Why your coin is a fiat currency and not a mutual credit?


#1

I would like to know the technical reasons of why you choosed your universal divedend coin to be a blockchain fiat currency, and not a mutual credit.

For those who dont know what a mutual credit is, read here:
http://ceptr.org/whitepapers/mutual-credit

Let me copy paste an explanatory quote from the above white paper.

Most people think that money is just money, but there are literally hundreds of decisions you can make in designing a currency to target particular needs, niches, communities or patterns of flow. Some seemingly small decisions end up having large effects when iterated over centuries and billions of transactions. But, for the moment, let’s just stick to one core design principle regarding how units in a currency are issued.

Blockchain cryptocurrencies are fiat currencies. They create tokens or coins from nothing. Bitcoin does this through mining, allowing the miner who completes a complex processing task first, to commit the next block of transactions to the chain along with a transaction that creates a bunch of new coins. These coins are just “spoken into being” (the meaning of “fiat” in Latin) by the node committing the new block. Thus begins the challenging task of tracking all the coins that exist to ensure there is no counterfeiting or double-spending. You wouldn’t need to manage consensus about whether a cryptocoin is spent, if your system created accounts which have normal balances based on summing their transactions. Sounds simple, right?

There’s a name for this completely peer-to-peer approach to issuing managing a currency supply: mutual credit. In a mutual credit system, units of currency are issued when a participant extends credit to another user in a standard spending transaction. Picture a new mutual credit currency with all accounts having a zero balance. The first transaction could look like this: Alice pays Bob 20 credits for a haircut. Alice’s account now has -20, and Bob’s has +20.

Notice the net number units in the system remains zero, just like the balance sheet in standard accounting must always balance to zero. That accounting practice places no limits on the amount of cash or assets a business can have; it simply means they are offset by an equal amount of liabilities or equity. Every negative balance in a mutual credit system is offset by positive balances so there is always a systemwide ZERO balance. You could think of the total number of units in circulation at any time as the sum of all the negative balances (or, if you prefer, the sum of positive balances since they are the same number).

But wait — Alice spent credits she didn’t have! True. That’s exactly how issuance in mutual credit works. Managing the currency supply in a mutual credit system is about managing credit limits — how far people can spend into a negative balance. Different systems set different rules about this, ranging from everyone having the same limit (e.g. 100 credits), to having NO limits and leaving the choice up to each person as to whether they want to extend more credit to someone deep in debt. It really depends on the community, the relationships, and the use case.

One elegant approach to managing mutual credit limits is to set them based on actual demand. You can calculate credit limits to be an equivalent of what you can pay back in 3 months (or another arbitrary period) based on the transaction history of each account (with a couple of anti-gaming modifications). This allows the currency supply to expand and contract based on the actual usage patterns of the community which demonstrate the market demand for the value people are providing.

This raises concerns about manufacturing fake accounts to game credit limits (Sybil Attacks). However, it is easy to implement different classes of accounts. Easy to create, anonymous accounts may get zero credit limit, only able to spend credits which they have received in prior transactions. To qualify for an account with a credit limit, one may need to validate their identity, pay an application fee, or jump through whatever hoops the community decides are appropriate for the community to extend credit (e.g. be a member of the church, live in the neighborhood, have placed a security deposit, confirmed a credit card on file which can be charged for fraud, for example).

What if I alter my code to give myself an unlimited credit limit, then spend as much as I want? As soon as you pass the credit limit encoded in the shared agreements, the next person you transact with will discover you’re in an invalid state and refuse the transaction. But what if they don’t want to refuse a transaction just because I’ve entered an invalid state? If two people collude to commit an illegal transaction by both hacking their code to allow a normally invalid state, the same pattern still holds. The next person they try to transact with using untampered code will detect the problem and decline to transact. If you get everybody to collude with a new agreement, that is comparable to a new software version or soft-fork of a blockchain.

Most modern community currency systems have been implemented as mutual credit, but we don’t know of anyone who has built a tokenless crypto-mutual-credit-currency yet, so let’s outline an approach to creating a basic one with minimal supporting infrastructure.

So why G1 is not a mutual credit? Who rejected the mutual credit initial decision, and for what technical reason? Is the universal dividend incompatible with the mutual credit idea?


#2

Would this be a “Monnaie libre” in regards of the TRM ?

Duniter wants to implement in real life a “Monnaie libre” in accordance with the TRM. Nothing more. Nothing less.

[Quite HS]
When you say “it’s easy”. If this is as much easy, why don’t you take duniter code to implement those modifications? If they are amazing, people will follow you. If everyone follows you, this remains the “duniter project”, if not, this is a fork. But why would this be bad?

I’m quite new here, but already upset by your way indeed. Everything that conducted to what is duniter project is present here, in the forum, site, chat logs. Why always invocate that people give you information, instead of looking for it and formatting it the proper way?

And if you don’t have enough time, why just do you spend your few time on passive-aggressive posts and not by constructing something good for you, for your peers?
[/quite HS]
[quite troll]
to conclude, I don’t understand what is this G1 you’re talking about?
[/quite troll]


#3

Two things.

First, if you look at the currency using a Zero-Sum Quantitative referential, you will find that it looks like a lot like Mutual Credit.

Look this : http://www.creationmonetaire.info/2014/10/le-quantitatif-et-le-relatif-les-4-referentiels.html or this : http://blog.inso.ovh/module-galilee.html

But it is different. This is my second point : with the Universal Dividend, the units of the money are defined strictly, their issuance too. Nobody can issue more money than another one. Whereas, in the Mutual Credit system, anyone is able to issue as much money as another one accepts.

I invite you to read this article to understand what is wrong with the Mutual Credit idea. http://www.creationmonetaire.info/2015/10/unite-de-mesure-01-et-comptabilite.html


#4

Your point seems inaccurate. In a mutual credit system you can set up a limit on how much money someone can issue. If the community set a common credit limit for everyone then all people are allowed to issue the same amount of money (in time-space). There is no one that can issue more money than the other, but someone may want to spend all his credit in a moment, and someone else in a decade. By setting the credit limit small you encourage people to work. By setting the credit limit high you encourage people to consume. The community could also vote to give more credit to the credible people, and less credit to the proved unreliable people . All this different and possible set up depends on what a community wants to accomplish, and it is related to governance. And of course this credit limit can be considered as some kind of universal dividend.

This cannot happen when a universal dividend is implemented by using a blockchain fiat currency and when everyone can issue as much money as the other one can. People in that case just sit down and receive the dividend. There is no incentive to work and procude wealth if you are sure that there will always be a mechanism that pays you, unless of course the dividend is small enough so that you are enforced that way to work in order to be able to live. How much big or small the dividend should be, this is also a governance question.

The above are also explained in a glance, at the article I provided to you.

But wait — Alice spent credits she didn’t have! True. That’s exactly how issuance in mutual credit works. Managing the currency supply in a mutual credit system is about managing credit limits — how far people can spend into a negative balance. Different systems set different rules about this, ranging from everyone having the same limit (e.g. 100 credits), to having NO limits and leaving the choice up to each person as to whether they want to extend more credit to someone deep in debt. It really depends on the community, the relationships, and the use case.


Systèmes de reconnaissance d'identité alternatifs (votez, s'il vous plait)
#5

This question is not at all and volunteerly handled by the money creation mecanism proposed by the TRM. Because it is political. And because you apply here a model where 1/ dividend is enough for someone to live (which is not the reason of the existence of the dividend in a Monnaie Libre) 2/ You consider that your money should make people work, whereas this point is not handled.

Have your read the TRM? Because I think lot of your interrogations on mechanisms are answered inside. This doesn’t answer to other question you affectionnate about democracy, WOT, governance that are only linked to the current money implementation, but for what questions it proposes to answer and what questions are out of scop. This is very interesting.

You would see that a range of acceptable (mathematical solutions) volume of the dividend is precisely defined if you want to be in the scope of what is defined as a “Libre Monnaie”. So the choice and gouvernance you talk about here almost doesn’t exist, because the range is very small. If you speak french, you can look also at @Galuel conference in last RML that explains why the formula to calculate dividend growth is not used as is in the duniter project.

You may also see that at least one other theory is equivalent and that mathematical bridges can be found between them.


#6

I see a tendency here, instead of answering with arguments, to say:
Go read the TRM. Go read this or that article. The only thing you didnt say to me is : go get an economics degree…

Your attitude does not encourage the dialogue. The dialogue is consisted by small questions and answers… If two people argue by pointing to big articles and to books, this is not a dialogue. It is two monologues.

If you like the dialogue, go to the TRM, find the specific quote that answers to my arguments and bring it here. This helps the dialogue. Otherwise, when you point to a whole book, this means either that you dont understand the book, or that you want to escape from the dialectic method.


#7

Finally, have you read the TRM ? If yes then this would be different ?

I simply consider that to talk about duniter, and any Monnaie libre and questionning them in the level you’re requiring is quite difficult without getting back to sources.

Because when you say “dividend amount should be debated”, TRM shows you that in the objective we have, it can not vary so much, so question is obvious.

And I feel when reading you you’re mostly asking pre-digest answers, more than trying to debate, discuss and dialog. (this, when your messages are not just hurting me because they sound like troll to my ears).


#8

Of course I have.
http://en.trm.creationmonetaire.info/probleme-de-la-monnaie-dette.html

This is where TRM rejects the debt money idea. But it does not argue for mutual credit.
It seems that it ignores its existence.

The TRM says:

In conclusion, “dept-money” is a system instituting a profound asymmetry in money creation, that is not contractually acceptable inside a democracy respecting human rights. Logically the recognition of the equality of judgment of all economical value imply the symmetry in front of the creation rules of a money that would be really common (which does not signify the equality in front of possessed goods or accumulated money following exchanges).

In a mutual credit system the community is allowed to establish symmetry in front of the creation rules of a money. If the credit limit is equal among the members of the community, then the creation rules of the money are symmetric.


#9

But the TRM makes the choice of a certain type of money creation for the symetry criteria.
I think that this is where the mutual credit diverges.

I’m not speaking about the fact that mutual credit is good or bad. It would need some demonstration that mutual credit would be equivalent, or if it exists, at least one counter example showing that the mutual credit doesn’t satisfy the symetry criteria.


#10

Il est à noter aussi que ce forum n’est pas un lieu de débat sur le choix de différentes monnaies ou systèmes économiques, mais une fois de plus, un forum technique concernant uniquement le développemert du logiciel et clients de monnaie libre selon la TRM.
Une place s’est crée naturellement pour relater et publier les évènements en relation avec la monnaie libre. Mais aucun n’est dédié aux débats concernant d’autres modèles économiques que la TRM.

Pour les débats il existe le forum non officiel: duniter.fr.


#11

@demo if you have really read the TRM, you would understand that the mutual credit you are speaking about doesn’t respect the 4 liberties of “Libre Money”. To paraphrase Galuel, if you want to have a mutual credit currency, go develop one (or use an existing one). In here, we only talk about “Libre” currencies, as defined in the TRM, and how to develop one.

Just a little hint: with the system you speak about, you mention that it is possible to create money “at will” (within some defined limits). Wouldn’t this allow for the manipulation of the money mass by a group of individuals, and thus potentially allow artificially created bubbles… (again, just a hint) Would this then respect all of the 4 liberties?


#12

And what about future members ? Because this is what differenciate a usual mutual credit system and a libre money. Actually, I often say that a Libre Money is a limited mutual credit system which integrates Time Symmetry.

The RTM talks about a specific mutual credit system, the LETS. It’s a system where the credit is the time of every members. When you join the system, you are at 0, and when you work 1h, you are credited of 1h. So, obviously, you are limited like almost everyone else : by the time you have available in a day.


What do the experiments of LETS show ?

At the beginning, there are 0 units of time on every account. And then, when one works for another one, it’s magic : one has 2 hours, and the other one, -2 hours. Here, when one works 1h, it generates up to 50% new units of time in the economy. (2 hours on an account, -3 hours on another one, 1 hour on another one = 6 hours)

Now, what happens after a given time, let’s say some years ? Some people have a credit of 1000 hours, whereas some people gave up and stopped participating in the system while having a negative credit.
When a newcomer joins, he is at 0. He is stuck : he has no credit to spend, and no one needs more credit so he cannot work for current people. If he works 1h, he generates 0.0001% of the total unit of time circulating in the LETS economy.

This is the point of the RTM : every one should be credited at a periodic time to ensure that such crisis do not happen. When a new member joins the economy later, he should be able to generate the same share of monetary units in his life (which are time units in the LETS) as the older members.


@demo , once again, that’s why we are stuck in our talks with you. You are stubborn not to read the RTM, and thus we talk but we have to explain again and again the point of the RTM, and thus the point of Duniter. Please, make the effort to read the RTM. Even with google translate it is totally readable and you should be able to understand most of it.
Then, after reading it, if you don’t agree with time symetry, , please let us work peacefully on our space-time symmetric currency system without annoying us anymore.


#13

[quote=“Inso, post:12, topic:2668, full:true”]

What do the experiments of LETS show ?

At the beginning, there are 0 units of time on every account. And then, when one works for another one, it’s magic : one has 2 hours, and the other one, -2 hours. Here, when one works 1h, it generates up to 50% new units of time in the economy. (2 hours on an account, -3 hours on another one, 1 hour on another one = 6 hours)

Now, what happens after a given time, let’s say some years ? Some people have a credit of 1000 hours, whereas some people gave up and stopped participating in the system while having a negative credit. [/quote]

In that case, whenever some people stop participating in the system, the one who has 1000 credit could lose his money (as many credits as he gained by the people who left). This is rational. If the one who owes dies, the creditor loses his money. This is called heritage disclaimer in the legal system. When the father dies, the children disclaim the heritage and the creditor loses his money. It happens in most legal systems worldwide.

Who said that? A newcomer is not at 0. He starts by having some credit limit, so he obviously can spend. He can spend as much money, as the credit limit allows. And this credit limit (which could be the same for everyone) can be considered as a dividend to the newcomers. This may be one mutual credit system variation. Please focus on what the mutual credit system is in its generality, and please understand that there can be multiple variations. Do not consider LETS (or the current Bank system) as the only possible mutual credit system (or debt money), in order to argue in favor of TRM. In the universe of mutual credit there are a lot of stars (similar to what is happening in the fiat money of course). TRM is a fiat money. Shall I argue against TRM because euro is also a fiat money? This is what you are doing.

Au contraire. You are stubborn not to listen of what the others are saying to you, and you are stuck in the TRM like if it is a Bible.

I think a mutual credit system can be designed as time-space symmetric.


#14

… and I’m working on making the RTM available in English… half way there (roughly).


#15

and

Then he spent his money and dies, so he looses nothing, and where is the money spent !? Do you pretend the people who own this money loose it because the one who spent it dies ? This is what you are saying ?

What are you taking about finally ? Please develop simulations whit at least 3 people replacing each other from year to year whith deaths and births, and make what the Galilee Module shows for Libre Money in your own very unclear, incoherent and dubious system without any definition.

When you will have done this work, for sure people who understand it, can retrieve the results, and if they agree, then you will be able perhaps to develop something for your own.

At that time then, we can close this thread without any interest about Duniter/Ğ1 and then no interest at all here. Make you own job in your own place.


#16