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Apply HN: Gresham Dollar – Viral Currency for Basic Income

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Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#11

Post by Suncho »

wehadfun wrote: post #6

What is the difference between a gresham dollar and a debit card?

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.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#12

Post by rdl »

Suncho wrote: post #7
rdl wrote: post #3

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)

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…

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.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#13

Post by Suncho »

Wissmania wrote: post #8

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.

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.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#14

Post by Suncho »

rdl wrote: post #12
Suncho wrote: post #7

Earlier quoted context omitted.

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…

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 curren…

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.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#15

Post by Kinnard »

Suncho wrote: post #4
Kinnard wrote: post #2

Where would people get Gresham Dollars, who would be the first to accept Gresham dollars and what would they sell for them?

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…

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.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#18

Post by rdl »

Suncho wrote: post #4
Kinnard wrote: post #2

Where would people get Gresham Dollars, who would be the first to accept Gresham dollars and what would they sell for them?

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…

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.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#19

Post by Suncho »

rnovak wrote: post #10
Suncho wrote: post #9

Earlier quoted context omitted.

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 car…

So you're co-opting them into a credit issuing agency? What if your company goes bankrupt in that 30 days?

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?

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#20

Post by notahacker »

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)

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