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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 (tha

by 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?
      - rnovak 11y ago
        > 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. So again, you'll be co-opting merchants into a credit issuing agency. you haven't explained any benefit to the merchant, other than a brief marginal increase in sales, for which they're taking on risk. What happens if you fly afoul of banking regulations (since you seem to be acting as a bank in this situation), and get shut down by the government?
        Suncho 11y ago
        Thanks for grilling me on this. It's very helpful. So again, you'll be co-opting merchants into a credit issuing agency. That's certainly one way to think about it. Things like store credit and gift cards are pretty standard. You could think of a Gresham Account as a continually replenishing gift card that's usable at multiple stores. Or maybe I don't understand your question. What do you mean, exactly, by "credit issuing agency"? you haven't explained any benefit to the merchant, other than a brief marginal increase in sales, for which they're taking on risk. Well, the increase in sales won't be brief. These new customers will be receiving income streams that they didn't have before. Those income streams are permanent as long as Gresham Dollar exists as a currency. Initially, there is absolutely zero risk to the merchant because Gresham Dollar will be backed 100% by USD. Any time we want to renegotiate reserve ratios with a merchant, that merchant can say no. Their existing GD will still convert. If you're an extremely conservative merchant and you just want free money, you'll sign up for the period during which we back your account with 100% USD reserves and then you'll part ways with us. You're free to do that. Maybe you won't want to though. Maybe you don't want to lose business to your competitor who IS still accepting Gresham Dollar at a 95% reserve ratio. What happens if you fly afoul of banking regulations (since you seem to be acting as a bank in this situation), and get shut down by the government? I hope this doesn't happen, and I have reasons to believe it's unlikely. But if it does, the way Gresham Dollar is set up, we will always have sufficient USD reserves to meet all of our promised GD-related obligations. A lot of people wouldn't be happy, including our investors, but it wouldn't be the end of the world. And if we get noticed, then we made a statement and raised awareness for basic income. And maybe we collected some useful data along the way.
Kinnard 11y ago
It seems feasible that you could achieve network dominance among the poor in SF. In which case they would be exchanging it amongst themselves. And they would be the first to accept it. What would your organization be called? Your organization would also accept Gresham Dollars presumably.
- Suncho 11y ago
  My organization would definitely accept Gresham Dollar for most transactions. I don't know what the organization would be called though. Any ideas? I can certainly imagine a poor community transacting in Gresham Dollar among themselves. Since a large part of their incomes will consist of GD, they'll probably want to save their USD (if they even have any) for when they absolutely need it. One potentially tricky part is that we need to come up with a straightforward way for poor people to transact in GD among themselves. It's easy if you have a debit card (or similar) and you buy from a merchant who's set up to process that debit card. But it's not as simple if you're dealing with a friend who doesn't have a payment system set up. They could transact online through an app, but we'd have to ensure they had smart phones and a way to keep them charged. More and more poor people are getting smart phones, so this is a hurdle that's probably shrinking with time. Even if the poor people with basic income accounts trade among themselves, GD will still, on average, flow out of the poor community and into the hands of our merchant partners. The GD will then be continuously replenished through people's basic incomes.
rdl 11y ago
It would be interesting to try this with non-poor people as well, in some closed environment, maybe covered by sponsorship. e.g. at a conference, vacation destination etc. Higher density (due to artificial time pressure). Helping poor people is morally interesting but they're actually really bad early adopters -- because they're poor the usually have much more risk aversion (because getting screwed on something can be an existential problem; for me, if I lose $100 through anything but fraud or theft, I'll be slightly sad; for a poor person, they might starve or die), and because they're usually less educated/accessible/etc.
- Suncho 11y ago
  Poor people are actually great early adopters in this case because they have the highest marginal propensity to consume (i.e. what money they get, they're more likely to spend). Gresham Dollar's longevity depends on people spending it. Plus, with poor people, we can make a big impact with a small basic income. The way we'll set it up is that nobody will lose money they already had. I can get into detail about how this works if you want, but what it boils down to is that when we stop having enough USD to continue to back people's additional basic incomes, existing GD that they already have in their accounts is still guaranteed to convert to USD. The plan is to expand beyond poor people and beyond the United States, but we definitely do not want to start with non-poor people. Besides, if we get a foot in the door with poor people, it would be hard for government regulators to decide to to shut us down. For exactly the reason you said, they'd be harming a lot of people.

by Suncho 11y ago

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?
    - rnovak 11y ago
      > 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. So again, you'll be co-opting merchants into a credit issuing agency. you haven't explained any benefit to the merchant, other than a brief marginal increase in sales, for which they're taking on risk. What happens if you fly afoul of banking regulations (since you seem to be acting as a bank in this situation), and get shut down by the government?
      - Suncho 11y ago
        Thanks for grilling me on this. It's very helpful. So again, you'll be co-opting merchants into a credit issuing agency. That's certainly one way to think about it. Things like store credit and gift cards are pretty standard. You could think of a Gresham Account as a continually replenishing gift card that's usable at multiple stores. Or maybe I don't understand your question. What do you mean, exactly, by "credit issuing agency"? you haven't explained any benefit to the merchant, other than a brief marginal increase in sales, for which they're taking on risk. Well, the increase in sales won't be brief. These new customers will be receiving income streams that they didn't have before. Those income streams are permanent as long as Gresham Dollar exists as a currency. Initially, there is absolutely zero risk to the merchant because Gresham Dollar will be backed 100% by USD. Any time we want to renegotiate reserve ratios with a merchant, that merchant can say no. Their existing GD will still convert. If you're an extremely conservative merchant and you just want free money, you'll sign up for the period during which we back your account with 100% USD reserves and then you'll part ways with us. You're free to do that. Maybe you won't want to though. Maybe you don't want to lose business to your competitor who IS still accepting Gresham Dollar at a 95% reserve ratio. What happens if you fly afoul of banking regulations (since you seem to be acting as a bank in this situation), and get shut down by the government? I hope this doesn't happen, and I have reasons to believe it's unlikely. But if it does, the way Gresham Dollar is set up, we will always have sufficient USD reserves to meet all of our promised GD-related obligations. A lot of people wouldn't be happy, including our investors, but it wouldn't be the end of the world. And if we get noticed, then we made a statement and raised awareness for basic income. And maybe we collected some useful data along the way.

Kinnard 11y ago

It seems feasible that you could achieve network dominance among the poor in SF. In which case they would be exchanging it amongst themselves. And they would be the first to accept it. What would your organization be called? Your organization would also accept Gresham Dollars presumably.

Suncho 11y ago
My organization would definitely accept Gresham Dollar for most transactions. I don't know what the organization would be called though. Any ideas? I can certainly imagine a poor community transacting in Gresham Dollar among themselves. Since a large part of their incomes will consist of GD, they'll probably want to save their USD (if they even have any) for when they absolutely need it. One potentially tricky part is that we need to come up with a straightforward way for poor people to transact in GD among themselves. It's easy if you have a debit card (or similar) and you buy from a merchant who's set up to process that debit card. But it's not as simple if you're dealing with a friend who doesn't have a payment system set up. They could transact online through an app, but we'd have to ensure they had smart phones and a way to keep them charged. More and more poor people are getting smart phones, so this is a hurdle that's probably shrinking with time. Even if the poor people with basic income accounts trade among themselves, GD will still, on average, flow out of the poor community and into the hands of our merchant partners. The GD will then be continuously replenished through people's basic incomes.

rdl 11y ago

It would be interesting to try this with non-poor people as well, in some closed environment, maybe covered by sponsorship. e.g. at a conference, vacation destination etc. Higher density (due to artificial time pressure). Helping poor people is morally interesting but they're actually really bad early adopters -- because they're poor the usually have much more risk aversion (because getting screwed on something can be an existential problem; for me, if I lose $100 through anything but fraud or theft, I'll be slightly sad; for a poor person, they might starve or die), and because they're usually less educated/accessible/etc.

Suncho 11y ago
Poor people are actually great early adopters in this case because they have the highest marginal propensity to consume (i.e. what money they get, they're more likely to spend). Gresham Dollar's longevity depends on people spending it. Plus, with poor people, we can make a big impact with a small basic income. The way we'll set it up is that nobody will lose money they already had. I can get into detail about how this works if you want, but what it boils down to is that when we stop having enough USD to continue to back people's additional basic incomes, existing GD that they already have in their accounts is still guaranteed to convert to USD. The plan is to expand beyond poor people and beyond the United States, but we definitely do not want to start with non-poor people. Besides, if we get a foot in the door with poor people, it would be hard for government regulators to decide to to shut us down. For exactly the reason you said, they'd be harming a lot of people.