The conceptual GeoFlux currency

[Elriel]

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.

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.

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.

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.

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.

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.

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.

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…)

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.

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, 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.

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).

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.

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.

[Radivis (Michael Hrenka)]

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.

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”.

Are you considering smooth, constant decrease in the amount of money in accounts that are over the limit?

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.

You know, I’m starting to get the feeling that GeoFlux might be stacked too much in favor of those with high reputation.

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!

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.

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

So, what I want to ask is, are you sure you’re not merely recreating the current system in a slightly new guise?

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.

[Elriel]

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”.

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.)

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.

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.

A reputation based economy is good for consumers: They get stuff much cheaper or for free

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

[Radivis (Michael Hrenka)]

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.

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.

This basically condenses to the question “How can I convince people to pay taxes happily and willingly?”

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?

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.

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 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.

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.

Also, you haven’t mentioned how you intend to make sure the same person doesn’t create several accounts for him/herself.

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.

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

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

[Elriel]

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?

The difference between “paying taxes” vs “buying bread”, “giving gifts” and “making donations” is that “paying taxes” is something you can’t choose not to do. It’s not a choice. All the others are voluntary actions. In this respect, the built-in demurrage is like a tax. Burning GeoFlux, in itself, is a choice. However, it’s a fine line as it’s purpose is identical with the demurrage. Depending on the exact details, it might go either way.

You could, of course, argue that using GeoFlux is in itself a choice to pay that tax and it’s thus not involuntary. This is true, as long as the choice of whether to use GeoFlux or not is voluntary. However, if GeoFlux became the sole currency used in the world, it’d stop being choice. So, to have a chance of that, you need to be able to answer someone who insists on thinking about them as taxes that it’s a tax worth paying.

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.

This makes sense in the sense that when you burn GeoFlux, you’re essentially paying everyone who currently holds any GeoFlux in proportion to their holdings. It’d probably work better if there was a special “fund” in GeoFlux that was used to pay the basic income and reputation income. That way the distribution would be more in line with the design principles. Except that… somehow these two seem like they’re the exact same thing but also seem to be different…

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.

This is what I mean with the fine line in the first part of the reply. If the demurrage is there to make burning more attractive, it erodes the freely chosen aspect of the act. Free choice is pretty important to many people.

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.

Just bear in mind that this is the most vulnerable part of the whole system. Everything else is meaningless if this part has bad flaws. There’s also the potential problem that our ideas of identity might change, rendering the whole system obsolete. For example, if we become able to duplicate minds… or merge them. It could be challenging to make this future proof as well as fraud proof.

I don’t currently have any suggestions for this part. It’s at the same time the most crucial as well as the most difficult part of this system to get right. Backfeed doesn’t have this problem since it bases things on it’s Proof of Value concept. In Backfeed you don’t really benefit from creating several virtual identities for yourself since the sum value of the individual virtual identities is unlikely to exceed what you could get with just one.

If GeoFlux had just the reputation income component and no basic income, it might actually share this property.

[Radivis (Michael Hrenka)]

You could, of course, argue that using GeoFlux is in itself a choice to pay that tax and it’s thus not involuntary. This is true, as long as the choice of whether to use GeoFlux or not is voluntary. However, if GeoFlux became the sole currency used in the world, it’d stop being choice.

If GeoFlux was the sole currency used in the world then everyone would have chose to use it instead of any other currency, or instead of setting up any alternative currency, which would be a perfectly fine thing to do.

Don’t like demurrage? Create your own InflaFlux! Nobody will stop you from doing that.

So, comparing reputation-dependent demurrage in GeoFlux to taxes is really a totally inappropriate comparison.

It’d probably work better if there was a special “fund” in GeoFlux that was used to pay the basic income and reputation income.

I’ve considered the fund solution as early concept in QP. The point about flux currencies is that you don’t need a centralised fund. It becomes unnecessary, because everyone automatically generates their own money. What would be better about having a fund as intermediary? I can tell you what would be worse about a centralised fund:

• It would be a single point of failure
• It would create a huge number of unnecessary transactions
• It could be abused by those who have control over that fund

Anyway, it’s true that it makes a difference whether you do

1. pay into a fund that pays everyone a basic income
2. pay into a fund that pays everyone a reputation income
3. burn GeoFlux

Let’s see how those cases actually differ from one another:

1. In this case, everyone gets the same share. It’s a totally egalitarian approach.
2. Here, those with a lot of reputation get more GeoFlux. It’s a reputation based meritocratic approach.
3. Finally, burning GeoFlux rewards all holders of GeoFlux, except the one who burns the GeoFlux, of course. This could be seen as some version of “proof of stake”.

Anyway, it may be worth considering creating funds that allocate GeoFlux like in 1. and 2. That would create new possibilities for people to give back to the system. Anyway, it’s important to note that 1. and 2. don’t solve the inflation problem. Only getting money out of the system can do that.

If the demurrage is there to make burning more attractive, it erodes the freely chosen aspect of the act. Free choice is pretty important to many people.

Ah, I see. This relates to my thread

What does "voluntary" actually mean?

[image] Over the course of the recent years I’ve noticed that my political position moved towards what I would label “voluntaryism”: People should be able to opt-in freely to sets of rules and norms that they submit themselves to, rather than be forced to behave in certain ways without prior consent. But that position opens up a very important question: What does the word “voluntary” actually mean? I find it hard to answer that question, because it seems to be a rather subtle concept that is e…

Anyway, it’s a weak point against a currency which requires voluntary adoption to work in the first place. If people hate demurrage so much that they can’t stand it, they will create something like InflaFlux.

Just bear in mind that this is the most vulnerable part of the whole system. Everything else is meaningless if this part has bad flaws. There’s also the potential problem that our ideas of identity might change, rendering the whole system obsolete. For example, if we become able to duplicate minds… or merge them. It could be challenging to make this future proof as well as fraud proof.

Yes, the “authenticity” system is the most “critical” part of the system. If it can’t be made to work, the conclusion might be that allocating value to agents is a fundamentally flawed concept – which would be a really crucial insight, if it was true.

Hmm, that makes me think about an interesting approach: What about designing some kind of “proof of difference”? Every new user of the system has to prove that they are different from all the other already existing users of the system. This will most likely become increasingly difficult as the number of users in the system increases.

I am aware that QP is based on a strong notion of “identity”. The future might become weird indeed with minds merging and splitting, or just connecting with one another in very deep ways. It’s not only reputation systems like QP which are threatened by such “fluid” notions of identity. Any (formal) (economic) exchange between two parties becomes problematic, if it’s not clear who those parties are, or where their boundaries lie. However, there is a system which can deal with a really huge amount of uncertainty: The human brain. I suspect that future social systems will have to resemble increasingly the operation principles of the human brain itself.

I don’t currently have any suggestions for this part. It’s at the same time the most crucial as well as the most difficult part of this system to get right. Backfeed doesn’t have this problem since it bases things on it’s Proof of Value concept.

But doesn’t Proof of Value need to be tied to a specific identity? Every system that is based on identities is at the very least prone to identity theft, and to confusion from future identity mindfuck. Nevertheless, you are right: Backfeed seems much more resistant against Sybil attacks than QP. The main reason for that seems to be that your influence in the Backfeed system is porportional to your reputation. In QP influence is distributed pretty equally, in contrast.

If GeoFlux had just the reputation income component and no basic income, it might actually share this property.

You are talking about PrestigeFlux here. It would be quite possible to have different versions of GeoFlux running at the same time. In the end, the people decide which currency becomes widely accepted.

[Elriel]

Something to ponder for the technical implementation of GeoFlux:
https://bytemaster.github.io/article/2016/02/10/How-to-build-a-decentralized-application-without-fees/

If GeoFlux was the sole currency used in the world then everyone would have chose to use it instead of any other currency, or instead of setting up any alternative currency, which would be a perfectly fine thing to do.

I was a bit hesitant about using a situation that seems impossible as an example… I’ll try harder to avoid that in the future. It seems to have distracted you from my point.

As for why it seems impossible… Well, there are lots of people who are going to view demurrage as a tax. It wouldn’t surprise me if that was a large majority of people. Trying to call it something else won’t help convince them. That’s pretty much the point I was trying to make.

Most people are not able to grasp large systems as a complete whole and understand the operation at scale. They will focus on what they can understand. One very easy thing to understand is numbers. Especially numbers that go up or down. If the account balance is going down without explicit consent, the reaction is “who’s taking my money?”. People are pretty conditioned to the idea that a number going down in such a case is bad.

So, comparing reputation-dependent demurrage in GeoFlux to taxes is really a totally inappropriate comparison.

Allright, I won’t mention it anymore. You’ll hear it often enough later when you get this off the drawing board and actually start getting users.

I can tell you what would be worse about a centralised fund:

Who said it’d be centralized?

Anyway, it may be worth considering creating funds that allocate GeoFlux like in 1. and 2. That would create new possibilities for people to give back to the system. Anyway, it’s important to note that 1. and 2. don’t solve the inflation problem. Only getting money out of the system can do that.

The funds only make sense if they actually affect the basic income or reputation income. One option is to forget the burning and instead start the system with all the monetary base assigned to two pools, which are special “addresses” in the system. individual basic and reputation incomes would then be defined by balances of the pools. The pools only grow if someone voluntarily puts money in and will shrink as income is paid out.

This would avoid making important economical parameters hardcoded to the system and allow the system to live according to user choices. This would crowdsource the problem of figuring out how to convince people to part with their fortunes.

This is an option that’s well in line with voluntaryism. I think that if this won’t work, then demurrage won’t either.

Anyway, it’s a weak point against a currency which requires voluntary adoption to work in the first place. If people hate demurrage so much that they can’t stand it, they will create something like InflaFlux.

I don’t think that’s all that unlikely. Considering we already have examples of similar cryptocurrencies. There are (well, at least there have been, not sure if they’re still alive) cryptocurrencies with demurrage, but none of them have ever seen much adoption.

But doesn’t Proof of Value need to be tied to a specific identity?

Strictly speaking, yes. However, the system is fluid and can adapt to changes in behauviour fast, so it’s self-healing in this respect. The system doesn’t rely on the idea that identities don’t change. The identities are in an assistive role and the system will work fine as long as the identities are not completely unstable.

[Radivis (Michael Hrenka)]

Most people are not able to grasp large systems as a complete whole and understand the operation at scale. They will focus on what they can understand. One very easy thing to understand is numbers. Especially numbers that go up or down. If the account balance is going down without explicit consent, the reaction is “who’s taking my money?”. People are pretty conditioned to the idea that a number going down in such a case is bad.

Yes, and they are justified in thinking that this is bad. But it’s a negative feedback system that’s supposed to be there to strongly incentivize people to either increase their reputation, or reduce the number of GeoFlux in their accounts. Without such a feedback mechanism you could just buy into the GeoFlux economy with lots of dirty money, and turn the reputation economy into a farce.

One option is to forget the burning and instead start the system with all the monetary base assigned to two pools, which are special “addresses” in the system. individual basic and reputation incomes would then be defined by balances of the pools. The pools only grow if someone voluntarily puts money in and will shrink as income is paid out.

That’s an interesting idea. But it wouldn’t be enough to only have two pools for that, since the speed and mode (linearly, exponentially) of bringing money into the system are also free parameters. So, ideally, there would be a whole family of special “system distribution accounts” with different properties.

This would avoid making important economical parameters hardcoded to the system and allow the system to live according to user choices. This would crowdsource the problem of figuring out how to convince people to part with their fortunes.

Yeah, that would make a single QP network extremely flexible and self-regulating. System parameters won’t have to be fixed globally, but people would act freely, and average global parameters would emerge out of individual actions. Such a system might even be used on a “conventional” cryptocurrency basis like bitcoin. This could even become the basis for a “voluntary taxation” system that actually works. Paying “voluntary taxes” could be rewarded with reputation, or with the ability to boost your content on a community platform.

Still, in such a system rich people could buy lots of currency without putting it into any of those funds, because they don’t care about the reputation system, but the scarcity and value of the currency. They might grab the majority of the currency and use it as long term value storage. By doing that, they would increase the scarcity of the rest of the currency making it even more valuable to hold. This would end the effective circulation of the currency, and make it much less economically useful for everyday activities. Also, it would probably make it a very volatile currency, because it would be used as object of speculation.

Therefore, I think it would still make sense to have reputation-dependent demurrage in the system. The money that got deleted could simply reappear in the basic income and reputation income distribution pools. Of course, the system would then need to have mechanisms that determined how much and in which pools the money would reappear.

Alternatively, one might introduce negative reputation and make the amounts of money in all accounts transparent. Those who held “too much money” could be punished by negative reputation, which would induce a negative flow from their accounts into the reputation income distribution pool. Of course, such a system would be extremely inviting to various forms of abuse. But it would be kinda funny and self-regulating.

[Elriel]

Still, in such a system rich people could buy lots of currency without putting it into any of those funds, because they don’t care about the reputation system, but the scarcity and value of the currency. They might grab the majority of the currency and use it as long term value storage. By doing that, they would increase the scarcity of the rest of the currency making it even more valuable to hold. This would end the effective circulation of the currency, and make it much less economically useful for everyday activities. Also, it would probably make it a very volatile currency, because it would be used as object of speculation.

You know, markets don’t destabilize easily. The bigger they are, the harder it’s to increase their volatility. Rich people buying into GeoFlux to hold it wouldn’t destabilize it. they’d stabilize it further. It’d need to be pretty stable to begin with for them to even consider buying into it.

Gold is a commodity with a very stable market value. Most gold in the world is not being traded. It’s just held. It’s not a good idea to try to design an economic system without knowing basic facts about how markets work.

Also, it’s not a problem for a cryptocurrency if the majority of it is being held and not circulated. The value will increase and people will just use smaller amounts. With regular currency, the problem is that the smallest unit becomes too valuable. That’s not really a problem with any digital currency. You can always add more divisibility without anyone losing anything.

Alternatively, one might introduce negative reputation and make the amounts of money in all accounts transparent. Those who held “too much money” could be punished by negative reputation, which would induce a negative flow from their accounts into the reputation income distribution pool.

I suspect this feature would be disliked even more than demurrage.

[Radivis (Michael Hrenka)]

@Elriel

Also, it would probably make it a very volatile currency, because it would be used as object of speculation.

You know, markets don’t destabilize easily. The bigger they are, the harder it’s to increase their volatility. Rich people buying into GeoFlux to hold it wouldn’t destabilize it. they’d stabilize it further. It’d need to be pretty stable to begin with for them to even consider buying into it.

Gold is a commodity with a very stable market value. Most gold in the world is not being traded. It’s just held.

The example of gold is kinda interesting. It seems that the value of gold has been historically extremely stable up to about 45 years ago, which is when the Bretton Woods system ended:

• http://www.nma.org/pdf/gold/his_gold_prices.pdf
• Change in gold price until 2021 | Statista

Bretton Woods system

But of course comparing gold to $US is not a fair measure of the value of gold, since the $US has been a fiat currency since the end of Bretton Woods. Let’s consider some inflation-adjusted charts for gold and silver values:

• Gold Prices - 100 Year Historical Chart | MacroTrends
• Silver Prices - 100 Year Historical Chart | MacroTrends

I think it’s clear that the gold and silver prices have shown at least a somewhat higher volatility after Bretton Woods. Perhaps the best explanation for this is that volatility decreases with market size. Conversely, the end of Bretton Woods reduced the effective market size for gold, since the price of gold became decoupled from the price of the $US, so a higher volatility for the gold market should be expected.

Yet, this correlation can’t be the whole truth, since there were historical price bubbles for many different commodities. If market size inherently stabilized markets, such bubbles should not happen – but they did. And of course, bubbles increase that market capitalization and market size of the commodities that are affected by such bubbles. How does economics try to explain bubbles? I’ve found the following Wikipedia article quite interesting:

Economic bubble

The asset flow equations have been used to study the formation of bubbles from a different standpoint in [31] where it was shown that a stable equilibrium could become unstable with the influx of additional cash or the change to a shorter time scale on the part of the momentum investors. Thus a stable equilibrium could be pushed into an unstable one, leading to a trajectory in price that exhibits a large “excursion” from either the initial stable point or the final stable point. This phenomenon on a short time scale may be the explanation for flash crashes.

The emphasis is by me. The claim in the citation above contradicts the notion that putting more money into a market always makes it more stable.

@Elriel

It’s not a good idea to try to design an economic system without knowing basic facts about how markets work.

Well, it’s an even worse idea to try to design an economic system based on basic facts about markets that turn out to be wrong.

@Elriel

Also, it’s not a problem for a cryptocurrency if the majority of it is being held and not circulated. The value will increase and people will just use smaller amounts.

Yes, they will use smaller amounts. But that reduces the relative amount of money that is effectively used for productive economic activity. Ideally, the rate of circulation would be very high and all money would circulate, so that the total amount of economic transactions is maximized. That doesn’t happen with assets that are hoarded. An efficient economy would run on a currency that people really don’t want to hold for that long. For storing value, they should actually use other assets. The big problem is maintaining a reasonably high value for those currencies that are not supposed to be used for long-term storage. I think that reputation-based demurrage is one of the best solutions for this problem. Of course, in theory, you could run an economy on the digital equivalent of gold, but such an economy wouldn’t run very efficiently!

@Elriel

The value will increase and people will just use smaller amounts. With regular currency, the problem is that the smallest unit becomes too valuable. That’s not really a problem with any digital currency. You can always add more divisibility without anyone losing anything.

Yes, cryptocurrencies like bitcoin effectively solved the “divisibility problem” of gold, but that still doesn’t mean that infinitely divisible digital gold would be the best means of economic exchange. A currency that is primarily used as long term storage of value is mostly of interest for those who are actually interested in long term storage of value, and not so much for average consumers. I think that’s an important reason for the limited success of bitcoin as publicly accepted currency. Gold-like currencies are mainly used for long term value storage and speculation, not so much for productive economic exchange.

@Elriel

Alternatively, one might introduce negative reputation and make the amounts of money in all accounts transparent. Those who held “too much money” could be punished by negative reputation, which would induce a negative flow from their accounts into the reputation income distribution pool.

I suspect this feature would be disliked even more than demurrage.

Most likely, yes. So, I gather that reputation-dependent demurrage is not so bad, after all, right?

[Elriel]

The example of gold is kinda interesting. It seems that the value of gold has been historically extremely stable up to about 45 years ago, which is when the Bretton Woods system ended:

I think it’s clear that the gold and silver prices have shown at least a somewhat higher volatility after Bretton Woods. Perhaps the best explanation for this is that volatility decreases with market size. Conversely, the end of Bretton Woods reduced the effective market size for gold, since the price of gold became decoupled from the price of the $US, so a higher volatility for the gold market should be expected.

Yes, up until 45 years ago, gold was basically the primary currency. Even if it was proxied by pieces of paper. After that the graphs look pretty volatile. However, how much of that is dollar being volatile and how much is gold being volatile? I think you might find it interesting to look at different economical graphs and looking at how they’ve progressed since 1970. Inflation is not the whole story. If you really want to get a good picture, you’d need to find similar graphs for a many different things and compare their prices to gold.

Economics is far from simple, unfortunately.

Yet, this correlation can’t be the whole truth, since there were historical price bubbles for many different commodities. If market size inherently stabilized markets, such bubbles should not happen – but they did. And of course, bubbles increase that market capitalization and market size of the commodities that are affected by such bubbles. How does economics try to explain bubbles? I’ve found the following Wikipedia article quite interesting:

You’re trying to read a more extreme meaning to “market size inherently stabilizing markets” than it has. It doesn’t mean no bubbles. It means they’re less likely. There’s nothing that can shield markets from mass delusion… Well, unless you find a way to prevent or alleviate mass delusion.

The asset flow equations have been used to study the formation of bubbles from a different standpoint in [31] where it was shown that a stable equilibrium could become unstable with the influx of additional cash or the change to a shorter time scale on the part of the momentum investors. Thus a stable equilibrium could be pushed into an unstable one, leading to a trajectory in price that exhibits a large “excursion” from either the initial stable point or the final stable point. This phenomenon on a short time scale may be the explanation for flash crashes.

The emphasis is by me. The claim in the citation above contradicts the notion that putting more money into a market always makes it more stable.

This is also based on an extreme interpretation. Of course it contradicts. It just isn’t what I was trying to say.

What I was trying to convey is that the bigger the market, the less it will be moved with a specific amount of money. That is what it means that a market is more stable.

Yes, cryptocurrencies like bitcoin effectively solved the “divisibility problem” of gold, but that still doesn’t mean that infinitely divisible digital gold would be the best means of economic exchange. A currency that is primarily used as long term storage of value is mostly of interest for those who are actually interested in long term storage of value, and not so much for average consumers. I think that’s an important reason for the limited success of bitcoin as publicly accepted currency. Gold-like currencies are mainly used for long term value storage and speculation, not so much for productive economic exchange.

That’s not what’s limiting bitcoin. The real limiting factor is that data security is hard for the average person. Proper data hygiene is not very widespread and it takes time to come up with solutions that can work despite that. Even more time to get them to widespread use. Also, you are aware, I hope, that dollar took close to a century to become the main currency of U.S.? Bitcoin is only 7 years old. People are wary of new things. Especially when it comes to trusting them with value.

There’s no practical reason to use separate things for store of value and currency of exchange once the divisibility problem is solved. However, Bitcoin’s benefits are less apparent to people who aren’t planning to hold, so there’s less incentive to switch. I mean, why would you care about inflation if you aren’t going to hold the money long enough to see much of an effect? Especially since holding bitcoin on the short term is pretty much a coin toss on if you gain or lose.

Still, there are interesting developments on the horizon. For example, when I was researching payment channels, I bumped into the idea that they could be used to create bitcoin wallets denominated in any currency you want without a need for a centralized company on the other end. When you pay from such a wallet, it’ll send bitcoins, but the amount of value you have can be locked to whatever asset you want. Provided you can find someone else who wants to take the other end of the deal. That means someone who is willing to take the risk of bitcoin losing value in exchange for getting all the profit if the opposite happens. These are often called insurance contracts.

This is not directly related to the subject, but contains all kinds of information that should give a good idea of the complexities inherent in markets: http://www.bothsidesofthetable.com/2016/02/14/what-most-people-dont-understand-about-how-startup-companies-are-valued/

Most likely, yes. So, I gather that reputation-dependent demurrage is not so bad, after all, right?

I never said it’s the worst possible thing to have in a currency design

However, I still think it’ll prove to be more than people can stomach. Feel free to prove me wrong, though

[Radivis (Michael Hrenka)]

Yes, up until 45 years ago, gold was basically the primary currency. Even if it was proxied by pieces of paper. After that the graphs look pretty volatile. However, how much of that is dollar being volatile and how much is gold being volatile? I think you might find it interesting to look at different economical graphs and looking at how they’ve progressed since 1970. Inflation is not the whole story. If you really want to get a good picture, you’d need to find similar graphs for a many different things and compare their prices to gold.

Do you have any specific suggestions? Perhaps something like oil, energy, food, basic services, electronics, real estate, financial products?

What I was trying to convey is that the bigger the market, the less it will be moved with a specific amount of money. That is what it means that a market is more stable.

Are you claiming that your use of the attribute “stable” for a market does not include the aspect of the market not being volatile? If yes, I find that at least slightly misleading.

Yes, cryptocurrencies like bitcoin effectively solved the “divisibility problem” of gold, but that still doesn’t mean that infinitely divisible digital gold would be the best means of economic exchange. A currency that is primarily used as long term storage of value is mostly of interest for those who are actually interested in long term storage of value, and not so much for average consumers. I think that’s an important reason for the limited success of bitcoin as publicly accepted currency. Gold-like currencies are mainly used for long term value storage and speculation, not so much for productive economic exchange.

That’s not what’s limiting bitcoin. The real limiting factor is that data security is hard for the average person. Proper data hygiene is not very widespread and it takes time to come up with solutions that can work despite that. Even more time to get them to widespread use. Also, you are aware, I hope, that dollar took close to a century to become the main currency of U.S.? Bitcoin is only 7 years old. People are wary of new things. Especially when it comes to trusting them with value.

Sure, the data security problem and the young age of bitcoin might be the most dominant reasons for its lack of ubiquitous acceptance, for now. In the long run, however, I think that the factors I’ve written about will gain in relative importance and determine the rate of acceptance of new cryptocurrencies, once crypto has been generally accepted and the security issues have been dealt with to a sufficient degree. Perhaps GeoFlux might be seen as preferable currency in 20 years or so.

There’s no practical reason to use separate things for store of value and currency of exchange once the divisibility problem is solved.

Is that so? I think this is a key question. Having your preferred store of value and currency of exchange being one and the same thing initially sounds like a preferred solution, and pretty simple. But if the ideal store of value and the ideal currency of exchange differ from one another, it would make sense to have them as separate entities which can be optimized for their respective function independently.

While thinking about this issue, I am realizing that people want more than a “store” of value. They want their value to increase, ideally reliably, quickly, and without effort. So, perhaps we also need to think about what the best safe automatic investment could be. If we aimed for really good safety, we might want to have something like “world economic growth dividend shares”, which might be approximated by a portfolio of government bonds. Still, that doesn’t seem better than having some amount in a universally accepted, non-inflationary currency. The value of that currency would increase with economic growth anyway, if the amount of currency in circulation doesn’t increase. If the amount of circulation decreases (non-uniformly), there is the risk that you are the one who is losing some of that currency, so the safety requirement is violated here. My guess is that bitcoin will be pretty close to being an ideal store of value, if the safety issues are addressed, and if fluctuations of the value of bitcoin become minimal.

I’m not trying to beat bitcoin as long-term storage of value here. But I’m trying to create a better currency of exchange. What’s most important for a currency is its universal acceptance. A good currency needs to be easy to handle, and everyone should accept economic transactions in that currency. Let’s assume that bitcoin became trivially easy to handle. If cryptocurrencies also became nearly universally accepted, would there be a reason to reject any particular cryptocurrency? I think there are three classes of such reasons:

1. Technological capabilities: Some cryptocurrencies have useful features that others don’t have. Flux currencies support continuous value transfer, for example (well, at least in theory).
2. Design features: How is the currency created? What mechanisms affect the currency? Inflationary currencies, and currencies with unconditional demurrage wouldn’t seem preferable, everything else being the same. Proof of work can be considered as waste of energy.
3. Social considerations: By using a specific currency, I am buying into the value network of the users of that currency, thus validating the value that is held by the members of that value network. People can have preferences which value networks they might want to support. If they have strong dislikes about certain value networks, they might reject its preferred currency.

Social considerations might feel week as an overall factor, but they are present. Some people prefer to use local currencies for such reasons, for example. Also, there are ethical banks, whose existence at least points to social reasons having a real economic impact. Currently, people usually strongly support the early investors when buying into a cryptocurrency. That can be seen as justified, or as necessary evil, or as inherently unfair – depending on your preferred point of view.

At the very least, a reputation-based currency would at least have stronger social validation within the reputation network that uses that currency. If there is a global reputation network, the question whether people accept a currency coupled to that network breaks down to whether they like the idea of a reputation based economy or not. It’s not trivial why people should value a reputation based economy over a conventional economy, but the argument that a first encourages digital abundance, and generally reduced costs, should at least convince the majority that it’s a really good idea to prefer reputation currencies.

Could that possible preference for a currency that is in line with the idea of a reputation based economy be strong enough for people to reject bitcoin or other currencies? I guess so. Is that likely to become a mainstream attitude? Probably not. Still, the relative currency preferences of people could come with price differences amongst those currencies. Merchants can provide discounts on certain network specific currencies, for example (perhaps in the hope to increase their reputation when they give discounts for a specific reputation currency).

Maybe the strongest arguments in favour of using reputation currencies are that they are futuristic and social and drive the movement towards digital abundance. Those might not be reasons that are based on simple rationality as economic actors, but they are rooted in the real social and psychological nature of human beings. Empirically, humans are not homo oeconomicus, and neither do I think that they should be – at the very least because homo oeconomicus is too much of a simplification. Still, the point about digital abundance can be seen as argument from individual long-term economic rationality, or altruistic economic (super)rationality. In any case, I see sufficient reasons for people to prefer GeoFlux over bitcoin in many circumstances.

I never said it’s the worst possible thing to have in a currency design

However, I still think it’ll prove to be more than people can stomach. Feel free to prove me wrong, though

The proof is in the future.

[Elriel]

I’ll try to find some time to reply to your latest message later, but for the moment, here’s something I thought you’d find interesting:

Capital in the Twenty-First Century

[Radivis (Michael Hrenka)]

Thanks. I’ve actually started reading Piketty’s book last year, but stopped reading relatively quickly. Not because I found the content disagreeable, or uninteresting, but because there were more urgent, interesting, and important things on my plate. Also I got the impression that you get the gist from having read the 50 pages. Have you been able to read the whole book?

[MvB (Martin von Berg)]

GeoFlux

Aim high and just call it “Credits”

[Elriel]

Have you been able to read the whole book?

Ah, no, I just found out about it.

[Elriel]

Do you have any specific suggestions? Perhaps something like oil, energy, food, basic services, electronics, real estate, financial products?

I’d probably consider basic necessities with the highest weight. Then services and less crucial things. But you got the gist of it.

Are you claiming that your use of the attribute “stable” for a market does not include the aspect of the market not being volatile? If yes, I find that at least slightly misleading.

There are no markets without any volatility. It’s a feature of markets. So it pretty much has to be a relative term rather than an absolute one. Anything that most of the market participants weren’t able to predict sufficiently in advance will cause more volatility. However, the bigger the market, the more of these things will appear all the time and they start to cancel each other out. So, the end result with a big market and most of the volatility canceling itself out is that the price movement is much smaller when measured in percentages.

Sure, the data security problem and the young age of bitcoin might be the most dominant reasons for its lack of ubiquitous acceptance, for now. In the long run, however, I think that the factors I’ve written about will gain in relative importance and determine the rate of acceptance of new cryptocurrencies, once crypto has been generally accepted and the security issues have been dealt with to a sufficient degree. Perhaps GeoFlux might be seen as preferable currency in 20 years or so.

The value of a currency with a fixed supply, like Bitcoin, tends to grow only with the market (or shrink with it). That in itself should be enough to prevent wealth from accumulating into the hands of the few. I expect there’s some kind of a equilibrium point that the system will tend towards converging on, so the immediate effect would be wealth redistribution.

Demurrage, or a more general wealth tax would speed it up, but seems rather difficult to actually get something like that implemented. I’m not convinced it’s a good long term solution either. A reputation component is likely an improvement for the implementation though. I just hope it doesn’t become similar to how politicians campaign for elections. When a politician is campaigning, it seems they’ll say anything at all they think will get them more votes than it loses them. Loads of empty promises is what happens in politics.

If the amount of circulation decreases (non-uniformly), there is the risk that you are the one who is losing some of that currency, so the safety requirement is violated here.

The factor that pretty much negates this issue is that this is not random. It’s entirely dependent on your own carefulness. It’s not difficult to practically eliminate this risk.

If cryptocurrencies also became nearly universally accepted, would there be a reason to reject any particular cryptocurrency? I think there are three classes of such reasons:

You left out the most important one. Transaction costs in exchanging one currency for another. Some people also talk about network effects. That’s basically the same thing because the cost of exchange is what actually separates different currencies into different networks. The cognitive effort in having to consider multiple currencies is also a big factor. Most people just don’t want to think about it. They just want something that works.

Also, I hope you do realize that pretty much all the features you’re planning for GeoFlux are implementable on top of bitcoin as voluntary systems? Granted, that limits them to being strictly voluntary. So, I think the main question is if the systemic enforcement of the parameters you’re designing a necessity for a GeoFlux like system?

If every user of Bitcoin voluntary chooses so, Bitcoins could flow exactly as you’re designing GeoFlux to flow. Even if everyone doesn’t choose to do so, the subgroup that did could function that way among themselves. Why would this be inferior to GeoFlux?

Currently, people usually strongly support the early investors when buying into a cryptocurrency. That can be seen as justified, or as necessary evil, or as inherently unfair – depending on your preferred point of view.

This is definitely a factor. However, the moment there’s some practical use value that’s difficult to get in other ways, this factor goes out the window for most. This is why I believe Bitcoin will continue to become more popular. It’s got the most users out of all cryptocurrencies and supports many new things and is getting new capabilities in practise.

Empirically, humans are not homo oeconomicus, and neither do I think that they should be – at the very least because homo oeconomicus is too much of a simplification. Still, the point about digital abundance can be seen as argument from individual long-term economic rationality, or altruistic economic (super)rationality. In any case, I see sufficient reasons for people to prefer GeoFlux over bitcoin in many circumstances.

Well, I won’t try to say this is impossible. I’ll just point out that it’s perhaps the most difficult PR campaign in human history

[Radivis (Michael Hrenka)]

The value of a currency with a fixed supply, like Bitcoin, tends to grow only with the market (or shrink with it). That in itself should be enough to prevent wealth from accumulating into the hands of the few.

I don’t understand your line of reasoning. Could you try being more explicit about the steps involved here?

Demurrage, or a more general wealth tax would speed it up, but seems rather difficult to actually get something like that implemented. I’m not convinced it’s a good long term solution either.

Demurrage has the advantage of keeping prices stable. Having to deal with increasing prices is not only annoying, it produces extra costs, which could be removed if prices remained relatively stable. Price stability and value stability are the main purposes of demurrage. The redistribution of wealth happens via basic incomes and reputation incomes, and is only indirectly mediated with demurrage. In an inflationary flux currency, it would be mediated via inflationary increases of basic incomes and reputation incomes. In the long term, inflation tends to produce annoyingly high numbers, adding lots of irritating additional 0s. Therefore, I see demurrage, especially conditional demurrage, as solution that is preferable to inflation.

Also, conditional demurrage is not a wealth tax. You can easily maintain your wealth by storing it in commodities that aren’t affected by inflation or demurrage.

A reputation component is likely an improvement for the implementation though. I just hope it doesn’t become similar to how politicians campaign for elections. When a politician is campaigning, it seems they’ll say anything at all they think will get them more votes than it loses them. Loads of empty promises is what happens in politics.

In a reputation economy broken promises would cost a lot of reputation. Burnt up trust would weigh more heavily than short term gains from inflated reputation gained though making misleading promises.

If the amount of circulation decreases (non-uniformly), there is the risk that you are the one who is losing some of that currency, so the safety requirement is violated here.

The factor that pretty much negates this issue is that this is not random. It’s entirely dependent on your own carefulness. It’s not difficult to practically eliminate this risk.

Ok, so you are basically saying that GeoFlux would be pretty good as store of value before the saturation stage. With an added GeoFlux burning system the saturation stage would be replaced with an equilibrium stage, at which currency generation and demurrage plus burning cancel each other out. The question is at what level that equilibrium will lie. I think this really requires real world testing to find out, since it depends on the real-world attractiveness of the (potential) burn rewards.

You left out the most important one. Transaction costs in exchanging one currency for another.

That’s a good point. In theory, transaction costs could be vanishingly low, which would remove this as a factor.

The cognitive effort in having to consider multiple currencies is also a big factor. Most people just don’t want to think about it. They just want something that works.

Right. People want “credits”, and not having to deal with hundreds of different currencies. This means that the most popular legally accepted currency (if there are more than one) will probably win big time, at least everything else being basically the same.

Also, I hope you do realize that pretty much all the features you’re planning for GeoFlux are implementable on top of bitcoin as voluntary systems?

It’s not clear how you imagine that to work. There are different possibilities. Please state your preferred scenario in sufficient detail.

Empirically, humans are not homo oeconomicus, and neither do I think that they should be – at the very least because homo oeconomicus is too much of a simplification. Still, the point about digital abundance can be seen as argument from individual long-term economic rationality, or altruistic economic (super)rationality. In any case, I see sufficient reasons for people to prefer GeoFlux over bitcoin in many circumstances.

Well, I won’t try to say this is impossible. I’ll just point out that it’s perhaps the most difficult PR campaign in human history

Or it might be the easiest PR campaign in human history: You get free money. And you even get extra money, if you do stuff that people like. The only problem is that this will probably sound too good to be true. I just need to convince people that the system is legitimate and works in reality.

[Elriel]

The value of a currency with a fixed supply, like Bitcoin, tends to grow only with the market (or shrink with it). That in itself should be enough to prevent wealth from accumulating into the hands of the few.

I don’t understand your line of reasoning. Could you try being more explicit about the steps involved here?

It’s the main point in the book, Capital in the Twenty-First Century. The increase in the value of Bitcoin will tend to follow the real economic growth over the long term. In other words, investing into Bitcoin will never get you more profit than the actual growth of the underlying Bitcoin economy. I believe inflationary currencies are the main reason you can earn more than the economic growth with capital. So, if the world moves to using Bitcoin as the main currency, it’ll remove the advantage.

Of course, I haven’t read the book, so I’m not entirely sure if this is a valid application of the main point, but for the moment, it seems solid enough for me.

Demurrage has the advantage of keeping prices stable.

Yes, that’d definitely fix some problems.

Also, conditional demurrage is not a wealth tax. You can easily maintain your wealth by storing it in commodities that aren’t affected by inflation or demurrage.

I was talking of wealth tax in a more broader sense than just GeoFlux here. Not really demurrage related anymore.

In a reputation economy broken promises would cost a lot of reputation. Burnt up trust would weigh more heavily than short term gains from inflated reputation gained though making misleading promises.

I don’t know, politicians seem to game reputation just fine to me. Their broken promises don’t seem to make much of a difference in them getting re-elected. Of course, this could just be an artifact of no permanent record of their lies, but well, I’ll believe it when I see it

Ok, so you are basically saying that GeoFlux would be pretty good as store of value before the saturation stage.

Try not to forget that it’s pretty inflationary before that.

That’s a good point. In theory, transaction costs could be vanishingly low, which would remove this as a factor.

Assuming it can be automated with low enough risk, then yes. The transactions costs mostly come from the exchange rate risk.

It’s not clear how you imagine that to work. There are different possibilities. Please state your preferred scenario in sufficient detail.

I don’t have anything that concrete thought up. I just wanted to point out that competing with Bitcoin is not unavoidable. Cooperation could work too.

Or it might be the easiest PR campaign in human history: You get free money. And you even get extra money, if you do stuff that people like. The only problem is that this will probably sound too good to be true. I just need to convince people that the system is legitimate and works in reality.

That’s the challenge. People are very well conditioned to think that “there’s no such thing as a free lunch”. It’s not enough to promise free money. You’d also have to convince them it can work, which can be difficult when most people don’t even get how the current system works.

[Radivis (Michael Hrenka)]

@Elriel

It’s the main point in the book, Capital in the Twenty-First Century. The increase in the value of Bitcoin will tend to follow the real economic growth over the long term. In other words, investing into Bitcoin will never get you more profit than the actual growth of the underlying Bitcoin economy. I believe inflationary currencies are the main reason you can earn more than the economic growth with capital. So, if the world moves to using Bitcoin as the main currency, it’ll remove the advantage.

Of course, I haven’t read the book, so I’m not entirely sure if this is a valid application of the main point, but for the moment, it seems solid enough for me.

Oh, great. Now I feel compelled to read that long book entirely. Well, there are worse ways of spending my time.

@Elriel

I was talking of wealth tax in a more broader sense than just GeoFlux here. Not really demurrage related anymore.

This point may be a bit off-topic, but I think the best solution to the inequality problem would be schemes that require payments for use or exclusive usage rights of common resources like land, water, clean air (who pollutes it, must pay), in the spirit of a

Land value tax

@Elriel

I don’t know, politicians seem to game reputation just fine to me. Their broken promises don’t seem to make much of a difference in them getting re-elected. Of course, this could just be an artifact of no permanent record of their lies, but well, I’ll believe it when I see it

Either it matter what poiiticians say and promise or it doest. In the first case, having a permanent record of their lies and public reputation scores will be useful. In the latter case, worrying about the reputation of politicians doesn’t matter anyway.

@Elriel

Ok, so you are basically saying that GeoFlux would be pretty good as store of value before the saturation stage.

Try not to forget that it’s pretty inflationary before that.

Bitcoin was also pretty inflationary in the beginning. It would still have been a good idea to buy Bitcoins at the earliest stages!

@Elriel

I don’t have anything that concrete thought up. I just wanted to point out that competing with Bitcoin is not unavoidable. Cooperation could work too.

Yes, I’ve thought about that route at first, until I got the idea to make an even fancier currency. Starting a new currency seems to be easier than getting a significant fraction of Bitcoin users to adopt a new paradigm. At our current stage, the cryptocurrencies people put out there seem to behave similar to shares of certain ideas. People using cryptocurrencies are shareowners of the idea of cryptocurrencies in general. By selecting appropriate cryptocurrencies, humans can vote for ideas with their money.

@Elriel

That’s the challenge. People are very well conditioned to think that “there’s no such thing as a free lunch”. It’s not enough to promise free money. You’d also have to convince them it can work, which can be difficult when most people don’t even get how the current system works.

Some people claim that the current system works, because most people don’t understand how our current system works. So, any strategy that relies on people understanding our current system is probably doomed to fail. A new system may only succeed, if its basic principles are easier to grasp than those of our current system. I am hopeful that people find it easy to understand basic incomes and reputation incomes. Those seem to be simpler concepts than for example fractional reserve banking.