Here's Dan from Emunie explaining roughly the economic model
Will the Microcash system be similar?
I'm too drunk to read that. can you tl/dr please ??
I'm also interested in the economic model. Apparently there is a plan ("decisions have been made").
Maybe we could get a hint? Like will it be an interest-based model like Zeitcoin (http://www.zeit-coin.net/) has but without an upper limit? And if yes, what will the interest rates be like?
And if there is no upper limit, do you guys really believe economy can grow exponentially forever?
I like the idea of an interest-based model, but I don't like the idea of a fixed rate. The rate should decrease until it reaches, say, 1%.
It is currently a term deposit type model. You lock your account preventing funds from being accessed for X period of time. The higher the time the higher the rate. Base rate will also be dependent upon, transaction velocity, account stuff and current supply amount. Whatever those magic numbers are will be tweaked during the beta test.
With attractive enough early interest rates it should help us avoid a pump and dump crash price wise. Though given that the seed will probably be at most in the tens of thousands I don't think price could crash much if it all anyhow, But if we attempt to get say 50% of seed funds locked away in interest bearing accounts you've already halved the potential dumped amount anyhow. Should be interesting to see what, if any effect this will have on price. If we do it right we may be able to get a steady increase in price for some months/years which could be beneficial to MicroCash as the majority of people seem to correlate price to success.
Both account fees and transactions are destroyed so that is the opposite end of the spectrum to help with supply contraction.
Also, the MicroCash economy will have the capacity to expand to meet world demand for a single currency. It is designed this way on purpose in the (very unlikely) case it becomes the defacto global trade mechanism. I see it like we may as well let the economic aspect grow to meet that potential demand, as the transaction engine can already service a lot of current world demand. Whether it will do that or not will depend upon the magic numbers I mentioned earlier combined with the real data (acccount numbers, transaction numbers, etc), it won't just expand to say 800 trillion units in a year or something crazy like that. It has to be a careful balance between maintaining supply and demand and I'll be using data like world population, "ideal" capitalistic economic growth and other such things as the reasoning behind many of the magic numbers. The odds that we will get this anywhere close to perfect are pretty low though.
All the specific details about the MicroCash economy will be tweaked during beta test. I wouldn't say anything is off limits currently, everything could change when it comes to the economic aspect if problems are found with anything we are doing. But I think the locked account idea seems to give us a good balance in regards to limiting dumping (which does seem to greatly affect popularity and outsiders interpretations of success) by locking up funds whilst at the same time giving a very similar interest rate mechanism that nearly everyone is familiar with. I don't like the concept of everyone just gaining interest out right, I feel like you should have to do "something" to get it, and restricting your access to use your funds is that "something". Its basically taking supply off the market for the length of the term.
It is basically the mechanism of creating money out of thin air that central banks use, and that is critical to capitalism, but putting it into everyones hands instead of just the bankers. I think that is a worthy goal for humanity.
I like that idea very much.
Clearly the interest rate can't be proportional to the time it is locked then but must be higher (due to compound interest).
There will probably be a selection of time spans, right?
Like 1 day = 0.1% interest rate,
7 days = x% > (1.001^7 - 1) = 0.702%
30 days = y% > (1+x/100)^(30/7) - 1 > 3.04%
1 year = z% > (1+y/100)^(365.25/30) > 44.05%
Yeah I am currently thinking a month is the smallest unit of time. And that you'll be able to cancel your deposit at any time, but gain nothing doing so, this is to encourage full term acceptance. So if you locked it in for 12 months to get a higher rate, and then 6 months in you decide to bail you get zero.
Having no way at all to cancel could be bad due to accidental locking.
I understand. Sounds good.
One problem though:
What is the advanatage of not locking MicroCash into an account?
If you can bail out for free the best strategy is to lock all your MicroCash in small chunks into accounts.
We should either not allow bailing out, or taking a surcharge for bailing out (which I prefer).
seems like a small gain in teh instance of unlocking early might be beneficial?
so unlocking a 12 month deposit at 6 months might give you a 1 month worth return.
This would have the advantage of locking more away but still giving added incentive to unlocking for fluidity?
This even worsens the problem I pointed out.
What is the advantage of not locking money into an account if you can cancel any locked MicroCash at any time?
Again, the best strategy would be to lock all your MicroCash in small chunks into many accounts.
An alternative would be to charge a fee when locking MicroCash into an account.
Yeah you raise a good point Julian. We could up the daily fee to 0.02mc for each locked account. Or maybe require the whole periods fee in advance, so 0.01mcd which it currently is per day, in advance. So if 30 days you need 0.3mcd, and it is deducted as soon as you click "Lock". Would make it not attractive I feel, at least for smaller accounts. For big accounts it won't matter much. Combined with not gaining anything at all by exiting early, no matter the time period invested.
To prevent people from unlocking too soon, people should LOSE a % when they unlock. Or else you have no reason to not lock everything.
And what's the advantage of locking in the global economic sense?
In the current system, bank can use saving's money by loaning it and bring growth to the economy. So the money is still "working".
In Microcash, the locked money is just dead it seems. It should be used in some way.
Oh and there is a daily fee for each account in the network? I forgot that...
Probably because it's not written anywhere!
You should think about giving more details don't you think
You are looking at things wrong romeo. Locked accounts exist to grow future supply. Capitalism needs money to grow from nowhere, if you want economic growth and a stable value.
In a normal bank that normal people use we get interest from the profits banks make, that is true. But these "normal banks" aren't the only banks that exist. The central banks control the creation of actual new money into the economy. MicroCash needs to emulate some of those features if want to compete with them. Instead of these central banks owned by "the elites" controlling the creation of new money in a secretive, non transparent system, we want to put that power into everybody's hands in an open, free system.
Normal banks can be created on top of MicroCash's system, we are not looking to replace the "normal banks" that loan money and such. That is pretty much impossible , well its not impossible its just stupid. Because decentralized loaning is stupid as there is no recourse when people don't pay back. You need systems on top of a p2p system to give more security in lending to the investors.
Details will be released as necessary, mostly during the beta period. If anyone wants this process to hurry up all they need to do is help out!
One thing i'm not clear on, is whether there is any requirement to run an active node?
Or is just locking your account into a defined time sufficient?
PoS requires you to be actively mining to receive your reward.
There are no requirements to run a node. No one is expected to run a node unless they want to. There are a variety of reasons to run a node, the more nodes the more checking of financial state occurs. The more nodes the more resilient the network is. You have more privacy than using a 3rd party. And if you are a business/service then running a node is probably the best thing to do. The MicroCash node is efficient and can handle exchange level transactions for businesses. So there is no real need to use other services as it is already very easy to do it yourself, and more secure as you don't have to worry about a 3rd party stealing your funds.
We will try to make it as attractive as possible to increase the amount of nodes. But you won't have to run one constantly to benefit from the other aspects of MicroCash.
Heard it's an Interesting read on elastic supply in crypto : http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2425270
I think charging a fee, even a small fee to lock an account might be discouraging to some. Locking your account for a fixed period [say 6 months] and then unlocking early [say after 1 month] and not receiving any interest on said deposit is one thing but to also lose $$ since you paid a fee in the first place to lock the account.....not sure on that one. I get the idea of charging a fee as if there is no fee to lock people may just use multiple wallets/accounts and lock them knowing they can just unlock one of them early if they want with no negative consequences [fees] but the fee up front might push people away from locking. That being said, maybe if we do charge a fee that fee can be credited back if the locked account that is opened early was at least 1/2 way through the locked period? Just an idea...