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You wouldn't, which is entirely the point. Demurrage currency incentives people to only hold what they need for cashflow purposes, and to re-investing the rest
by maaku 14y ago
You wouldn't, which is entirely the point. Demurrage currency incentives people to only hold what they need for cashflow purposes, and to re-investing the rest into real capital. It's the distinction between money as store-of-value and medium-of-exchange. Traditional money tries to be both and creates problems in the process. Freicoin is designed to be a medium-of-exchange only, and converted into other assets (treasury bonds, stocks, etc.) for long-term storage of wealth.
- tptacek 14y agoStill confused. How does a currency that overtly disincentivizes its own use solve the problem of the hoarding of other currencies?
- maaku 14y agoThe demurrage encourages it's own use as a medium of exchange - use it or lose it. Hoarding of other currencies is not a problem. I recommend reading David Graeber's "Debt: The First 5,000 Years". IIRC it has a good chapter on demurrage, as well as covering many historical currencies which by accident of design were similar to modern demurrage currency in operation.
- tptacek 14y agoWhat incentive exists for anyone to use this currency at all? Why would I ever accept a "freicoin"?
- maaku 14y agoWell there's all the advantages that bitcoin has (low transaction fees, quick processing, no chargebacks, etc.). We're also working on tools & services that would make transacting in Freicoin as easy as possible, so that for example you can set a limit on how many freicoins you want to hold, and the remainder will automatically be swept into an exchange account and converted into bitcoins or dollars.
- jdangu 14y agoI have the feeling this is in reaction to the capped total value of the bitcoin monetary system which generates deflation over time and incentivizes sparing currency instead of using it. By adding a component of inflation, you increase exchanges. Let's just get rid of the cap and keep things simple. edit: Of course from a micro-economic perspective this doesn't make sense unless it was forced onto us by a government as a de facto standard.
- stevedekorte 14y agoYou don't really increase exchange with other currencies if its low friction to do transactions in BTC as the optimal strategy is to keep your savings in assets that increase the most in purchasing power and only move value out at the moment of a purchase and only for the amount of the purchase. Likewise, the seller prefers to receive the highest appreciating asset in exchange if friction is low.
- maaku 14y agoInflation and demurrage do not have exactly equivalent effects, as we discuss in the about page http://freico.in/about/ http://freico.in/about/