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I'm lonely, and created a private CBDC

news.ycombinator.com

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Re: I'm lonely, and created a private CBDC

#21

Post by alice157 »

alice157 wrote: post #19

Interesting! I've got a few questions: It looks like it's currently in limited release at the moment - how would somebody go about playing with this? Is it just the verification that's private, or also the transaction history? Is it private in the sense that not even the central bank can track it, even with a code change? How do you expect this system to compare to cryptocurrencies that do liquid staking + inflation,…

Another:

One failure mode I see here is a hypothetical employer sending paychecks right before the tax hits, sticking the employees with the tax burden. In fact, I imagine there would be a monthly rush to spend and play hot potato. Would some sort of rolling window perhaps address this?

Of course, the spending is by design - it's the forced last-minute nature of it that i wonder about.

Re: I'm lonely, and created a private CBDC

#22

Post by nealbozeman »

alice157 wrote: post #21
alice157 wrote: post #19

Interesting! I've got a few questions: It looks like it's currently in limited release at the moment - how would somebody go about playing with this? Is it just the verification that's private, or also the transaction history? Is it private in the sense that not even the central bank can track it, even with a code change? How do you expect this system to compare to cryptocurrencies that do liquid staking + inflation,…

Another: One failure mode I see here is a hypothetical employer sending paychecks right before the tax hits, sticking the employees with the tax burden. In fact, I imagine there would be a monthly rush to spend and play hot potato. Would some sort of rolling window perhaps address this? Of course, the spending is by design - it's the forced last-minute nature of it that i wonder about.

The taxing is continuous. There is no strategy to wait to pay out.

Re: I'm lonely, and created a private CBDC

#23

Post by imtringued »

notahacker wrote: post #16
nealbozeman wrote: post #4

A tax is needed to raise the money for the UBI, and to keep the value and money supply stable. Income tax is unnecessary if you say money that's sitting doing nothing will be taxed out of the system (basically a waste tax). The whole system is being taxed away at 1% per month to pay for the UBI. If you spend, lend, or invest your money as soon as you get it, you never pay taxes. There's a neat equilibrium here. UBI i…

> If your account is zero, you're not paying any tax, and the account grows quicker. So the best strategy for any individual to maximise their accumulation in your currency (or in practice, minimise their losses) is to refuse to accept payments into their account, insisting on receiving payments in other currencies instead. As everyone is incentivised to refuse your currency and nobody is incentivised or required to…

Except that isn't how trade or currencies work. This is overly simplistic.

You want a currency that people want to both spend and earn. If you have a deflating currency then people would rather earn it than spend it, if you have an inflating currency then people would rather spend it than earn it.

You might now argue that the rate of inflation or deflation should be set by the market to find the optimal money tax that balances willingness to spend and receive money.

But here is the thing. If the rate of the national currency is suboptimal people will try to find substitutes. If the central bank tightens the money supply too much and unemployment is too high, then people will also accept this alternate currency because they are going to spend most of it anyway, they won't be paying much tax to begin with.

Also, from what I have seen the fees people are willing to pay on credit cards are quite ridiculous compared to the -5% demurrage of the chiemgauer. The Chiemgauer circulates 3.5 times faster than the euro so the effective fee is something like 1.25% which is less than credit card fees. Unless you are filthy rich and keep all your savings as liquid money instead of lending it out the fee is basically irrelevant.

Once you take into account that lending at 0% interest is possible then from a macroeconomic perspective the system is cheaper for the average participant and if we assume economical stability promises become true then even the wealthy with who insist on holding money will benefit because banks are less likely to need a bailout and there is no inflation.

So the problem isn't that people will refuse to accept it, the question is how do you get it started in the first place. How do you convince a critical mass of people to adopt it?

Re: I'm lonely, and created a private CBDC

#24

Post by alice157 »

nealbozeman wrote: post #22
alice157 wrote: post #21

Earlier quoted context omitted.

Another: One failure mode I see here is a hypothetical employer sending paychecks right before the tax hits, sticking the employees with the tax burden. In fact, I imagine there would be a monthly rush to spend and play hot potato. Would some sort of rolling window perhaps address this? Of course, the spending is by design - it's the forced last-minute nature of it that i wonder about.

The taxing is continuous. There is no strategy to wait to pay out.

Cool! I'm excited to see if this (or a similar system) ever gets battle tested, I think we need more innovation in how we do markets.

Re: I'm lonely, and created a private CBDC

#25

Post by flyval »

I think you’re really confused about inflation. The central bank doesn’t control inflation. Saying your currency is inflation proof doesn’t make sense, because you have no control over that.

Inflation is caused by the market valuing the currency less than it had before. For example, if people don’t trust you, your currency will undergo inflation.

Also, I see a lot of claims about metric dc being linked to MEUs but no explanation of what maintains the peg. You can’t just claim the peg, you have to enforce it somehow. Even the bank of London couldn’t do that in adverse conditions (https://www.investopedia.com/ask/answers/08/george-soros-ban...)

Re: I'm lonely, and created a private CBDC

#26

Post by nealbozeman »

alice157 wrote: post #19

Interesting! I've got a few questions: It looks like it's currently in limited release at the moment - how would somebody go about playing with this? Is it just the verification that's private, or also the transaction history? Is it private in the sense that not even the central bank can track it, even with a code change? How do you expect this system to compare to cryptocurrencies that do liquid staking + inflation,…

Thanks for the nice comment! Ping me neal@metricdc.org and I'll leave you some Metrics :) . Anyone else interested, can ping me, too. I'll leave you a "cash" pickup that you take using a QR code or URL.

The thing about centralization is that you have to abide by banking laws in each country, so accounts that are verified would have an identity that goes with them. This is the trade-off with crypto, but even crypto doesn't have this benefit because to get involved, you go through a centralized, regulated exchange.

Transactions and identities on the CBDC are private as there is no public ledger, but warrants can still be used to compel the bank to give information on an account, same as any other bank.

In my opinion, liquid staking + inflation still has the classic liquidity trap problem. You want to hold the "currency" rather than spend it, and there's not really a process to acquire the currency, other than exchanging other money for it. UBI is a process to acquire the currency, and the tax an incentive to spend it and spread it.

I will do grants this year that people can use to make new business and get new money in to circulation. Employees of businesses getting grants will also get verified accounts.

Re: I'm lonely, and created a private CBDC

#27

Post by nealbozeman »

alice157 wrote: post #24
nealbozeman wrote: post #22

Earlier quoted context omitted.

The taxing is continuous. There is no strategy to wait to pay out.

Cool! I'm excited to see if this (or a similar system) ever gets battle tested, I think we need more innovation in how we do markets.

Agreed! Ping me Neal@metricdc.org if you want some cash. If you're looking at any other ideas in the space, would love to hear about them.

Re: I'm lonely, and created a private CBDC

#28

Post by kkfx »

I suggest to consider who need CBDC: the Central Banks, in general banks between them. NOT Citizens. Why? Simply: money in a SANE ECONOMY must be a PUBLIC, not private, unit of measure of almost all substrates.

The private model is a classic scam, a VERY classic and well known but curiously for some psychological reasons still working today, being them the substrate owned by someone those can steer the society with the concept of debt. In case of revolts/wars etc controlling TLCs means also controlling economy in a cash-less society, similarly means controlling few services that run a multitude of crappy proprietary devices needed to exchange moneys against a product or for a service.

Democracy need the opposite: a common symbolic unit of measure anybody want to ease economic exchange BUT something NO ONE BUT THE PUBLIC can control. Not only directly (in regulatory terms) but also indirectly (i.e. in infra terms, tech terms etc).

So the actual evolution IMVHO, without proofs, but with enough clues, original cryptos seems to be more a fintech/BigOfIT effort to substitute themselves to classic banking systems [1] probably not worked as expected and corrected by dividing the cake with classical banking systems. The target is declared by various "supra-nationals" institutions like the WEF in it's 2030 agenda, that SOME call nazi-international or the evolution of classic nazism and socialism toward a more effective way of ruling the masses.

The target? A total economical control that led to a total control of the society, apparently absent: you feel to be free, just need to earn enough, without noticing that earning means fulfilling some desires, who are NOT emerged by a network of people interactions, individual agenda's, desires etc, or the classic so called "free market", but you are not to the point you can't live if not comply at least enough. The purpose is the idea of crafting a human evolution with a human selection instead of natural one. The earliest form of this idea I found was in a book from Clinton Roosevelt The Science Of Government, Founded On Natural Law in the 1841. He was one of the scammers of the NY bank before the FED, to read the scam itemized at the end of an historic scammer letter, at the end of the page https://www.heritage-history.com/index.php?c=read&author=car...

So? Well. In MERE economical terms a sane economy need a free currency, an artificial unit of measure controlled by the People themselves through a State. A sane society need to have spread culture, knowledge and DESIRE to evolve. Planned evolution works very well on paper, but fall short thereafter.

[1] see the Geneva Report 2019 https://voxeu.org/content/banking-disrupted-financial-interm...

Re: I'm lonely, and created a private CBDC

#29

Post by nealbozeman »

flyval wrote: post #25

I think you’re really confused about inflation. The central bank doesn’t control inflation. Saying your currency is inflation proof doesn’t make sense, because you have no control over that. Inflation is caused by the market valuing the currency less than it had before. For example, if people don’t trust you, your currency will undergo inflation. Also, I see a lot of claims about metric dc being linked to MEUs but no…

Agreed. I don't mention anything about inflation proof. Rather, it should be clarified as a reference to monetary inflation. Inflation happens for many reasons, and even monetary inflation could happen here as the circulation grows to reach its supply cap.

There are no pegs, and especially no pegs to any other currency. It's a free floating currency, but the money supply is capped to the number of verified users/accounts.

Re: I'm lonely, and created a private CBDC

#30

Post by nealbozeman »

notahacker wrote: post #20
nealbozeman wrote: post #18

Earlier quoted context omitted.

Central Banks don't require a nation-state. They can be private. Cryptos and tokens, generally, are decentralized and couldn't be controlled by a central bank. I'm using a private central bank in this case to control the money supply.

Leaving aside the basic definitional stuff (the difference between private banks and central banks is normally considered to be state authority), why does anybody want to accept the money from your "central bank" as payment? With real central banks the answer is "because creditors in a particular state are legally required to accept it as payment for debt, and everyone else in that state needs it to pay taxes which a…

Points heard - I've been down this road, too.

Contracts & debt can be specified in any currency, including a private one, even if taxes have to be marked to a national currency at the end of the year. But still a question of why adopt it?

A private currency, to get adopted, would have to be as good as a national one, plus more. UBI might help that cause. No transaction fees might be another. Stability without interventions, a 3rd? Accessible to informal economies?

Issues to overcome with each.

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