Apply HN: Gresham Dollar – Viral Currency for Basic Income

(2) I can't imagine some of the poor in, say, Harvard Square maintaining their GD wallets, be they physical, hardware or otherwise. This isn't the problem you're trying to solve, but just a thought.

OK, but this could get problematic. The costs of operation and infrastructure will not be trivial, especially as the project grows beyond the bootstrapping phase. Have you considered the option of a dedicated trust fund to maintain the project's infrastructure that is supported by a not-for-profit organization?

As I understand it, the principle behind this currency is that it decays, and thus people will prefer to spend it first, otherwise it will expire and convert into USD at the account's reserve rate. So say I have $100GD at an 80% reserve rate, when it expires I will then have $80 USD. But, I may also have a basic income of GD trickling into my account and I can buy GD with USD at the pegged 1 to 1 ratio, or buy FGD at the speculative market rate.

I've long assumed that basic income was inevitable. I didn't know how we'd get there, but I was optimistic about the future. I still believe that basic income is inevitable, but now I have a way to help it happen sooner and more smoothly.

But I'm sure my investors won't be entirely happy with that answer. I actually do feel it's important for Gresham Dollar to succeed. If someone else tries to do it, they might do it wrong. If someone else tries to execute on this idea, but they don't get it quite right, it'll be a rough road for our economy.

How could you guarantee it's only you?

The answer is that I can't guarantee that it's only me, but because of the network effect inherent in money, it has to be only someone. Money is a natural monopoly. So if we're the first to disrupt money in this way, it's going to take a lot of resources to dislodge us.

The more popular Gresham Dollar gets, the more someone else will want to copy it, but the harder it gets for them to be able to succeed in doing so.

In fact, if there's even a hint this is popular, I expect to see this co opted by big corporations or entities with far more resources. Wal-Mart Dollars, Amazon Dollars, might all show up, which actually destroys the trust of this kind of system.

I don't know. The less people trust Gresham Dollar, or any Gresham Dollar-Type (GDT) currency, the more likely they are to spend it. Lack of trust, in some ways, actually boosts a GDT. What's critical is that we make the whole thing user-friendly. It should be seemless to switch between spending GD, USD, other GDTs, and any other currencies that are in the mix.

It's always been the plan for Gresham Dollar to integrate well with other currencies besides USD. This should include other GDTs. I can imagine a scenario in which the various GDTs work synergistically together. You could have multiple big corporations each with their own USD reserves backing their own GDT and providing their own basic income and we'd have a system for exchanging between the GDTs.

For example, let's say Walmart has Walmart Bucks as their GDT. If you can only spend Walmart Bucks at Walmart, Walmart Bucks aren't going to take over the world, but they could be an important part of the overall GDT eco-system. We would hold a reserve of Walmart Bucks and provide a facility for people to exchange their Walmart Bucks for GD at slightly less than par. If a GD user wants to shop at Walmart, he can save money by first converting his GD to Walmart bucks. Ideally, this process would be automatic.

Wow, crazy idea.

Thanks!

(Some duplication of HN discussion -- it unfortunately pretty much dies after a day or so, G+ has the advantage of keeping those interested in a discussion looped in.)

1. How do you make money doing this?

2. Where does the investment for USD come from? How is this renewed? How are loans and/or investors paid back? What risks do they face?

3. What are the barriers to entry? Why doesn't _everyone_ start such a service? An "I'm creating my own money, care to join" venture is fine and dandy, but one thing a currency sovereign enjoys is, well, currency sovereignity. And in particular, legal tender status.

4. Who's left holding the bag? If this collapses, who loses out? Presumably, merchants. Is there any provision made for this possibility?

5. How do you plan to crack this market? The existing consumer revolving credit market is pretty resistant to entry. The two biggest players, Visa and MasterCard, both originated as large bank-based credit cards (BankAmericard => Visa and InterBank Master Charge => MasterCard). Other contenders include American Express (financial services, origins related to Wells Fargo in the 19th century), Discover (3rd largest card, though distantly, also acquired Diners Club which I was going to list separately), but they've failed to make major inroads against the two giants.

6. The "Gresham's Law" bit seems to apply to holders. The key being that people will spend the currency faster if they lose faith in it. But this assumes that the _sellers_ will accept the currency. A loss of _seller_ acceptance will in fact torpedo the currency. I strongly recommend William Stanley Jevons, _Money and the Mechanism of Exchange_, which still serves as the foundation of much thinking on money (~1880).

7. How is this not a Ponzi scheme? https://en.wikipedia.org/wiki/MMM_%28Ponzi_scheme_company%29

(Questions also posted to G+.)

Depends on the people.

GD comes into existence through the basic incomes that basic account holders receive. Initially, we'll hand these basic accounts out to poor people. What we'll literally hand them is a physical card that participating merchants can process at the point of sale. So these initial users will not really have to learn how to obtain GD. We actively give it to them.

We'll actively set up some merchants to be able to process GD payments. The sales pitch to merchants is, "We're giving people free money. Do you want their business?" Additional merchants would be able to sign up for merchant accounts through our website.

At first, we won't be able to give basic incomes to every individual. But anyone will be free to sign up online for starter accounts that allow them to receive and make payments in GD, participate in the crowd investment of GD (Future Gresham Dollars), and compete for Gresham Points (described in another comment).

The initial basic account users and merchants will help reify GD. Ideally, our project would generate some hype leading others to sign up for starter accounts.

(2) I can't imagine some of the poor in, say, Harvard Square maintaining their GD wallets, be they physical, hardware or otherwise. This isn't the problem you're trying to solve, but just a thought.

There's not much managing they have to do.

The plan is to make the Gresham Card as simple to use as an EBT (food stamps) card. You use your Gresham Card to spend at merchants who accept GD. The GD balance is tapped first, followed by the USD balance.

There's an online interface through which users can link bank accounts, make online payments, change settings, and do other fancy things. But users who completely ignore the online interface, for whatever reason, will still be able to receive and spend their basic incomes.