If you’re off the charts relatively to your peers in evaluating
the actions of others, your reputation will suffer; if you’re good in
setting trends regarding the contributions of others, you’ll be
rewarded.

This may be the most characteristic idea of Backfeed: The feedback on feedback. Obviously, this increases the complexity of the system, but why have they included that mechanism? My suspicion is that this is supposed to prevent reputation inflation: If people get punished for inflating the reputation of a person, such inflation becomes less likely. However, it fails to prevent the inflation of a person who is reputationally backed by a majority of the users of a network. This looks pretty much like a failure mode that should occur frequently. Also, this mechanism seems to encourage group-think, rather than swarm intelligence.

QP on the other hand solves the problem of reputation inflation by making reputation points scarce. That’s a much simpler mechanism, but much more effective for solving the inflation problem.

Perhaps there is another reason why Backfeed uses this kind of system, but if there is one, it’s not obvious to me from either the video or the magazine article. Possibly the intention behind it was to rate the rating ability of raters. But why should that be measured by conformity with the network? Shouldn’t exceptionally good raters naturally deviate from the general opinion of the network? This system feels like it would rather encourage mediocrity in rating.

Tokens are issued automatically whenever a contribution is recognized as
valuable by the majority of reputation in a network, and collected as a
fee whenever an action is performed that requires the attention or
evaluation of other users.

Ok, so they didn’t actually rediscover flux currencies, but use an alternative approach which may possibly be better adapted to the blockchain idea.

The idea to use tokens as fee for performing actions or interacting with the attention of users is interesting. It definitely has an Ethereum-ish flavour.

This actually gives me an idea for modifying flux currencies: Instead (or in addition to) conditional demurrage, there could be the possibility to “burn” money, in order to achieve specific results. Perhaps something like auctioning for the top spot in a network magazine / forum / platform. The auctioned money would then disappear from the system, which would make the remaining money more valuable by increasing its scarcity. I’m not sure whether that would be actually better than conditional reputation-dependent demurrage, but it’s quite worth considering.

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I thought you’d be interested. :grin:

It makes sense. reputation and currency have different purposes, afterall.

I should read up on the QP writings you’ve done. So far I’ve only read about GeoFlux. However, with Backfeed, I already feel like I can understand the goals behind the design choices. So, I’ll try to open those up a bit. with QP, I’m not actually sure what your design goals are for it, but I get the feeling they’re likely different from Backfeeds’ in some important ways.

First of all, Backfeed is designed to get out of the user’s way while it helps the user to cooperate with others. It’s an assistive system, so the less it’s actively noticed, the better. This is why it tries to avoid directly asking users and instead assesses things indirectly from what they do. Most features are chosen with the goal of maximizing what they can achieve as a group.

Backfeed is not designed to be a single universal reputation platform. Rather, it’s designed to be a framework for building and organizing different task specific cooperative networks of people. I think the purpose of this feature is to identify people who are best able to work together as a group and to make that apparent to the participants.

This criticism would be spot on, if this was to be a universal reputation system. As it is, the system pushes the people who don’t fit in to find or found other networks that they’re better able to cooperate with.

I do agree that group-think is a problem. However, I don’t think that it makes sense to try to solve it on this layer. Systems built with Backfeed will each be focused on some specific goal and the reputation only measures things related to that. Backfeed might not be a good fit for networks with a more vague or general purpose.

Also, Backfeed does produce data that can be used to combat the group-think tendency. More specifically, the data about groups of other people who think differently is readily available. This helps prevent the illusion that “everyone thinks like we do”. It’ll be easy to try seeing the world through the lenses other people see it with by trying out their networks.

Yes, there’s a definitive anti-spam token whiff about that. But it does mean that you can make yourself visible to some degree to a network as long as you’re perceived to be more useful than harmful by the other users. The purpose here would seem to be to try to get the most visibility to the most useful participants.

This makes sense, if you’re building a network with a specific goal. It might even be a necessity to keep the network usable if it grows big. You do need some kind of a limiter that prevent overloads. Even mental resources have their limits :slightly_smiling:

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You intend good things with this. But you intend too many of them.

Low/nill value
The basic income system will devaluate the currency (it will cause inflation). The cost will be carried by people that own the currency already. This cost will make the currency very expensive to hold.

You worsen this with the demurrage.

Actors should not be expected to self-harm
You note “social goodness” as a counterweight, but this is game-theory-incompatible. I’ll applaud you for self-sacrifice, but beat you and all your kind with selfishness. Bitcoin demonstrates that selfishness does work - and even there people complain of the cost of the mining rewards.

The reputation based distribution system is certainly interesting, but given the inflation it is quite unlikely to distribute significant value. Scarcity is essential for value, I’m sure you know.

Identifcation is a hard problem
You cannot uniquely identify people offline. You can definitely not do so online. It’s also not really that meaningful, with AI’s and corporate people and aliens and animals and less-accountable people.

Don’t muddle the discussion with digital goods
It might seem reasonable - because you see a use case here, but ultimately there’s little difference. The intellectual property situation has to do with national interests (service economies have an upper hand here), corporate interests (entertainment and such is big money) and it is a hack to allow the “earn by selling” model to flourish. Greater works of art are not made for money but for passion, populism is a sign of pleasing the audience rather than the arts. QP does not at all address these issues.

You addressed this by creating a “no cost to giving” kind of situation, that works because people will end up giving even when they were not incentivised/forced to.

You also need to be careful with how people value art anyway. With the current copyright situation the creator of a work is empowered to determine how it can be marketed and such, and conceptually that’s not so bad. However well it might “work” from an economy perspective, restricting digital copying is impossible from a technological perspective. Private communication == filesharing, and DRM is only enforceable by restricting the construction of DRM breaking devices and software, which is incredibly facist/antifreedom and comes with excessive cost of enforcement. (And DRM is expensive by itself, too)

Potential solution: Perspective
It might be worthwhile to investigate a currency wherein my “trust” or “reputation” assignments empower the assignments of those I assigned to. So: some random Chinese person diggs a random dude’s racist bullshit? As long as I don’t respect anyone that respects him, well, I don’t care. But someone I gave reputation, gave someone reputation, then that someone’s reputation points are worth something to me.

It solves the identity problem: I trust those I gave rep to, perhaps as far as I gave them rep, and those they trust cannot exceed the trust I gave the referrer. (I trust A for 10, then if A trusts x (A->x) for T trustpoints, then from my perspective T<=10. Stronger still, SUM x (A->Xx) <= 10)

When a placed token generates currency that currency should be immediately “quantified”. Immediately it’s “value in perspective” should be fixed. Perhaps for me a certain currency-unit will have value 0.5, and for Peter it would be 0.8. Then, that currency-in-perspective can be traded. This will create a novel market, one that attempts to (automatically) values how these tokens can be spent. Digital contracts may be essential to provide clarity of value.

Given effective and active exchange a trade value will become clear. That token (0.5 for Lodewijk, 0.8 for Peter) will have a definite Euro value. Based on that market-conform valuation even strangers can trade with these tokens.

This perspective thing is definitely complicated/novel and so will complicate matters. Sorry, but you really need to fix identification, remove basic income for the sake of competitiveness, fix potential cheating. Unless your currency works for real-world-items and services too, it is not a sane medium of exchange. If your currency is a hot potato it will not be worth much or anything at all.

(this is rather run-on, sorry about that)

I’m not sure you really understand how GeoFlux works, so I better explain it in a different way. GeoFlux is only generated by basic incomes and reputation incomes. There is no other money creation mechanism other than those. In the default system 50% of all GeoFlux comes from basic incomes and (at most) 50% of all GeoFlux comes from reputation incomes. It is of course possible that different forks of GeoFlux use different values. It might be possible that a version of GeoFlux without basic income becomes popular. However, I would see that as relatively bad outcome, because that would most likely amplify the problems with economic inequality, which are a real issue for the overall performance of the economy. Perhaps people don’t get that now, but I hope that they will get that eventually. And if :shit: needs to hit the fan first for that, then that’s the way it is.

When people eventually wake up and realize that we need basic income, they will punish those who use non-basic income currencies and adopt basic income currencies (thus rewarding those who adopt them, too).

The demurrage system maintains the average value of GeoFlux per person. GeoFlux is not supposed to be a currency that people should hold indefinitely. Instead, it should be a currency that is used for quick and frequent exchanges. It should keep the economy flowing. Bitcoin is really not suited for that, because the incentive to hold bitcoin, rather than spening it, should be overwhelming. Nobody except for traders and speculators should be ever willing to purchase something with bitcoin. The fact that people purchase goods with bitcoin is rather an artefact of bitcoin being the first cryptocurrency with some degree of public acceptance. As general purpose currency, GeoFlux is superior to bitcoin in many ways, when considered from a global economic perspective.

Which is perhaps a big problem, since people usually aren’t very inclined to assume a global economic perspective in their day to day thinking, and not even when considering the use of different currencies. First, we probably need a big economic education campaign. :weary:

I don’t buy that. And even if that was the case: Humans don’t act according to game-theory, usually. I find that those who believe in the utility of application of current level game theory outside of narrow constraints lack a higher understanding of rationality. Of course, this claim leads to a tangent that will open a can of worms. I wished I could refer to a good reference on this, but I know of no reference that I would find really convincing. So, I’d need to argue for my point on my own, but that would exceed the scope of this thread, which is why this discussion will have to be deferred to the future. :rocket:

Most definitely. QP and GeoFlux were absolutely designed with that in mind.

If anything, this seems to be the biggest challenge for QP and GeoFlux. I see identity as social construct. So, it’s society which defines identities. I’m sure the key to solve the problem lies in previous insight, but at the moment this presumed key eludes me.

Making artificial digital scarcity obsolete was the main motivation behind the design of QP and GeoFlux. This is not an optional side-effect. It’s the core justification of the whole system. Everything else besides digital abundance is just a bonus, if it materializes.

You are right. Some of the most valuable works are created in spite of (or even because of) overwhelming societal opposition. No economic system can or should make it easy for absolutely exceptionally deeds and goods to be created. Absolutely exceptionally progress is achieved only by facing – and succeeding against – seemingly overwhelming odds. Diamonds are created under immense pressure. The right answer between doing what’s right and doing what’s popular is by definition to do what’s actually right. But people need to train their character for doing that. There’s no way that this could be made easy for persons. It’s supposed to be hard! And QP will definitely contribute to doing the right thing still being hard, especially if the wrong options are very popular. There’s no escape from that conclusion. And there’s no system you can conceive that will change that.

Yes, I’ve considered a system like that when I was designing Quantified Prestige. It turned out not to be mathematically elegant, so I mostly discarded it for the simpler “linear” system (which just turned out to be more egalitarian and democratic).

That pretty much reminds me of the Circles currency. You might want to check out the associated forum.

That sounds like an interesting system.

Basically, so every person would give rise to the generation of trust currencies in the accounts of the people I trust. If I am A, and give B 2000 trust points, then B get an income of 2000 A-trust-coins per year. This would be a combination of the QP and the Circles system. However, how would the value of A-trust-coins be determined? By market valuation, obviously, but how do people arrive at a certain market valuation of X-trust-coins? Perhaps on the basis of the reputation / trust score of X? That system may escape the mathematical complications that arise when trying to create such a relative system with only a single currency. But I would need to think about that more deeply.

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Radivis, I didn’t quite expect the conversation about Backfeed end at my second message about it. Are you still mulling about it or did I just manage to answer your questions well enough that you were left with nothing to say?

You know, the demurrage is the only mechanism in GeoFlux that actually makes them scarce.

Is the idea that A would offer something in return when someone returns A-trust-coins to him?

Mostly the latter. It made me realize that Backfeed is actually trying to solve a different main problem than GeoFlux. QP was also intended to be used for organisation internal value distribution, but that’s not its main intention. Perhaps Backfeed is superior to QP in that regard, in some scenarios. I’m not sure about that. I feel that both systems are still rather similar, so it may be possible to combine them into one big framework. Whether that’s a good idea, is not clear to me at the moment. In any case, I think Backfeed deserves its own thread. And I want to contact the Backfeed team and get into a deeper discussion about the system.

The idea of mutually beneficial exchange is the foundation of trade, barter, and currencies. I don’t see a reason to deviate from that foundational principle for personal trust coins. That said, A doesn’t need to offer any specific service or good in exchange for A-trust-coins. The value of A-trust-coins mainly comes from the value of A-trust.

Anyway, I have thought about this Subjective Prestige (or Relative Prestige) system, as I would call it. While it may solve some issues of QP, it would do so at the cost of increasing the complexity of the system very much. It would quickly become the most complicated economic system on this planet, with the number of individual currencies in the system scaling with something around n², when n is the number of users of the system (the rest of the scaling comes from the existence of different Subjective Prestige networks existing in parallel).

Without a heavy dose of automation and artificial intelligence injected into this system, I can’t see taking it off. So, while Subjective Prestige may be a good idea, it seems to be premature for this current stage of history. However, I can see it as some kind of joint successor of Quantified Prestige and the Circles system.

In that case, I have absolutely no idea what A-trust means and consequently see no value in the A-trust-coins. In what way would I benefit from having them? Why would I be willing to part with something else to get them?

I have reflected on the issue of scarcity of the reputation currency again. It really needs to be designed in a very specific way, otherwise it won’t be able to appropriately implement a reputation based economy.

Cryptocurrency Gedankenexperiment

To understand that, let’s examine a couple of different hypothetical cryptocurrencies.

InflaFlux

InflaFlux are basically the same as GeoFlux, but without the demurrage, and with no way of removing InflaFlux out of the system, except for loss of InflaFlux access. InflaFlux would pretty much start out like GeoFlux. However, eventually there would be so many InflaFlux in circulation, that the value of newly generated InflaFlux becomes negligible.

If one wanted to try to compensate for that effect by increasing the generation rate of InflaFlux, this would create further inflation. The higher the generation rate, the higher the relative value of newly created InflaFlux. On the other hand, InflaFlux which were already in existence, would become quickly devalued. So, nobody would really want to hold InflaFlux. There would especially be little reason to buy any InflaFlux, which basically makes it a rather worthless currency.

Onecoin

Let’s start with Onecoin. Onecoin is 100% pre-mined by its creator, the One. It’s an incredibly scarce currency. There is only 1 Onecoin ever in existence, but you can trade arbitrary fractions of that 1 Onecoin. This turns it into the perfect storage of value, well, at least in theory. Its value cannot be diluted by new Onecoins being mined into existence.

Now the real question is: Why should anyone purchase Onecoins from the One? People would reward the One for creating a strange altcoin. If Onecoin ever got widely accepted, the One would become tremendously rich, unless the One was actually a nice person and gave almost all of them away. If the One wasn’t nice, people would probably simply avoid that currency, because it made One person tremendously rich for no good reason. Onecoin would have tremendous other benefits to justify investing into Onecoin, in that scenario at least.

What if the One was actually nice and gave away, say 95% of all Onecoins to charity or something? Now the situation might be different. Using Onecoins would then mostly mean supporting charities and getting an excellent storage of value. At least for a while, Onecoin might be a popular currency, because it’s tremendously scarce, and is seen as socially beneficial, because it supports charities. In theory, such a currency could replace Bitcoin, because it’s scarcer and more just at the same time.

Decaycoin

Decaycoin is like Onecoin, in that it is 100% pre-mined by the One, and mostly given away to some “worthy causes” (as defined by the One, of course). The difference is that it is coupled to a reputation system like QP, not in the sense that reputation determined the creation rate of Decaycoin (because no new Decaycoins are generated), but for setting a reputation-dependent demurrage threshold for Decaycoin. Let’s say that Decaycoins decay at a very high demurrage rate of 50% per year. This turns it into an extremely unattractive currency to hold, if you are above the demurrage threshold. But: The fact that Decaycoin decays in that way, amplifies its scarcity, even above that one Onecoin. It’s the perfect storage of value for values below your personal demurrage threshold. If you can stay below the demurrage threshold, the value of Decaycoin will increase for various reasons in parallel:

  • As acceptance of Decaycoin increases, the value of Decaycoin increases
  • When the economy grows, the value of Decaycoin grows along with it. Decaycoin is naturally deflationary
  • As more and more of the Decaycoins that you don’t hold decay, the scarcity of Decaycoin increases, thus making it more valuable

Decaycoin might be an even better reputation currency than GeoFlux. The ability to hold Decaycoin over extended periods of time requires a high reputation. People with high reputation can act as Decaycoin banks, at least up to a specific amount, because they are unaffected by the conditional demurrage. Those banks would charge fees for holding Decaycoins. Those fees would be lower than the demurrage rate, but larger than 0. Thus, people can basically make profit from storing Decaycoins in a decay-free way, if they have a high reputation. It would still be a good idea to store Decaycoins at “reputation banks”, because the expected value increase of Decaycoins would usually still exceed the amount of value loss from holding fees. Decaycoins would therefore be even more scarce than Onecoins. So, as storage-of-value currency, they might totally win the race.

T-Prestigecoin

T-Prestigecoins are a version of Decaycoins. Instead of being given away by the One at inception, there would be a different system for generating T-Prestigecoins. At a specific date T all T-Prestigecoins would be generated at once and distributed according to the Prestige scores of the users of the coupled QP network. This may be seen as fairer and more sensible version of bringing T-Prestigecoins into existence than the One deciding who gets how many coins first. But from the T onward, T-Prestigecoins would show pretty much the same dynamics as Decaycoins.

###PrestigeFlux
PrestigeFlux are pretty much the same as GeoFlux, but without the basic income component. PrestigeFlux are continously generated only by Prestige. In a certain way, PrestigeFlux would be similar to T-Prestigecoins, but with a continuos generation of new coins, instead of the total drop at an arbitrary point T in time. This might seem advantageous, because the choice of the arbitrary time T might be a politically disputed issue that might threaten the legitimacy of T-Prestigecoins.

###BasicFlux
BasicFlux is the same as GeoFlux, but without the reputation income component. All BasicFlux is generated as basic income. But there’s still the reputation-dependent demurrage. So, people can still act as “reputation banks”, if they have reputation. Those who have little reputation, would be strongly incentivized to sell their BasicFlux as quickly as possible.

In a BasicFlux system everyone would start out equally, but those who manage to get a lot of reputation would profit more from the system, because they would be able to make profit from their role as “reputation banks”. Still, inequality is pretty much limited by everyone getting a full basic income, and the currency being scarce from the reputation-dependent demurrage.

BasicFlux might be seen as socially fairer system, and as economically preferable one, because it keeps inequality at a pretty healthy level. That might increase the acceptance of BasicFlux above that of PrestigeFlux. Perhaps inequality would even become a bit too low with Basic Flux.

GeoFlux

GeoFlux basically fixes the potential “too high equality” issue of BasicFlux.

So, it seems like there is a chain of currencies:

InflaFlux -> Onecoin -> Decaycoin -> T-Prestigecoin -> PrestigeFlux -> BasicFlux -> GeoFlux

Each successor seems to fix some issues of the previous currency. So, if each successor is better in at least one way, and not worse in any other way, then the conclusion would be that GeoFlux should be the best currency of those presented. Of course, the assumption that no “successor currency” didn’t add any additional flaws is highly questionable. Still, considering all that I’ve written, GeoFlux should be a really good currency – at least if people were clever enough to understand the reasons why it would be so good!

What’s especially interesting in this chain is that the first currency, InflaFlux, and the last one, GeoFlux, only differ in the latter having reputation-dependent demurrage! So, the reputation-dependent demurrage system seems to be an exceedingly powerful aspect of the currency, because it changes its status from being the “worst” currency to being the “best” currency.

I think an important conclusion from this Gedankenexperiment is that the scarcity of a currency is not the only factor that gives it value. What also needs to be considered is the social legitimacy, which is an important factor for its acceptance, and thus for its (long term) market value. Legitimacy of fiat currencies is created by the (possibly flawed) democratic consensus of using such a currency as legal tender. Legitimacy of cryptocurrencies would need to be created in a different way. It should be based on its overall benefit for society at large. May the best currency win!

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Actually, InflaFlux would eventually end up being more desirable to hold than GeoFlux because it has a decreasing inflation rate, when measured in percentages. GeoFlux has a pretty stable 5% loss of value per year after the amount of currency in circulation stabilizes. If you had defined InflaFlux to issue 5% of the current supply every year as basic and reputation incomes, it’d not differ from GeoFlux in practise. The main difference would perhaps be that people who don’t think too much might think they’re getting more each year, so for those people, it might seem to be better.

Also, GeoFlux doesn’t differ from InflaFlux (as you defined it) in any way before the demurrage begins. In other words, the inflation will be high.

an altcoin named Onecoin actually existed but as far as I know, it didn’t last too long, it had the peculiarity that there would only ever be one of them. Divisible, of course, though.

Scarcer than Bitcoin? More? You’re not making sense here.

Let’s assume there was an altcoin with only 0.001 coins created. Would that be scarcer than the onecoin you described? No it wouldn’t. In practise, the only difference to onecoin would be that you’d have to type extra zeroes in front of the amounts. Being divisible to arbitrary fractions means that any amount of coins is equally large because you can always divide the coins into equivalent parts.

With digital currency, it doesn’t really matter how many units there are. It’s entirely arbitrary. What matters is how much they’re worth in terms of something with an actual use value.

I’d go so far as to say that social legitimacy is the main factor. A non-scarce currency will lose it’s value too quickly and will lose any legitimacy it had as fast as it got it. A scarce currency, however, tends to collect more legitimacy as time passes and it demonstrates it’s ability to keep it’s value.

Hi, You’ve summoned Backfeed, now here we are :slightly_smiling:
Thanks for your comments, here are some of ours -

First of all it seems that there’re really some similarities between BF and QP in the overall thinking, although some differences should be noted:
First and foremost - Backfeed doesn’t envision a global backfeed-currency, but rather an ecosystem of currencies which refer to each other. Both reputation and currency (tokens) are Network specific and not global. This might answer to some of the concerns you’ve mentioned regarding groupthink, reputation inflation and the feedback of feedback concern:

  1. The Backfeed protocol is a consensus discovering engine. It’s purpose is to create a multitude of meritocratic hierarchies in a decentralized network of peers. If you’re not aligned with the consensus of a network, the system encourages you to fork into a new one or drift towards other, more like-minded individuals. The idea here is to allow a decentralized crowd to perform complex tasks, without having a centralized organisation. That’s why we have what you’ve called a “feedback on feedback” loop.

  2. You’re right, every network has some sort of dynamic “group-think”, the crowd intelligence emerges out of the dynamics that arise between those different networks. In that sense, BF doesn’t encourage conformity, but alignment around values. If you differ from those values you’re not punished by the system, but rather naturally drift towards networks in which your values are more dominant, this way each participant can maximize their influence in the global network of networks.

  3. Reputation can’t be inflated - In every network exists a fixed total of 100% reputation, which is reallocated to the peers in the network according to the Proof-of-value protocol. Reputation is not measured nominally but rather relative. Furthermore, reputation corespondents with influence in the system, not income: Reputation is not transferable and represents the weight your evaluations of others have, and not the amount of tokens you’ll receive.

  4. token, however, are issued whenever a valuable contribution is made. How is “valuable” determined? Thorough mutual evaluations corresponding to reputation and the Proof-of-value protocol

Reputation is attached to certain actions, and not persons because that’s the way the system determines the value of contributions to a system, in a way that might remind one of Bitcoins Proof of Work protocol (just regarding human contribution, and not machine contribution).

To sum it up:
Backfeed’s aim is to enable massive open source collaboration without central administration, e.g - enabling the bootstrapping and emergence of decentralized organisations, while providing a fair and efficient compensation mechanism. In that regard, Backfeed and QP could be complimentary and there is no need to prefer one over the other. We could imagine a world in which both coexist and complement each other.
Maybe our economic model could shed some more light on this:
http://magazine.backfeed.cc/backfeeds-economic-model-for-an-decentralized-age/

If you have any further questions or remarks, feel free to contact us at info@backfeed.cc
You can also send us your email address so we can add you to our public slack channel where you can join the discussion.
We’ll be happy to hear from you.

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If you ignore the conditionality of the demurrage, you are right (except for scaling factors with a 5% inflation InflaFlux). But the reputation-dependence of the demurrage is exactly what makes GeoFlux interesting. Anyway, let’s start with a simple observation: It’s not rational to store value in large amounts of a currency that systemically loses value over time. Whether that loss of value is imposed due to inflation or demurrage doesn’t matter very much. If you are affected by either, it’s more rational to switch to a store of value that doesn’t lose value as quickly.

The point is that GeoFlux behaves very differently, depending on whether you are affected by demurrage or not. As long as you are able to avoid demurrage costs, it’s a pretty good currency. And you are able to avoid them by increasing your reputation or by using new users as “reputation banks”. The situation of course changes, when there are no new users with blank accounts left. I call this the “saturation stage”.

GeoFlux saturation stage

It feels hard to wrap my head around the saturation stage of GeoFlux. Before the saturation stage GeoFlux has spread by expanding to new users. But now that most normal users are affected by demurrage, the situation becomes unpleasant. GeoFlux becomes hard to sell, because it has lost a large fraction of its worth as store of value. But: It’s still pretty decent for moving around value quickly. Investors can purchase large amounts of GeoFlux relatively cheaply. They can then purchase their investments with GeoFlux. If they are really quick, the loss from demurrage becomes pretty negligible. GeoFlux would stimulate quick investment and consumption. Basing an economy on a currency that people want to hold in large amounts is not a good idea, because it creates incentives to hoard that currency, instead of spending it. The resulting economy would be rather sluggish. You really need some kind of currency that people don’t really want to hold so much, but that still has some stable value.

Anyway, why is GeoFlux better than InflaFlux? Because GeoFlux reflects a reputation economy better than InflaFlux! In GeoFlux your effective demurrage rate depends on your reputation. If your reputation becomes high enough, your demurrage rate is 0. The more GeoFlux you accumulate above your demurrage threshold, the higher your effective demurrage rate becomes, up to the asymptotic 5% per year. If your effective demurrage rate is low, not only do you lose little money, but you can act as “reputation bank” for those who would suffer from a higher effective demurrage rate. In an effective market, at the saturation stage, this would mean that the effective demurrage rate becomes about the same for everyone, but that holding fees for GeoFlux flow from people with low reputation to people with high reputation. Having a high reputation means a double income, first from a direct reputation income in GeoFlux, and second from storing the GeoFlux of others for an income in holding fees. A high reputation is a double advantage in a GeoFlux economy. Is that a good thing? Well, it’s at least a very reputation economy-ish thing.

But of course you can argue that once GeoFlux reaches its saturation stage, people would want to switch to a different currency, since they are free to do that, as GeoFlux is not backed by governments or something like that. Well, if anything, currencies are backed by their acceptance as currencies. Any competing currency would struggle to reach the same level of acceptance as GeoFlux, even if it actually loses value slower than GeoFlux. You can see the same playing out with dollars and bitcoins. People still mostly use dollars, even though bitcoins should in theory increase in value over time. At the saturation stage, GeoFlux should mainly derive its value from its social acceptance. And that social acceptance should come from the fact that it’s a currency that enables an efficient reputation based economy.

Fun point: Once you give away all your GeoFlux in favour of an alternative currency, GeoFlux should become pretty valuable again for you, since you are unaffected by the demurrage! It should actually become so valuable that competing currencies lose their perceived advantage. At least, until you reach the demurrage threshold again.

So, what about investing all the GeoFlux above your demurrage threshold into a new competing currency called GeoFlux2? That kinda feels like a logical conclusion of this system. Every time a reputation currency reaches its saturation stage, new reputation currencies should spring up to compete as complementary currencies. In the end, people will end up holding a whole stack of different reputation currencies. The complexity of that system would be rather high. Perhaps the saving grace is that by then most people would live pretty much in a post-scarcity situation and usually not bother about holding large amounts of money. And those who still care, have a fun game of monetary economics to play.

Sorry, that was badly worded. I basically meant “more in alignment with socially perceived justice”.

Hi @Backfeed_cc, thank you very much for your reply!

Yes, that is an important distinction between BF and QP. QP was designed to enable a global reputation currency. The simplicity of having a global universal currency makes it worth to have a system QP, even if BF was superior to QP in most other respects.

Quantified Prestige networks can be local or global; specific or universal. The question is when a network should use QP, or when it should use BF, or whether it would make sense to develop some kind of synthetic system that takes the best parts of both systems to create an even better one. Anyway, I think that both QP and BF will need to go through long stages of empirical testing to find out what systems are really best suited for certain networks.

I really like that term. It perfectly encapsulates the (micro)political use of BF. QP has much more of an economic focus than a political one.

I think that aligns very nicely with my idea of a fractal society, which was the basis for giving Fractal Future its name (it was called Social Future Metanet at first). People should be as free as possible to self-organize into groups of like-minded peers. Of course, the issue exists that like-minded peers are relatively scarce. Finding them seems to be a hard problem. Dating platforms seem to try solving that problem, but of course there’s the disadvantage that they are too narrowly focused on dating, and not on bringing generally like-minded people together.

Decentralized governance seems to be a seriously hard problem. I’m glad that you are working on that.

Wow, that sounds like a very clever way of putting it! :slight_smile: I really love that way of expressing that idea. I think you’re on to something big. This may tie in to my IEET article Solving Problems with Collective Intelligence.

This means that as the number of members and actions in a network increases, the relative reputation weight of each member and each action decreases. But since total value might be roughly proportional to both members and their actions, this doesn’t seem to be a real problem. You only need to ensure that the distribution of reputation remains roughly appropriate.

The feedback on feedback mechanism seems to work for that purpose. The QP approach for making reputation distribution appropriate is by limiting reputation-giving power to a fixed amount, so that people need to think well about how to distribute their reputation-giving power. Both approaches seem to have their strengths and weaknesses. Perhaps it might be worth considering combining both. The resulting system might be quite complex, but at least it may evade certain failure modes of each single approach.

Ok, so there are several (potential) differences between QP and BF here:

  1. Reputation does not (directly) create an income in BF – but it does in QP.
  2. Reputation corresponds with influence in BF. In QP, this would require tying in reputation scores with decision mechanisms. I’ve considered reputation-dependent polls as one such mechanism. But I haven’t spend a lot of thought on network governance in general, yet.
  3. Reputation increases the weight of your evaluation of others in BF, but not in QP. At first, I also considered doing the same in QP, but then settled for a more egalitarian and “linear” approach for QP, mostly because it makes the mathematics of the system much easier. That might not be the best motivation, but I guess settling for simplicity is preferable to complexity, unless you really need that complexity.

That looks like a valid approach. I don’t see obvious overall advantages or disadvantages of this over the reputation income approach. The only big issue might be token inflation, which I’ve tried solving by reputation-dependent demurrage. But as this thread shows, this opens another whole can of worms.

Yes, there are good reasons for this approach. With QP I’ve settled for a more open way of determining value. People can esteem the contributions of others for any reason in QP, even if they can’t actually pinpoint how, or what specific action has been especially valuable. QP allows capturing subtle and diffuse value, which might get ignored when value has to be attached to specific actions. On the other hand, QP opens itself up to a larger variety of biases by following that approach.

Thank you very much for your invitation! I’ll get back to you! :smiley:

Yes, in practise it doesn’t matter a lot which of these effects is causing the loss of value. There’s however a key difference. Inflation creeps in imperceptibly, it’s very difficult to tell it apart from other things affecting prices. With demurrage you can literally watch the amount of money you have going down. So, with inflation you’re not constantly reminded in a concrete way that it’s happening. However with demurrage, you’ll be reminded every so often. It’s like taxes, it’s in your face all the time that you’re losing the money.

Are you considering smooth, constant decrease in the amount of money in accounts that are over the limit? You might want to ponder on that in light of what I said above.

Anyway, I’m not quite following the logic here. This would only make sense if the investor can purchase GeoFlux for under the market prices and someone is willing to take GeoFlux at the market price or higher. In a properly functioning market, this isn’t a chance that can be had easily. Do note that to take GeoFlux as a payment doesn’t differ from buying GeoFlux in any important way.

If you just mean to refer to the normal market activity of speculators trying to buy low and sell high, sure, that’s what causes the wave like movement of the exchange rates and doesn’t become easier just because the exchange rate is falling.

The stimulation effect only happens if people have a reason to want to hold the currency despite the loss of value. It certainly can happen, as evidenced with the popularity of current Fiat currencies. However, I suspect that’s because credible alternatives haven’t been around for very long and the ones that popped up in the past were quickly and decisively cut down by governments. Now we have alternatives with no center. They’re not quite that simple to cut down.

You know, I’m starting to get the feeling that GeoFlux might be stacked too much in favor of those with high reputation. I mean, even today it tends to be that those with good reputation are also rich and that those who’re relatively unknown are poor (at least by comparison). Of course, there are those with what you could say bad reputation who’re also rich but… do you think they could really keep those riches if that was the whole story?

So, what I want to ask is, are you sure you’re not merely recreating the current system in a slightly new guise? (well, granted, it’s got the basic income, so at least that’s different, but…)

I suspect that by the time that GeoFlux reaches saturation, we’ll have many different digital currencies to choose from. So, the competitors would already be there and have wide acceptance.

I think you really should think about how to convince people that reputation based economy is actually a good idea. It sounds good on paper but when it comes to money, that’s not enough to convince people.

So, who’ll be the bagholder who buys all the GeoFlux from the hands of those who want to buy GeoFlux2? If everyone tried that at the same time, it’d be a total market crash for GeoFlux and a super rally for GeoFlux2. a completely unrealistic scenario but …

I wonder how you’re imagining the account balances looking like in the saturation stage. It might start out with only a small percentage of each account being above the limit. However, as it progresses, the average amount NOT affected by demurrage will close in on 5% of the total balance (well, something close to 5% anyway, not feeling like doing the math to figure out the exact figure right now).

I hope that by that time we’ll have distributed systems that pretty much take care of resource allocation in a way that everyone can consider fair. Who knows, perhaps we’ll have delegated the process of resource allocation mostly to the results of the Backfeed networks or something similar that’s not directly controlled by people’s opinions but rather their valuations of each other’s work. The valuation data in the individual backfeed networks is a treasure trove as far as data mining is concerned.

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That inflation creeps in imperceptibly is what makes inflation so deceptive. People don’t realize that they are losing value with inflation. Which is why it is harder to get people to act against the loss of value in an inflationary currency. Inflation is like a stealth transfer of value from those who hold inflationary currency (mostly the middle class) to those who hold non-inflationary assets instead (mostly the rich). The more this value transfer is made obvious (for example by switching from inflation to demurrage), the more can people react to it, because it becomes really “in your face”.

Yes, the amount of money over the demurrage threshold decays exponentially.

Anyway, what has been written so far in this thread tells me that it would be a good idea to find a way to avoid ever reaching a saturation stage. And I think that can best be done by introducing an attractive way to burn GeoFlux, for example:

  • You could pay for decentralized computation in GeoFlux
  • You could participate in an auction for a good ranking on a network news platform (attention economy!)
  • You could pay for a specific class of asset (for example (virtual) real estate)

Once people are affected by demurrage, they are incentivised to do one of the following things:

  1. Sell GeoFlux
  2. Give GeoFlux away to someone as loan or charity
  3. Increase their own reputation (which is of course not trivial)
  4. Burn GeoFlux in exchange for (potential) rewards

The more GeoFlux in the system is affected by demurrage, the harder it becomes to sell GeoFlux. Also, giving money away as charity might not be seen as extremely attactive. With high demurrage fees loans might even have negative interest rates, so that’s not terribly attractive either. So, burning GeoFlux for getting something in exchange will look like an increasingly attractive option that should be able to stave off the arrival of a saturation stage.

Yes, that’s how GeoFlux is intentionally designed! You need a currency that is very much coupled to reputation in order to make a true reputation based economy possible. Otherwise the normal monetary economy will eat up the reputation economy!

Right. The point of a reputation based economy is that it makes appropriate allocation of value easier. More specifically, it can enable digital abundance by making it much easier to get money from giving away digital goods (or even other goods and services) for free. In our current market based system, it’s not trivially easy to get money for giving stuff away for free – on the contrary: It sounds paradoxical at first. In a reputation economy gaining value from giving away stuff for free becomes much more natural and uncomplicated. People need to “sell” less – though of course they may still need to advertise their goods and services to a large audience.

  • A reputation based economy is good for consumers: They get stuff much cheaper or for free
  • It’s also good for producers: They are freed from spending time and energy on using complicated monetization schemes

The system I want to create is an evolution of our current system, not something absolutely revolutionary new. As evolution of our current system, it will certainly retain some of its flaws. I’m not saying that everything will be great in a reputation based economy. But some things will definitely be better.

The thing I wanted to point your attention toward is the fact that it’s an uphill battle to get people to understand demurrage is actually better than inflation due to the fact that demurrage is “in your face” and inflation is mostly invisible. (That being said, a system without any inflation or deflation would be even better but that doesn’t seem like a goal that’s attainable in practice.)

This basically condenses to the question “How can I convince people to pay taxes happily and willingly?”. I suspect an ideal method for that would be to have something that only QP network can give and give that only for burning GeoFlux. Of course, that something needs to be very useful for the people doing the burning.

At least the plan you’ve expressed in this thread can’t be expressed as free. Initially it’s funded with inflation and later with demurrage. If you can eliminate the demurrage somehow, that still leaves the initial inflation stage but if it’s guaranteed to stop eventually, it’s not a showstopper. Also, you haven’t mentioned how you intend to make sure the same person doesn’t create several accounts for him/herself. If that can’t be reliably prevented, it’ll result in uncontrollable inflation. That could well be the hardest problem to solve since you’d want to allow everyone that one account but prevent anyone from getting more than one.

I hope I’m not discouraging you too much by piling up a problem after problem here :innocent:

Ok, you are right. It’s often worth repeating that it’s an uphill battle to expect people to make rational decisions. Point duly noted. :smiley:

I think you are going overboard with your comparison of demurrage and burning GeoFlux with “paying taxes”. That’s almost as bad as referring to buying bread, or giving gifts, or making donations, or trading on the stock market as “paying taxes”. It frames the situation is an entirely unhelpful way, I think. If you use this comparison, could you please explain why you make it, and what purpose it has?

In the case that a decentralized organisation (the same that helped bring GeoFlux into existence) became the next big thing and everyone wanted to be featured on their website, allocating advertisement spaces or content slots for those who burn the most GeoFlux would seem to be pretty effective.

Burn GeoFlux
-> Increase attention given from others to you
-> Increase your reputation
-> Increase your GeoFlux income

Basically, burning GeoFlux could be seen as long term investment into the GeoFlux economy (weird, isn’t it?)!

[quote=“Elriel, post:55, topic:924”]
At least the plan you’ve expressed in this thread can’t be expressed as free. Initially it’s funded with inflation and later with demurrage.[/quote]
Burning of GeoFlux should take the majority of the function of getting money out of the system. Reputation-dependent demurrage is still a very good idea to make burning more attractive, and increase the value of reputation.

If people burn enough GeoFlux, there won’t be inflation, and demurrage could be mostly avoided. Demurrage would turn into a punishment for low reputation, or not releasing GeoFlux into the wild.

The basic idea is that people need to collect enough “authenticity” to activate the accounts they create. “Authenticity” is a measure of being a unique person. A tentative system for allocating “authenticity” would be connected to the amount of reputation that a specific account gets. Users can try to make up different personas which collect reputation independently, but they bear the risk that both of their accounts would completely lose authenticity, if it became apparent that they are actually the same person. It’s not a perfect system, but perhaps it’s good enough. If not, it needs to be improved.

No, you’re helping me to get rid of the remaining problems. :slightly_smiling: