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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 busines

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?
  - Suncho 11y ago
    We can't force merchants to accept GD payments, but they have a fairly strong incentive to. When we first launch, every GD in existence will be backed 100% by our USD reserves. It's free money. All of the GD the merchants receive, if they hold onto it, is guaranteed to convert into USD no matter what. Once a currency is widely accepted as payment, there's a self-reinforcing network effect: "I value this currency because I know others will accept it as payment." The challenge lies in bootstrapping the currency to the point where the network effect can take over. We start by taking USD from our investors and handing it out to consumers who will spend it. But in the process, we package that USD inside GD. So we start 100% backed by USD and then we ease up with time. As merchants come to rely on their GD revenue, they'll gradually be willing to accept slightly lower reserve requirements lest they lose all their Gresham Dollar business. And since the reserve requirements only come into play when our USD reserves get low, once merchants accept lower reserve requirements, they have skin in the game and an incentive to see Gresham Dollar succeed. Note that any user can accept payment in GD. You don't have to have a merchant account. But non-merchant accounts are subject to the Activation Cap which limits the pace at which GD can convert into USD (e.g. $20/day). We remove the cap for merchant accounts, but in exchange they must set the same price in GD and USD.
    - danielvf 11y ago
      Yes, in the initial phase, as long as you are putting USD into the system for merchants to cash out, it seems like it would work. However, once you and investors stop funding GD, and the expected value of GD goes down, a merchant would then be selling goods paid for in USD, and receiving GD worth less than their USD cost. This would be a negative profit per sale and no volume effect of sales in GD would make up for this. It would seem like at least at this point, merchants would stop accepting GD payments?
      - gruvious 11y ago
        Merchants typically have margins of at least 35%, so they may make smaller profits, but probably not negative. It may be a discount, though the value of GD is not measured solely in it's USD value.
Suncho 11y ago
After living for 30 days, GD automatically converts into USD. Every time you spend it, GD's Lifetime resets back to 30 days. This is how we enforce the peg. It is the key innovation of Gresham Dollar.

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?
- Suncho 11y ago
  We can't force merchants to accept GD payments, but they have a fairly strong incentive to. When we first launch, every GD in existence will be backed 100% by our USD reserves. It's free money. All of the GD the merchants receive, if they hold onto it, is guaranteed to convert into USD no matter what. Once a currency is widely accepted as payment, there's a self-reinforcing network effect: "I value this currency because I know others will accept it as payment." The challenge lies in bootstrapping the currency to the point where the network effect can take over. We start by taking USD from our investors and handing it out to consumers who will spend it. But in the process, we package that USD inside GD. So we start 100% backed by USD and then we ease up with time. As merchants come to rely on their GD revenue, they'll gradually be willing to accept slightly lower reserve requirements lest they lose all their Gresham Dollar business. And since the reserve requirements only come into play when our USD reserves get low, once merchants accept lower reserve requirements, they have skin in the game and an incentive to see Gresham Dollar succeed. Note that any user can accept payment in GD. You don't have to have a merchant account. But non-merchant accounts are subject to the Activation Cap which limits the pace at which GD can convert into USD (e.g. $20/day). We remove the cap for merchant accounts, but in exchange they must set the same price in GD and USD.
  - danielvf 11y ago
    Yes, in the initial phase, as long as you are putting USD into the system for merchants to cash out, it seems like it would work. However, once you and investors stop funding GD, and the expected value of GD goes down, a merchant would then be selling goods paid for in USD, and receiving GD worth less than their USD cost. This would be a negative profit per sale and no volume effect of sales in GD would make up for this. It would seem like at least at this point, merchants would stop accepting GD payments?
    - gruvious 11y ago
      Merchants typically have margins of at least 35%, so they may make smaller profits, but probably not negative. It may be a discount, though the value of GD is not measured solely in it's USD value.

Suncho 11y ago

After living for 30 days, GD automatically converts into USD. Every time you spend it, GD's Lifetime resets back to 30 days. This is how we enforce the peg. It is the key innovation of Gresham Dollar.