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Apply HN: Gresham Dollar – Viral Currency for Basic Income
21–30 of 103 posts
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#22Earlier quoted context omitted.
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 ar…
> 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?
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#23What happens if there's a "bank run" where everyone waits for their GD to mature rather than spending it?
The psychology behind a currency run causes people to want to get rid of the untrusted currency as quickly as possible. In the case of Gresham Dollar, because we don't offer on-demand exchange, that means spending it. The less people trust Greshem Dollar, the more they will spend it and the less we will dip into our reserves. This is a key feature of Gresham Dollar.
It's technically possible for us to fail because everyone holds onto their GD, but we won't. In any case, we'll always be very transparent about our USD reserve levels and how close we are to running out. I've devised a whole system for what happens in the event that our reserves get low.
Thanks for the question!
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#24Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#25A couple of questions:
1) Could you describe the problem you are trying to fix in more detail? Who needs GD and why can't they use USD instead? You mention basic income. Why is another currency needed for that? How will the basic income be provided, wouldn't you essentially have to fund it out of your own pocket. If you think someone else would fund it, how would you make sure GD are used? [untangle the currency from basic income for me]
2) Walk me through the process of opening an account, buying a shirt from WalMart, buying a USB stick from Amazon and buying an Apple at my local market.
3) What's the legal requirements for this? Would you need a banking license to operate the exchange and infrastructure? You say it's a cryptocurrency. How do you manage the monetary exchange in a crypto fashion? How would you think the US government would view GD (especially since it is supposed to help with a basic income)?
Edit: Removed Q4 since it's essentially covered by the 30 day conversion
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#26Earlier quoted context omitted.
And in general, where does the money come from? You're proposing to start your own private central bank.
Yes. Our own private central bank.
If it's fully private and not Fed-linked, where's all the money to meet the convertibility obligations coming from?
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#271. Where does the money come from to fund the conversion into USD? i.e. is this self-funding somehow or is it a government program?
2. Why 30 days to mature (why not 0, 3, 15, 45, 3650)?
3. "Far fewer USD reserves than a central bank would normally need..." OK. So I'm missing a bigger point of the mechanics. (see #4...)
4. Is there a Ponzi-Scheme danger as more people are trading their Viral Currency?
PS- 1. The premise of the hack is interesting--bad money gets spent first, good gets saved; though ironically the bad is less valuable if you spend it today (discount)-- 2. I like the goals of basic income. Thanks for experimenting with it and starting a conversation.
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#28Earlier quoted context omitted.
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 b…
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.
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#29Earlier quoted context omitted.
Yes. Our own private central bank.
If it's fully private and not Fed-linked, where's all the money to meet the convertibility obligations coming from?
It will be distributed in deposits across banks that do have deposits at the Fed. We'd try to do it in such a way as much of our reserves as possible are FDIC insured.
Have you heard of CDARS? It would be similar to that.
Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income
#30Earlier quoted context omitted.
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 ar…
OK, so if the maturity resets you are at least in a position to be able to issue nominal assets faster than people can claim your liabilities in real dollars, but that doesn't mean you're legally solvent.
I mean, a fractional reserve bank's deposits are fully backed, just mostly not with reserve dollars but with a bonds and loans which are creditors' obligations to repay the bank more than the face value of its deposits.
Your startup has a lot of obligations to pay people dollars. Who has an obligation to pay you?