12 ms·

Apply HN: Gresham Dollar – Viral Currency for Basic Income

• Kinnard 11y ago
  Where would people get Gresham Dollars, who would be the first to accept Gresham dollars and what would they sell for them?
  • Suncho 11y ago
    Great questions! Where would people would get Gresham Dollars: We build our initial consumer user base by choosing an American city and handing new money (that is, GD) to the people in that city who are most likely to spend it – i.e. low income people who have a higher marginal propensity to consume (what money they get, they're more likely to spend). This money comes in the form of a regular GD income – essentially a basic income for each individual. We will gradually move on to other cities and countries and to more general populations. Who would accept GD first: Initially, when introducing Gresham Dollar, we tell merchants that we're handing people new money in the form of GD and it's up to those merchants whether they want to compete for those customers and that money. We'd go around to grocery stores, convenience stores, and other places where poor people are likely to shop. I'm sure that my answers to your questions will lead to more questions.
    • rnovak 11y ago
      But the merchant pays for their merchandise in USD. why would a merchant choose to accept this "currency", considering it's not valuable to them?
      • Suncho 11y ago
        TL;DR: The currency is valuable to them. The core mechanism behind Gresham Dollar is that each unit of GD lives for a limited amount of time (e.g. 30 days) after which it expires and we replace it with an equal amount of USD from our reserves. Whenever someone spends GD, we reset that GD's lifetime (e.g. back to 30 days). So the merchants would be getting their USD. They'd just have to wait. When the first credit cards were introduced, American Express convinced merchants that it was worth a small transaction fee to accept a more convenient form of payment. It should be even easier to persuade merchants to accept money that customers otherwise wouldn't be spending at all. In either case, the merchants benefit by offering customers a new way to make purchases. When they accept credit cards, they have to pay a transaction fee. But when they accept GD payments, the fee they pay is time. Pretend you're a merchant. I come up to you and say, "Hey we're giving people this free money. Do you want these people as your customers?" What's your answer?
        • rnovak 11y ago
          So you're co-opting them into a credit issuing agency? What if your company goes bankrupt in that 30 days?
          • Suncho 11y ago
            There will be provisions in the merchant contract for what happens if we run out of USD reserves. In the initial months after we launch, every Gresham Dollar will be 100% backed by USD reserves, so the merchants (and other users) will take no risk in holding GD. Later on, we will gradually leverage into a fractional reserve, but we will always be completely transparent about our USD reserve levels and how close we are to running out. Since we don't offer on-demand exchange between USD and GD, it's impossible for there to be a run on our USD reserves. If, at any point, a user doesn't trust that his GD will hold its value, the only way for him to get rid of it involves transferring it to someone else's account, which resets the maturity on the GD, and lessens the need for us to dip into our USD reserves. In this way, the less that people trust the currency, the stronger it gets. Does that answer your question?
• rdl 11y ago
  If it's centralized, why bother with "cryptocurrency" (blockchain stuff), vs. a centralized (blinded?) token system (or even just a database ledger system, to start)
  • Suncho 11y ago
    Good question. I'm not entirely sure that we will. My is that certain aspects of the system will be distributed for efficiency and security purposes, but we'd need a central authority in charge of the currency, so we don't run into the problem of getting stuck when the economics of the situation would require a hard fork. I've been learning about cryptocurrencies and the blockchain, but I'm far from an expert. As far as I understand, there are a few big problems with bitcoin that can only be fixed via a hard fork, not the least of which is that there's a cap on the supply of bitcoin, so if you tried to use it as an actual currency, it would be deflationary in nature, much like gold. I'll look into the alternatives. If you have any links you'd recommend me researching, I'll check them out.
    • rdl 11y ago
      I would just prototype with a centralized database-backed system, if you don't need anonymity (and for this, non-anonymity might actually be an advantage). This isn't an interesting technical idea, it's interesting because of the social/economic/etc. behaviors, so I'd try to do the cheapest/easiest/oldest technology possible. More like a PayPal-style system...which ironically actually started out as a "digital currency" system on handheld terminals before they rolled it back to an email/website thing.
      • Suncho 11y ago
        Yes. The innovation here doesn't lie the technology itself, so I've decidedly been putting less effort into that aspect of things up to this point. Thanks for the advice. I want to do what's cheap and efficient and secure.
• wehadfun 11y ago
  What is the difference between a gresham dollar and a debit card?
  • Suncho 11y ago
    I'm not sure I understand your question. Basically, Gresham Dollar is a currency that's backed by USD reserves. A debit card is a card you carry around that lets you directly spend your bank deposits. One of the initial Gresham Dollar payment methods may end up looking very much like a debit card. To start, we will be handing out Gresham Dollar accounts to poor people. We want to make it as simple as possible for them to use.
• Wissmania 11y ago
  How would you handle the market that emerges between the two currencies? If Gresham Money is deemed less valuable, and some market exists between the two currencies, it seems that GD would just weaken relative to USD. I'm not sure how you could stop merchants from then just inflating GD prices, neutralizing the viral effect.
  • Suncho 11y ago
    I fully expect (and hope for) such a market to emerge. One key thing, which I mentioned in another comment, is that GD "matures" into USD after a certain period of time (e.g. 30 days). But some people might not want to wait for their GD to mature, so they'd be willing to sell their GD at a discount of face value. But the price gets too low, people will prefer more to keep their GD. Our merchant partners are required to set prices equally in both USD and GD, but there's nothing preventing other users from dealing in USD/GD in this way. And by participating in this market ourselves, we can help build our USD reserves.
• comex 11y ago
  What happens if there's a "bank run" where everyone waits for their GD to mature rather than spending it?
  • msrpotus 11y ago
    And in general, where does the money come from? You're proposing to start your own private central bank.
    • Suncho 11y ago
      Yes. Our own private central bank.
      • notahacker 11y ago
        If it's fully private and not Fed-linked, where's all the money to meet the convertibility obligations coming from?
        • Suncho 11y ago
          It will be distributed in deposits across banks that do have deposits at the Fed. We'd try to do it in such a way as much of our reserves as possible are FDIC insured. Have you heard of CDARS? It would be similar to that. http://www.cdars.com http://www.cdars.com
          • notahacker 11y ago
            That's where you store it. Where does it come from? I understand initially you'd need investment. I understand that in future, a secondary market could come into existence which would allow Gresham dollars to be exchanged for real dollars, at slightly below par value. But in order to actually have a profitable business, you need to obtain more dollars than the GD you're giving out over a given period of time. How does that happen?
            • 11y ago
• notahacker 11y ago
  A pretty fundamental question: why the Gresham Dollar and not regular dollars? I mean, there's no practical limitation on the monetary authority creating more real dollars to pump into the economy. The reason it doesn't (and the reason why it's fashionable to separate monetary authority from fiscal authority) is because of beliefs about pervasive inflation caused by large increases the supply of money, particularly if that comes in the form of handouts to those with a high marginal propensity to spend it. But as far as I can see based on your outline, Gresham dollars are at best functionally equivalent to regular dollars in their effects on demand in the economy. Demand increases when they're handed out, supply lags, ergo prices go up. But you can add in a [very] slight increase in cost of sale for merchants accepting GD, especially if they need to convert to regular dollars to pay their suppliers. So why Gresham dollars? Why not just hand out newly minted regular dollars? Or food stamps, if the aim is to socially engineer how they're spent? As far as I can see, all the differences are disadvantages (confusion, costly new infrastructure, discouraging saving behaviour amongst low income beneficiaries)
  • Suncho 11y ago
    Thank you for the very thoughtful questions. A pretty fundamental question: why the Gresham Dollar and not regular dollars? Political reasons. The United States government could technically fund a basic income through deficit spending, but they won't. The Fed will inject money into the banks through TARP and QE etc, but there's no easy way for them to inject money at the consumer level, nor do they want to. I mean, there's no practical limitation on the monetary authority creating more real dollars to pump into the economy. Exactly. But they're not going to do it, so I'll do it myself. The reason it doesn't (and the reason why it's fashionable to separate monetary authority from fiscal authority) is because of beliefs about pervasive inflation caused by large increases the supply of money, particularly if that comes in the form of handouts to those with a high marginal propensity to spend it. Yes. That's exactly right. Last Spring, before I came up with the idea for Gresham Dollar, I realized that these inflationary concerns are unfounded. Obviously, if you dump $8 trillion into consumers' hands all at once, you'll have some kind of a problem, but an increase in spending is not inherently inflationary if we can scale our production to meet the new demand. I could go on about this forever. But the bottom line is that printing money and handing people a basic income does not necessarily cause general price inflation and there are always ways to manage price levels. But as far as I can see based on your outline, Gresham dollars are at best functionally equivalent to regular dollars in their effects on demand in the economy. Yes. That's the idea. Demand increases when they're handed out, supply lags, ergo prices go up. In the short term, prices for certain things can go up. But, thanks to technology, our collective means of production is getting ever more scalable. That means prices can even come down as we produce more. It's not entirely clear what will happen to prices, but I have a few different models for different types of goods. Another example is that a basic income will likely cause people to migrate away from big cities and could put downward pressure on real estate prices in places like Silicon Valley. It's all very fascinating. Anyway, the government thinks this kind of thing will automatically cause inflation. I don't. So I'm doing it. But you can add in a [very] slight increase in cost of sale for merchants accepting GD, especially if they need to convert to regular dollars to pay their suppliers. I'm not sure we need to do that. At first, the GD business will only be a small part of the sales these merchants make, so they can still pay their suppliers in USD and wait for their GD to convert. Later on, more businesses, including possibly their suppliers, will be accepting GD. So why Gresham dollars? Why not just hand out newly minted regular dollars? I wish they'd do that. Then I wouldn't have to work on this project. Or food stamps, if the aim is to socially engineer how they're spent? The idea isn't to socially engineer how they're spent. The idea is to subsidize consumer spending for the entire economy. I don't want to cause distortions in the markets. I receive food stamps myself and they are very economically inefficient. As far as I can see, all the differences are disadvantages (confusion, costly new infrastructure, discouraging saving behaviour amongst low income beneficiaries) Confusion and costly new infrastructure are certainly disadvantages. I disagree that discouraging saving behavior is a disadvantage. Especially in today's economy, consumer spending could use a boost.
• deleted 11y ago
  [deleted]
• kriro 11y ago
  A couple of questions: 1) Could you describe the problem you are trying to fix in more detail? Who needs GD and why can't they use USD instead? You mention basic income. Why is another currency needed for that? How will the basic income be provided, wouldn't you essentially have to fund it out of your own pocket. If you think someone else would fund it, how would you make sure GD are used? [untangle the currency from basic income for me] 2) Walk me through the process of opening an account, buying a shirt from WalMart, buying a USB stick from Amazon and buying an Apple at my local market. 3) What's the legal requirements for this? Would you need a banking license to operate the exchange and infrastructure? You say it's a cryptocurrency. How do you manage the monetary exchange in a crypto fashion? How would you think the US government would view GD (especially since it is supposed to help with a basic income)? Edit: Removed Q4 since it's essentially covered by the 30 day conversion
  • Suncho 11y ago
    1) Could you describe the problem you are trying to fix in more detail? I'm trying to solve the problem of how to get income to consumers in a reliable and efficient way that causes a minimum of economic distortion. Consumers must be able to spend in order for the economy to function. Historically, we have relied on the labor market to distribute money to consumers. We have expected consumers to be able to trade their labor to employers in exchange for money to spend. But the labor market's primary function is not to distribute spending money. It is to match labor with the businesses who utilize it. Different businesses require different types and amounts of human labor. It would be an amazing coincidence if compensation for labor somehow aligned with a favorable distribution of incomes in our economy. That's why it doesn't. That's why it never has and it never will. And because consumers lack adequate income, we produce less and our productive capacity gets under-utilized. If it gets too bad, you have a collapse like the Great Depression during which, we shut down factories and actually lost productive capacity. Our society has this belief that you jump-start the economy through investment (bank loans), etc. In the run up to 2008, spent credit that they had to pay back. If they had real money instead instead of borrowed money. The problem I'm trying to fix is the business cycle, or at least its harmful effects on the real economy. I'm also ultimately hoping to provide a universally accepted currency for the global economy. TL;DR: The problem I'm trying to fix is an inefficient economy. * Who needs GD and why can't they use USD instead? * If the government wanted to hand me the printing press, this whole enterprise would be a lot simpler. One way to think about Gresham Dollar is that it's a work-around for not being able to print more USD. * You mention basic income. Why is another currency needed for that? * It's not. But you do need to be able to create the money that you hand out to people. I used to think that the best way to pay for a basic income is through taxation, but I don't think that anymore. It'd be easier to do it through issuing new currency (i.e. deficit spending). * Who needs GD and why can't they use USD instead? * The economy needs more dollars to be distributed to consumers. Since we can't create new USD, GD is a substitute. Anyone who lacks an income needs GD. Any business who wants business from those people needs GD. Mostly, the overall macro-economy needs GD. Furthermore, the ultimate goal of GD is to be the world's currency. At some point, there may be Gresham Euros or Gresham Yen, but the end goal is to have a universal currency. * How will the basic income be provided, wouldn't you essentially have to fund it out of your own pocket. * We will need investors not only to fund our operations, but also to supply the USD reserves necessary to back the Gresham Dollar currency itself. The return on these investments will come in a different currency (GD) than the currency that was initially invested (USD). This works because, by the time we've succeeded (which I call the transition date), GD will have supplanted USD as the primary currency that people use. If we succeed, the investors won't care about USD anymore. If we fail, as with any investment, investors will lose their money anyway. As issuers of our own currency, we are in the position of being able to negotiate exact returns with our investors. We can therefore fund ourselves entirely by issuing a peculiar type of debt, which we call Future Gresham Dollars (FGD). If an investor provides us an initial investment of $5 million USD, for example, we can promise to pay them back e.g. $50 million GD at the transition date. That investor will be said to own 50 million FGD. A Future Gresham Dollar is essentially an IOU for a Gresham Dollar payable at the transition date. Since our FGD debt is denominated in GD, it's impossible for us to default on the debt. We create new GD to pay it. Gresham Dollar is crowd funded. Any time we want to boost our USD reserves, we can do so by selling new FGD. We will provide an interface to allow any Gresham Dollar user to buy FGD. While we may receive some large investments, anyone can participate in the crowd funding by investing any amount. Future Gresham Dollars are essentially discount bonds that all share the same date of maturity (the transition date). This means that Future Gresham Dollars are fungible – i.e. one investor's FGD is interchangeable with another investor's FGD. Investors can therefore trade FGD amongst themselves thereby creating secondary market for FGD. Users can set their own buy and sell prices for FGD. They can make money by dealing in FGD. We will set our own price for selling FGD to the market. Whenever our USD reserves are growing faster than we need, we will raise our FGD sell price to slow down our influx of USD. Investors may then prefer to buy FGD from each other on the secondary market. Selling FGD to another investor before the transition date can yield a more immediate profit. Furthermore, if we properly underprice our initial offering of FGD, our initial investors will be able profit right away. We may additionally set our own FGD buy price to prevent the value of FGD from falling too far. Our buy and sell prices, taken together, will define a price spread inside which FGD dealers can trade. When we buy FGD, we'll only ever pay in GD rather than USD because paying in GD has less of an effect on our USD reserves. Given that FGD is fungible and freely traded, we can conceptualize FGD as a currency of its own. Immediately prior to the transition date, because it will soon convert to GD, FGD will already have been circulating at close to the value of GD. Although FGD's value fluctuates with time, it will inevitably converge to the value of GD as the transition date approaches. The payout simply consists of relabeling all FGD as GD. Nothing dramatic happens on the transition date. There's no impact on the economy or the money supply. In addition to setting personal buy and sell prices, users can always buy and sell FGD at whatever price is offered by the market (spot price). When making Gresham Dollar purchases, users can pay using FGD by automatically, at the time of payment, exchanging FGD for GD through the dealer market at the spot price. In addition to the money they stand to make, individuals might invest (buy FGD) because they support our objective to provide people with a basic income and stabilize the world economy. Investors often care about changing the world for the better. * If you think someone else would fund it, how would you make sure GD are used? [untangle the currency from basic income for me] * The basic income is a primary way in which new GD is introduced into the economy. Once the money is created, the GD can circulate freely among people who accept it. It has value on its own because it will convert into USD when people hold it. At first, only a few thousand people will have the basic income, but the plan is to expand to cover more and more people. GD are basically the same as USD, but people get paid their basic income in GD because we can't create new USD. Is that what you meant when you asked me to untangle the currency from the basic income?
• obeone 11y ago
  1. Where does the money come from to fund the conversion into USD? i.e. is this self-funding somehow or is it a government program? 2. Why 30 days to mature (why not 0, 3, 15, 45, 3650)? 3. "Far fewer USD reserves than a central bank would normally need..." OK. So I'm missing a bigger point of the mechanics. (see #4...) 4. Is there a Ponzi-Scheme danger as more people are trading their Viral Currency? PS- 1. The premise of the hack is interesting--bad money gets spent first, good gets saved; though ironically the bad is less valuable if you spend it today (discount)-- 2. I like the goals of basic income. Thanks for experimenting with it and starting a conversation.
  • Suncho 11y ago
    Good questions! 1. Where does the money come from to fund the conversion into USD? i.e. is this self-funding somehow or is it a government program? It's not a government program. The primary way in which we build our USD reserves is through the sale of "Future Gresham Dollars," which are tokens that automatically convert into GD at a pre-determined future date, after which Gresham Dollar no longer automatically converts into USD. An early investor might pay, say, $5 million USD in exchange for $50 million FGD. Anyone can buy FGD, so you can think of it as a form of crowd funding or crowd investment. 2. Why 30 days to mature (why not 0, 3, 15, 45, 3650)? 30 is an arbitrary number. I picked 30 days because it sounded reasonable and then I did some calculations based on that number. For example, let's say we choose Boston as our starting city. We would sign several merchants, probably mostly grocery stores, to 90 day merchant contracts with a 100% reserve ratio requirement. There are roughly 10,000 homeless people in Boston. We'd need about $5 million in FGD investment to run a 3-month experiment during which we distribute basic accounts with a $10 daily basic income and a 30-day GD lifetime. This assumes that we're handing out the same number of accounts every day; on the last day, the 10,000th account will be activated. In a worst-case scenario assuming we don't get any further USD reserves and everybody sits on their GD without spending it, we run out of money and shut the whole thing down after 90 days. But that's a worst-case scenario. We can do similar calculations with other GD lifetimes. And, in fact, the plan is to gradually lengthen the lifetime of Gresham Dollar until the day when it no longer converts to USD at all anymore. 3. "Far fewer USD reserves than a central bank would normally need..." OK. So I'm missing a bigger point of the mechanics. Hmm. Well, we don't offer on-demand par exchange for GD. The only way for GD to convert back into USD is for its lifetime to expire and its lifetime gets reset every time it changes hands. The less people trust it, the more they will get rid of it, and the less we have to dip into our USD reserves. That being said, we will initially have 100% reserves, but not forever. 4. Is there a Ponzi-Scheme danger as more people are trading their Viral Currency? There's always the risk that we run out of USD reserves. But we will continually maintain worst-case estimates of when that will happen that are visible users when they log into their accounts, so it won't hit anyone out of nowhere. Furthemore, you'll always be able to see how much of your GD is guaranteed to convert even in the scenario where everybody just suddenly decides to sit on their GD one day. Even so, if you're an ordinary user not holding large balances of GD, you'll be okay even if we run out of reserves. Unless you're a merchant partner, there's a cap on the amount of GD that will convert to USD in a given period of time. So if, for whatever reason, you're holding $2 billion in your Gresham Account and we run out of USD reserves, you're not going to get most of your USD back. I wrote more about the activation cap in one of the other comments here. Merchant partners take on risk as defined in their contract. If you're a merchant partner whose contract says you get 90% of your USD back in the event that we fail, you'll get 90% of your USD back. It's actually more involved than (and not quite as bad as) that. We have a whole plan for what happens if we run out of USD reserves. It's called the Disruption event, and it's something we can technically come back from. But during Disruption, GD will obviously not be converted to USD as normal and we will allow merchants to set separate prices in GD and USD. But if Gresham Dollar is already somewhat established by then, it doesn't necessarily mean the end of the currency and we can always recover from Disruption by bringing our USD reserve levels back up. PS- 1. The premise of the hack is interesting--bad money gets spent first, good gets saved; though ironically the bad is less valuable if you spend it today (discount) Thanks! If you spend at a merchant partner, who's required to accept GD at par with USD, then you don't actually get less value from your GD for spending it early. And if you're selling your GD on the market, you'll still get more value for your "younger" GD because all GD is the same to the person receiving it, so you'll get the same price no matter what. 2. I like the goals of basic income. Thanks for experimenting with it and starting a conversation. =)
• Mz 11y ago
  How does this become basic income?
  • Suncho 11y ago
    I'm sure this is controversial for me to say, but we can pay for a basic income by printing money and handing it out. The government likely won't even think to do this because it's so counter-intuitive. By creating our own currency, we can be the ones to "print" the money and hand it out.
    • dredmorbius 11y ago
      But your currency is backed by USD. How do you cover printing your own money, or are you borrowing for each GD you issue?
      • Suncho 11y ago
        Well the idea is that once Gresham Dollar gets circulating, the rate at which we dip into our USD reserves will be far less than the amount of GD in circulation, so we'd be able to sustain more total GD than we have USD in reserves. You can think of each GD as an IOU for a USD that automatically gets paid after a period of time. In that sense, it's like borrowing. But, over time, as people get accustomed to paying using the IOUs, the IOUS become a currency of their own. Similarly, USD used to be an IOU for gold, but there was always far more USD in circulation than there was gold to back it up. Eventually USD progressed passed the point where it needed anything concrete underpinning its value. Money has value because other people value it. Once everyone accepts it, its value is self reinforcing. I'll accept cash as payment from Alice because I know Bob will accept it as payment from me. Eventually, Gresham Dollar will not need to be backed by USD anymore.
    • Mz 11y ago
      That doesn't really answer my question. Let me rephrase that: Let's assume you successfully created a new currency and let's assume it does not result in hyperinflation. What mechanism will be used to give everyone a cut? Have you even crunched the numbers on how much money you will need to give everyone a cut? How many dollars per month are you planning to distribute to "everyone" and by what mechanism do you intend to distribute it? Thank you.
• seibelj 11y ago
  I'm intrigued, I live in Boston and am a software engineer, shoot me an email if you'd like to get coffee. seibeljames@gmail.com
  • seibelj 11y ago
    Follow up - I met with Alex (suncho) and he is a rational, reasonable person with a strong passion and belief in his idea. The idea fascinates me, I will be thinking about it for some time, and personally investing when it is released. Alex - I recommend you get a website and white paper out, and a forum to discuss this with like minded people.
• applealoevera 11y ago
  I really like the concept behind this idea. I hope to be able to follow the development of this idea. Hope that you can start a site or blog of sorts. In fact, most of your answers here would serve as good content to begin with.
• dredmorbius 11y ago
  How do you make money?
  • Suncho 11y ago
    If we succeed, we'll control the world's money supply. Along the way, we'll likely use a small, publicly-disclosed portion of the investments we receive for salaries and other expenses. We'd switch over to spending only GD as soon as is reasonable. Our investors earn pre-determined returns on their Future Gresham Dollars (see other comments), so they make money no problem.
• nearbuy 11y ago
  I have a question about bootstrapping. You want GD to be circulating. It seems to me, initially, most merchants will hold on to their GD until they convert to USD. This will cause you to burn through your reserves. How do you incentivize merchants to spend their GD and get the currency to keep circulating instead of having, Basic Income -> merchants -> USD?
  • Suncho 11y ago
    You're right. Especially at the beginning, merchants won't find many other businesses who will take their GD, so even if they wanted to spend it, their options would be limited. But they do have a few options, including: 1. Merchants can use their GD to pay their employees bonuses. Those employees, who also have a limited number of places to spend it may then turn around and spend their GD back at their employer again. It would be a way for merchants to lock in business. 2. It's easy to frame Gresham Dollar as part of a social cause. Merchants can use their participation in Gresham Dollar as a way to market themselves to socially-conscious customers. Maybe they even donate some of their GD proceeds back to the community. The community is then likely to spend some of that GD right back at the merchant who donated it. I'm open to other ideas. Does anyone have any suggestions? In any event, my assumption is that, to start, the Gresham Dollar market will look mostly like Basic Income -> merchants -> USD, and that in order for us to survive this initial bootstrapping phase, we'd require sufficient USD reserves to offset the attrition of GD. Ideally, we would bootstrap fairly quickly. We would want to take in USD reserves faster than the rate of GD attrition. Then, as Gresham Dollar achieved wider adoption, that attrition rate, as a percentage of total GD in circulation, would decline. I imagine that some of our initial investors will be expecting us to fail, but they would have invested anyway because the worst case scenario is that they paid for a bunch of poor people to get some free money for a few months. And the best case scenario is that they contributed to an economic revolution and made a profit in the process.
    • nearbuy 11y ago
      I really like the goal of this project. I don't have many ideas that would help get it circulating. Maybe look for smaller communities that source a lot of supplies locally and launch pilot programs there. You could get the whole community on-board since you could be injecting a significant amount of money into a small economy. Convenience and lack of transaction fees could be an incentive to spend. Sending USD to friends and family typically involve waiting periods, transaction fees and inconvenient processes (cheques, email money transfers). Of course, Venmo and Paypal have improved this in recent years. Combining the above two ideas, you can launch in communities outside the U.S. where financial inclusion is limited. There are many places where the majority of people don't have bank accounts. They already lack the advantages of credit/debit cards, paypal, etc. They may not have enough assets to make opening a bank account worthwhile. Granting people there basic income and GD accounts could solve both these problems. Plus, by choosing a location with a smaller economy and lower cost of living, you could have a more pronounced effect with the same amount of investment. You could team up with a charity that already gives money to these communities. Maybe create a service for merchants where they could spend their GD. Some kind of customer loyalty program that pays out rewards in GD, or an advertising service that lets merchants advertise to people with GD accounts. Honestly, getting a new currency into regular circulation seems like a really hard problem. Good luck!
• gruvious 11y ago
  You incentivize merchants with new customers that will shop exclusively at GD accepting merchants. After you have these merchant agreements in place, it will then be easier to incentivize the merchant suppliers to accept GD in order to stay competitive in their market. The model, as I see it here so far, does not take into account the administrative costs of doing business. I'm talking about human resources, database servers, credit cards for BI recipients, transaction fees over credit networks... how do anticipate meeting these overhead costs? Also, in regards to BI, I am also curious about the mechanism. One of the arguments for BI is that it eliminates the overhead costs associated with various agencies of social welfare and passes that savings on the public. Nevertheless, GD is a transition currency that will not originally be available to everyone as BI, which means that there will need to be some sort of selection mechanism (which is hopefully not as costly or beauracratic as current US welfare systems). As the currency gains popularity, more FGD is sold and the USD reserve goes up. How do you quantitatively measure the popularity of GD? Will you be collecting data on transactions that feed into this analysis? What metrics are used to calculate the acceptable reserve level? Is this what will influence the production and distribution of new GDBI?
  • Suncho 11y ago
    You incentivize merchants with new customers that will shop exclusively at GD accepting merchants. After you have these merchant agreements in place, it will then be easier to incentivize the merchant suppliers to accept GD in order to stay competitive in their market. Yes. Gresham Dollar would creep up the supply chain. The model, as I see it here so far, does not take into account the administrative costs of doing business. I'm talking about human resources, database servers, credit cards for BI recipients, transaction fees over credit networks... how do anticipate meeting these overhead costs? We'll take a small portion of the investments we receive and put it toward paying operation/capital expenses. The rest of it goes toward boosting our USD reserves. I won't get into specifics because I don't have the specifics worked out. Even if I did, they'd be boring. One of the arguments for BI is that it eliminates the overhead costs associated with various agencies of social welfare and passes that savings on the public. Basic income is more than just "efficient welfare." Consumer spending is the bedrock of any economy and basic income enables that. The labor market does not exist for the purpose of distributing consumer income, so naturally does a poor job of it. We, as a society, have devised all sorts of rules and regulations to try to force the labor market to be our economy's primary income distribution system, but it's an uphill battle. Nevertheless, GD is a transition currency that will not originally be available to everyone as BI, which means that there will need to be some sort of selection mechanism. Initially, there will be two selection mechanisms and they're both very simple: 1. We'll pick a city to start in, we'll sign up some merchant partners in that city, and we'll hand out a certain number of basic accounts every day to poor people in the city. These accounts receive the "basic income." We'll repeat this process from city to city. We'll partner with local social services organizations, such as homeless shelters and soup kitchens, in finding people to give these accounts to. What we'll physically hand out will be tokens (e.g. something like debit cards) representing accounts in our system. Merchants will use the tokens to receive payments from the appropriate accounts. 2. On the other end of the spectrum, anyone can sign up for a starter account online. A starter account doesn't receive the basic income. Starter accounts allow you to: 1. Hold a GD balance. 2. Accept payments in GD 3. Buy Future Gresham Dollars In the long run, we will upgrade all starter counts belonging to individuals into basic accounts. In the short run, individual starter accounts participate in the Gresham Points system, which is the other selection mechanism for determining who receives a basic income. When an individual starter account user converts USD to GD (e.g. by transferring money from a linked bank account), that starter account earns a corresponding number of Gresham Points. Periodically, the individual starter account with the highest number of accumulated Gresham Points will be upgraded to a basic account. Although most new basic accounts will be handed to low income people, a small number (orders of magnitude smaller) will be created, in this way, as a part of the Gresham Points game. In addition to motivating people to use Gresham Dollar, the Gresham Points competition helps build our reserve of USD. Users can monitor the high scores to determine how many additional points they need to win a basic account. How do you quantitatively measure the popularity of GD? There are a bunch of different variables we can track including: 1. Number of users 2. Number of merchants 3. Size of USD reserves 4. Velocity of GD (how often it gets spent) 5. Number of transactions. Will you be collecting data on transactions that feed into this analysis? We will record every transaction in a ledger. What metrics are used to calculate the acceptable reserve level? Is this what will influence the production and distribution of new GDBI? Good question. If our USD reserves dip to the level where we can only fulfill our existing promises and nothing more, then the system goes into Disruption (explained in another comment). We probably would not expand to a new city without first securing enough USD reserves to provide USD-backed basic incomes to its poorest citizens for at least a couple of months. But we don't want to expand too slowly, because, as you said, popularity helps us build our USD reserves. We would want to bootstrap ourselves while riding as much hype as possible. Lots of details still to be worked out.
• gruvious 11y ago
  You incentivize merchants with new customers that will shop exclusively at GD accepting merchants. After you have these merchant agreements in place, it will then be easier to incentivize the merchant suppliers to accept GD in order to stay competitive in their market. The model, as I see it here so far, does not take into account the administrative costs of doing business. I'm talking about human resources, database servers, credit cards for BI recipients, transaction fees over credit networks... how do anticipate meeting these overhead costs? Also, in regards to BI, I am also curious about the mechanism. One of the arguments for BI is that it eliminates the overhead costs associated with various agencies of social welfare and passes that savings on the public. Nevertheless, GD is a transition currency that will not originally be available to everyone as BI, which means that there will need to be some sort of selection mechanism (which is hopefully not as costly or beauracratic as current US welfare systems). As the currency gains popularity, more FGD is sold and the USD reserve goes up. How do you quantitatively measure the popularity of GD? Will you be collecting data on transactions that feed into this analysis? What metrics are used to calculate the acceptable reserve level? Is this what will influence the production and distribution of new GDBI?
• MetaMonk 11y ago
  (1) Where are people going to go to learn how obtain GDs, or is the plan to have other adapters reify GD first and then have it move on to others? (2) I can't imagine some of the poor in, say, Harvard Square maintaining their GD wallets, be they physical, hardware or otherwise. This isn't the problem you're trying to solve, but just a thought.
  • Suncho 11y ago
    (1) Where are people going to go to learn how obtain GDs, or is the plan to have other adapters reify GD first and then have it move on to others? Depends on the people. GD comes into existence through the basic incomes that basic account holders receive. Initially, we'll hand these basic accounts out to poor people. What we'll literally hand them is a physical card that participating merchants can process at the point of sale. So these initial users will not really have to learn how to obtain GD. We actively give it to them. We'll actively set up some merchants to be able to process GD payments. The sales pitch to merchants is, "We're giving people free money. Do you want their business?" Additional merchants would be able to sign up for merchant accounts through our website. At first, we won't be able to give basic incomes to every individual. But anyone will be free to sign up online for starter accounts that allow them to receive and make payments in GD, participate in the crowd investment of GD (Future Gresham Dollars), and compete for Gresham Points (described in another comment). The initial basic account users and merchants will help reify GD. Ideally, our project would generate some hype leading others to sign up for starter accounts. (2) I can't imagine some of the poor in, say, Harvard Square maintaining their GD wallets, be they physical, hardware or otherwise. This isn't the problem you're trying to solve, but just a thought. There's not much managing they have to do. The plan is to make the Gresham Card as simple to use as an EBT (food stamps) card. You use your Gresham Card to spend at merchants who accept GD. The GD balance is tapped first, followed by the USD balance. There's an online interface through which users can link bank accounts, make online payments, change settings, and do other fancy things. But users who completely ignore the online interface, for whatever reason, will still be able to receive and spend their basic incomes.
• hc07 11y ago
  Wow, crazy idea. However, no matter how good or plausible this idea is, it's extremely vulnerable to itself... Central banks have power not only because they can issue currency, but also because they are a monopoly (in their sphere of influence). Nothing stops someone else, including the govt or someone trying to destroy the system, from replicating this and give out Another Dollar (AD). In fact, if there's even a hint this is popular, I expect to see this co opted by big corporations or entities with far more resources. Wal-Mart Dollars, Amazon Dollars, might all show up, which actually destroys the trust of this kind of system. This is the killer of almost all innovations, the innovator's dilemma. How could you guarantee it's only you?
  • Suncho 11y ago
    The glib answer I usually give people is that it would be great if someone stole my idea because then the world's economy would fix itself without my help. I'd just go back to having fun and doing my own thing. I've long assumed that basic income was inevitable. I didn't know how we'd get there, but I was optimistic about the future. I still believe that basic income is inevitable, but now I have a way to help it happen sooner and more smoothly. But I'm sure my investors won't be entirely happy with that answer. I actually do feel it's important for Gresham Dollar to succeed. If someone else tries to do it, they might do it wrong. If someone else tries to execute on this idea, but they don't get it quite right, it'll be a rough road for our economy. How could you guarantee it's only you? The answer is that I can't guarantee that it's only me, but because of the network effect inherent in money, it has to be only someone. Money is a natural monopoly. So if we're the first to disrupt money in this way, it's going to take a lot of resources to dislodge us. The more popular Gresham Dollar gets, the more someone else will want to copy it, but the harder it gets for them to be able to succeed in doing so. In fact, if there's even a hint this is popular, I expect to see this co opted by big corporations or entities with far more resources. Wal-Mart Dollars, Amazon Dollars, might all show up, which actually destroys the trust of this kind of system. I don't know. The less people trust Gresham Dollar, or any Gresham Dollar-Type (GDT) currency, the more likely they are to spend it. Lack of trust, in some ways, actually boosts a GDT. What's critical is that we make the whole thing user-friendly. It should be seemless to switch between spending GD, USD, other GDTs, and any other currencies that are in the mix. It's always been the plan for Gresham Dollar to integrate well with other currencies besides USD. This should include other GDTs. I can imagine a scenario in which the various GDTs work synergistically together. You could have multiple big corporations each with their own USD reserves backing their own GDT and providing their own basic income and we'd have a system for exchanging between the GDTs. For example, let's say Walmart has Walmart Bucks as their GDT. If you can only spend Walmart Bucks at Walmart, Walmart Bucks aren't going to take over the world, but they could be an important part of the overall GDT eco-system. We would hold a reserve of Walmart Bucks and provide a facility for people to exchange their Walmart Bucks for GD at slightly less than par. If a GD user wants to shop at Walmart, he can save money by first converting his GD to Walmart bucks. Ideally, this process would be automatic. Wow, crazy idea. Thanks!
• dredmorbius 11y ago
  Having had some time to consider this, questions and observations. (Some duplication of HN discussion -- it unfortunately pretty much dies after a day or so, G+ has the advantage of keeping those interested in a discussion looped in.) 1. How do you make money doing this? 2. Where does the investment for USD come from? How is this renewed? How are loans and/or investors paid back? What risks do they face? 3. What are the barriers to entry? Why doesn't _everyone_ start such a service? An "I'm creating my own money, care to join" venture is fine and dandy, but one thing a currency sovereign enjoys is, well, currency sovereignity. And in particular, legal tender status. 4. Who's left holding the bag? If this collapses, who loses out? Presumably, merchants. Is there any provision made for this possibility? 5. How do you plan to crack this market? The existing consumer revolving credit market is pretty resistant to entry. The two biggest players, Visa and MasterCard, both originated as large bank-based credit cards (BankAmericard => Visa and InterBank Master Charge => MasterCard). Other contenders include American Express (financial services, origins related to Wells Fargo in the 19th century), Discover (3rd largest card, though distantly, also acquired Diners Club which I was going to list separately), but they've failed to make major inroads against the two giants. 6. The "Gresham's Law" bit seems to apply to holders. The key being that people will spend the currency faster if they lose faith in it. But this assumes that the _sellers_ will accept the currency. A loss of _seller_ acceptance will in fact torpedo the currency. I strongly recommend William Stanley Jevons, _Money and the Mechanism of Exchange_, which still serves as the foundation of much thinking on money (~1880). 7. How is this not a Ponzi scheme? https://en.wikipedia.org/wiki/MMM_%28Ponzi_scheme_company%29 https://en.wikipedia.org/wiki/MMM_%28Ponzi_scheme_company%29 (Questions also posted to G+.)
  • Suncho 11y ago
    2. Where does the investment for USD come from? The USD reserves are crowd funded through the selling of Future Gresham Dollars. I've described FGD in other comments. Our USD reserves also increase any time someone converts USD to GD in their account. How is this renewed? If we desire more USD reserves, we can sell more FGD to the open market. The FGD debt doesn't renew. We just issue more of it as needed. And after the transition date, there's no longer any such thing as FGD. How are loans and/or investors paid back? What risks do they face? On the transition date, all FGD becomes GD. The risk is that, if Gresham Dollar fails, GD may not be worth as much as the investors were hoping.
• hc07 11y ago
  I want to explore another angle of this point I brought up (i mentioned this below for a different point): "What's the point of basic income then if eventually tens of thousands of GD is required to buy bread and basic income is only several thousand (point is, not enough to make a difference)? This happens in a sort of way in real life already... Because govt meddle in education loans and subsidies for college, the result isn't just that there are more availability of education only, there's also an ever increasing climb , almost unhooked from reality, of tuition costs. And some people simply stop paying back, which in a way results in a kind of wealth transfer effect like your GD. But the lethal point is that no force stops the inertia from becoming ridiculous. We already see that colleges no longer have incentive to adhere to reality and prices go to the moon. To remain effective, GD BI have to climb, and off we go to the races. Applied to entire economy, you get hyper inflation. Your GD can't distribute fast enough when mass psychology sets in." Another effect is that not only would GD be viral, BI inside this system itself would become viral. Like the college tuition example, over time, this will disintegrate to the point that people who really make a living and earn USD (or any other way to measure real money, not the BI allocation) will be eclipsed. Everything will become like college. There will be nobody left will be able to afford it in full without some kind of help. Either that, or the BI effect and influence Will diminish and we're back to square one. In this sense, I'm back to what I said above. The BI powered by GD is going to become viral on viral. It will destroy the real economy completely, until nothing is left. The structure it's such that they cannot both coexist.
  • Suncho 11y ago
    Another effect is that not only would GD be viral, BI inside this system itself would become viral. By "viral," do you mean "inflationary"? I'm not sure how useful it is to compare student loans to basic income. Student loans have to be paid back. And they can only go toward college, so they cause market distortions that a basic income wouldn't cause. Many of the products and services we use benefit from economy of scale. The more we produce of a particular product, the cheaper it becomes to produce each individual unit. If we give people money to buy more goods, we will scale up to produce more goods to sell to them, which in no way pushes prices higher. A basic income won't, on its own, lead to general price inflation.
• danielvf 11y ago
  Gresham's law applies when businesses are legally compelled to accept better and worse money at the same rate. In your example with silver quarters, the businesses were compelled by the government to accept the new, worse coins at the same rate as the old, and thus the switch was made. However absent legal force, different currencies trade at different rates, which are set by people buying and selling them. Since you cannot compel sellers to accept GD, GD will not trade one for one USD. Unless of course you are buying back GD at at least one for one with USD to force the market price to your desired price. Given that GD will be less valuable to sellers than USD (inherently and by design) it seems to follow that the value of GD to sellers will crash the moment you stop injecting USD into the system. Is there a way you can get a massive amount of sellers to accept a massive amount of a rapidly depreciating currency without discounting it once you can no longer keep up with the required cash injections?
  • Suncho 11y ago
    We will compel sellers to accept GD at par with USD through a legal contract. There's legal force, so Gresham's law can apply. We're not going to be buying back GD at par. Given that GD will be less valuable to sellers than USD (inherently and by design) it seems to follow that the value of GD to sellers will crash the moment you stop injecting USD into the system. The plan is to continually inject USD into our reserves at a rate faster than the rate of GD attrition. The rate of GD attrition will decrease as the currency gains more and more traction. By the time we removed the USD peg, Gresham Dollar would be a strong currency that can stand on its own. If we don't end up making it that far, we enter into Disruption and Gresham Dollar might depreciate. We have a plan for how that would work (see other comments). Is there a way you can get a massive amount of sellers to accept a massive amount of a rapidly depreciating currency without discounting it once you can no longer keep up with the required cash injections? No. And we don't plan to.
    • danielvf 11y ago
      I had missed the contract requirement for merchants to accept GD at 1-1 for USD. Thanks. However, since you can't force a merchant to accept GD in payment for goods or services, it seems that as soon as the expected value of GD goes below a certain threshold, merchants would stop accepting it, and the currency would become valueless. What am I missing here?
• deleted 11y ago
  [deleted]