PeerFi.one: Money 2.0

(Updates 4/14…Guys, this is a half-baked thesis to solving money — the elephant in the crypto space that we can’t figure out yet… IOWs: How can the money or usable liquidity be created as easy as the fractional reserve money-lenging magikal system and where violence is not part of the equation.)

(03/25/2023) The following hypothesizes and discusses an extraordinary need and business opportunity, and the possible solutions path or direction but the exact mechanisms has not yet been quite visible to the writer*. He invites the reader to join and help. (*Partly solved, 3/27; now 51% baked.)

(03/28/2023) After further review, the above half-baked thesis and the conclusion of this article are that the “Money 2.0 thesis” seems to be not practical and doable. The main barrier seems to be the economics to make this work in a great open network (the world), however, it is made be more feasible as a new algorithmic spendable coin for the curated garden T-sphere as it is large enough and it will have implied backing of … the he…AND…I am getting closer to the solution (see 4 PM bottom of the page).

GPT remarks to the below article: This critique is a summary of a document proposing the need for a new form of decentralized money, or Money 2.0, which can replace or replicate the spendable function of fiat money.

GPT3.5: The author argues that the current economic, social, and political systems based on centralized gatekeeping models are breaking down and that new decentralized models are needed. The proposed Money 2.0 should have properties compatible with the ethos of decentralization and serve as a base currency for spending. The author also suggests that the current stablecoins do not fit this purpose, as they are hard-backed.

GPT4 remarks on the below article: This document discusses the need for decentralized spendable money to replace or compete with fiat money. The main driving thesis is that spendableness is an important property for a base currency, and the world needs a new form of money to convert human energy into monetary value. The current economic, socio-political, cultural, and finance systems are based on a centuries-old centralized-gatekeeping extractive model, which is breaking irreparably. Decentralized technology provides a way to enable commerce without centralized gatekeepers, and a new type of money is required to serve as a medium of exchange. This money must have properties that are compatible with and complement the ethos of decentralization. The author argues for a price-stable coin that is backed purely by the utility of its price-stable model and algorithmic protocol and its network effects. The document also discusses the web 3 money meta characteristics, which include crypto, digital, decentralized, universal, borderless, network effect, community, and prioritizing the interests of its participants. The author believes that the creation of spendable decentralized money is an extraordinary need and an epic opportunity.

The article to Peerlayer.one: Money 2.0

A. The extraordinary need and opportunity for Money 2.0:

The need for a decentralized (crypto) spendable money (SM) to replace, compete with or replicate the spendableness of the fiat money. (Not sure at the moment, if it also needs the 3 functions (SoV, MoE, UoA) or if does need them, to allow these three to organically evolve after money 2.0 is launched and proves its protocol and thesis as this is similar how bitcoin also started and it got the 3 functions over time, and it still don’t have the UoA.)

Main driving thesis of this document: We assert that the spendableness is an important property in addition to the 3 common functions of money if the money is to be used as a base currency, and by base I mean to be used for spending “down” for consumables.

Goal:

How to design the (near most) equivalent of the fiat money in DeFi, i.e., one which can be used for spending, and how to have such to be continuously minted/printed or created as needed by the system and the economy where the SM is deployed.

What problem are we solving?

The world’s need for: 1) next generation money and 2) a way in crypto and digital platform or solution to convert human energy into monetary value — i.e., using the latest smart technology, as world is reaching the maximum limits* on its centralized processes and now must venture into the decentralized to go to the next level of productivity. (We are now printing debt to pay for debt.)

Really?! Ambitious, this is. … well, we know that Web 3 will require new form of money. Most assume its cryptos. But, remember the “98%” don’t know, don’t care, and don’t want to bother with cryptos… so we crypto-zens and developers have to go to their mountain. But we know it’s coming. And as we assert in this document, most or all successful crypto coins are more valuable at this time as speculative SoV, so foolish or shouldn’t be spent to buy a latte with a coin that could be 5x higher in a couple of years. (As in, once you have acquired the stored monetary energy of bitcoin, keep it and use its monetary energy (more and more ways to be developed), but not for spending.)

Human energy? Yes, that is the ultimate source of value creation, wealth creation, and money creation. As evidenced by how fractional reserve lending prints money when the borrower binds their future work energy to the agreement. Etc.

Driving assumptions/beliefs:

Macro environment: The debt creation model has reached its limits. Fractional reserve lending-money creation model system is breaking — SVB, Credit Suisse, Deutsch bank, etc., and by this summer to 2024 some experts say the banking systems may start to freeze up. We are at the point of using debt on debt to keep the system flowing and that to stop the injection of new debt into the system will freeze it up. World debt is $300 Trillion / 10 billion population = $30,000 per human. The world needs alternative money and means for its implementation.

TL;DR: All the current economic-socio-political-cultural-finance (especially) systems are based on centuries old centralized-gatekeeping extractive and violent model which consume say 50% to even 80% of the outputs of the human creative work that now such system is irreparably breaking and the extraordinary need and epic opportunity is for new decentralized models.

The decentralized technology provides a way where the value outputs stay with the creators, users, and participants and where each has access to the resources of the entire network (i.e., without the centralized gatekeepers). Along with this, we need new type of money to enable commerce, one which is “price stable” (ala Ampleforth model), and to serve as MoE. This money must have properties which are compatible and complements the ethos of the decentralization (DLT).

Bitcoin shows us that money can be created and used as SoV purely based on a 1) utility proposition based on software protocol and then 2) self-sustained by the network effect. The goal and mission of this document is to argue for a price-stable coin only relies on the same 2 functions where it is which is backed purely by 1) the utility of its price-stable model and algorithmic protocol and 2) its network-effects. The current stablecoins do not fit as they are hard backed.

Web 3 Money meta characteristics:

Crypto, digital, decentralized (aspirational, but can sacrifice a little for UX and mass adoption), universal, borderless, network effect, community, “inclusive” or “empowering” (as opposed to extractive or exploitative), prioritize the interests of its participants — that the sum is greater — however individuals are independent sovereign agents, etc.

B. The Money 2.0 Hypothesis, assertions, and synopsis:

The function of spendableness of the fiat money has not been solved in the crypto*, and as a follow on the creation-process of such money (which has the spendable function) as not be solved either. This is the purpose of this document. (*Because every project coin-token which is worth its mission and utility is worth far more during its growth as Speculative SoV (SSoV) than the other 2 functions of money, the MoE and UoA, therefore, it should not be spent, well … unless for gas fees (to trade up). It is difficult and bit expensive to convert from fiat into cryptos, then why spend it when the fiat money will do, thus crypto are to be used for spending as last resort.

“Law of least value” — this theory that states that we tend to spend the least valuable money first: The speculative value or shall we say of most top crypto-currencies are very high, and thus they are too valuable to spend them in the current “early-era” of cryptos.

The spendableness is the most essential function of a base money or currency from which to build an economy or to facilitate commerce in an ecosystem (network, nation, large enough community) as this quality and use for spending, leads to the higher functions of the money. Such type of money is a must have in the crypto space in order to go beyond its current early stages and grow into a mature economy.

Such spendable money (SM) 1) must not have any tangible intrinsic value, i.e., backed by assets at least at the start or launch of such coin, and 2) must derive its monetary value and marketcap primarily from only its utility and the network effect (which is what bitcoin did).

In addition to this spendableness, the money ought to be the lowest monetary denominator (sorry, not the best wording) of the ecosystem, economy, or nation. In other words, that it must have the property or utility of being spent or used to trade-up where it is used by every other participant to spend as well. The spendable base currency is used to “trade-up”. This is why bitcoin cannot be used to spend for consumable goods and services. (Or the BCH — as in why buy or exchange into BCH, if only to spend. Well, one reason is if the fiat money is inflating, and the BCH is an inflation hedge as well.)

The only justification for spending bitcoin is if all others in the community are using such as their base currency as well. For example, if in a community everyone spends bitcoins for their daily use and expenses, banks gave loans in bitcoin, and wages are paid in bitcoins, then the net loss would be “neutral”. However, in such as community, if the early adopters were to spend the bitcoins they have, they are losing their wealth relative to others. To spend bitcoin when (cheaper) alternatives are available would result in net wealth loss over time. Also a spendable currency must not have been bought or exchanged/traded “down” for it. Traded down example would be exchanging Bitcoin for such spendable currency.

Stablecoins which are backed by assets are not spendable, as they are intrinsically more valuable. A spendable currency must not have any intrinsic value. Fiat assets backed stablecoins are not ideal as “spendable” currency and also the model may not be sustainable, at least for our target use needs (e.g., if to be “printed” to increase the supply), and not easily scalable: Reasons include the cost of their maintenance for maintaining the collateral vaults (e.g., Maker CDPs) macro-economic risks (USDC has been losing money since 2022, as they invested in low interest Treasury/bonds/etc. pre-2022 and their yields are low, and the potential investors are investing in other higher yields bonds).

In order to have this spendable and trade-up utility, such money should not be bought or backed by tangible assets as this would put higher value on such money. The solution that the writer is arguing for in this document is to have a money without any hard backing. Just as bitcoin 14 years ago, even though, the valuable energy and labor of the miners and Satoshi Nakamoto went into their creation or minting. (Oh: With bitcoin, energy was stored and built up in the initial phase before it became more widely recognized and used for money-energy storage. … TBD.)

The foregoing describes the spending quality of this new money. Next is the question of how this type of SM could come into existence. (And thirdly — how to manage the supply, the velocity, etc.)

To answer these questions, let’s draw ideas and analogies from the fiat money (FM), its creation, use and so on. The FM are earned from wages or income from other assets, and gifted or created by the government, or come into existence when loans are created and issued to borrowers.

To summarize the above, we argued for the need for a crypto-currency which has the fiat money properties of: 1) not being backed by any hard assets or has no intrinsic value other than from its utility and the network effect (of its acceptance); and then 2) to determine how such can be created or come into existence.

We know to create a spendable money in crypto is hard: One week after publishing his whitepaper Satoshi says this: If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that. The writer has extensively studied the Ampleforth model … it has 2 highly unique mechanisms, but the use cases and adoption is still low and it is primarily used as speculative SoV.

(BTW, ATM, if the reader notices… the writer does not yet know of this spendable money coin needs to be pegged to fiat … or if we just let the coin “price” find it own level, and if the pegging is an essential part of the spendable money… so this part, I will leave open for comments … but, I believe the foregoing has made a compelling case for a new type of Money 2.0.)

Driving observations (#1) about the spendable characteristics money:

- People use the base money to spend or trade up. They spend the base money for things of use and value to them — basic necessities, in game experience, etc. They trade-up for education, experiences, investments, cryptos. They tend not to trade down. Law of least value.

- The base money also is generally not bought or exchanged into, instead it is earned as wages, gifted (from the government, etc.), or passive income. Exceptions are when one wishes to exchange one currency for another and this can be seen as trading up (Yen for USD, USD for Disney Dollars or Travelers Checks, etc.)

- Bitcoin and most other top crypto coins and tokens, if to be spent deprives the user of the future expected superlative increase in value, and would not be wise and only as last resort.

- Stablecoins or coins which are asset backed (fiat or cryptos) are not spendable in our definition: They have tangible value, pegging mechanisms to the assets are dependent on macro-policies, etc.

Note: Game tokens, however, have the spendable function. They partly solved it. The players buy or earn the tokens and use them to spend or trade up for game objects. Notably the game tokens have very diluted UoA in the sense that a $1 USD may purchase 1000s or more game tokens, and the game objects are priced in 1000 ~ 10,000 units.

The Solution Thesis restated:

The need for a type of crypto-currency money which has no intrinsic value on its own but has the utility of base-currency or money where it has the spendableness and use to “trade-up”. The top foundational property of such money is its usability and spendableness for day-to-day uses. As part of this money, we then need a process of how such money comes into existence. The goal of this document is to argue for and then get ideas to create a spendable money in the “classic sense” of the fiat money.

The fiat dollar has all these and the following, we try to replicate the fiat money and the process of how it is created and comes into the economy. Thus, our goal is to solve for a crypto-currency model of the fiat money system.

To help get some ideas, the following are the characteristics we see of the fiat money and the fractional reserve banking, lending, and money creation (FRB) system.

- Created based on future promise by the human borrower: FRB takes the promise of the future-value performance of qualified human borrowers and creates present-value liquidity or money and gives to the borrower.

- Earned and gifted: People can earn money or are gifted at times by the FRB and the government partnership.

- Created at will: The authorities can create and put into the economy or reduce by taking out the liquidity and/or raising the cost i.e., the interest rate.

- Inflates or loses value — whether by design or otherwise. The Fed did even set a rate of 2% annual inflation as an ideal. The inflation may actually be a design feature to encourage its spending and also to aid the debts or loans to be paid back by the future cheaper money. (Not sure ATM to consider this as a feature in the Money 2.0)

C. The following is the Money 2.0 solution path we see ATM:

Generally, the idea is to emulate how the fiat money are 1) put into the economy, then 2) used by the “stakeholders”, and finally 3) how it finds its value, marketcap, and supply management. This is described in below. The first seems relatively easy, the second part took some extra imagineering, the third part is bit harder.

Broadly: The spendable money (SM) coin (or token, points) are given out based on the below described levels. Then, the system waits, observes and studies, as the SM coin and the market interact, find its objective market price or value. However, if we are confident of the starting economic and the tokenomics model, then we can game the market and price a bit faster by promotions, market making, and soon on.

The below 3 levels seems valid qui pro quo for how the stakeholders use them and start to lead to the rise or establishing of the value for the SM coins. These especially took some extra time to ideate and are insightful and again, we are trying to emulate the fiat or find the organic way to build value from bottom up. The dynamics are among three parties: the individual users, the marketplace or commercial stakeholders who finds value in the individual users and buys the SM coins, and the SM system or platform which prints and is managing the overall system.

[Side Note: Studying the Ampleforth protocol and model, we looked at the Fredrick Hayek monetary theory. Some notes:

(GPT) “…while Hayek supported the gold standard as a way to limit government intervention in the economy, he also recognized that it had its limitations. … a gold standard can be inflexible in responding to changes in the economy and can lead to deflationary pressures in certain situations. Hayek believed that ultimately, a free market in money and banking was necessary for a truly stable and efficient monetary system. … Under a free market in money and banking, private banks would be free to issue their own currencies or notes, which would circulate based on their acceptability and perceived value by the public. The supply of money would be determined by the demand for these currencies, which in turn would be influenced by factors such as interest rates, economic growth, and inflation….”

We contend that Hayek’s model of private banks issuing currency is not scalable in this global open border age, puts inordinate burden on the consumer (“98%” of whom don’t want self-custody even), the banks can commit fraud, honest banks are subject to attacks/exploits.,. etc. who wants to deal with multiple currencies and forex matters to ship goods across border (or cross blockchains even, i.e., between different crypto-currencies) … etc.

As Satoshi quote earlier: A spendable money (SM) “should” have been built into the bitcoin or the network. We contend that the network “should” have the SM and back it with its marketcap. For example, for Ethereum to mint a new class of coin/s to act as such currency. Since this is not possible, we need to do this retroactively and try to design a model which goes as flat as possible to other protocols and blockchains, decentralized, no-premine (gulp!), no investors, no DAO even, and yes no reason for SEC here or elsewhere to feel threatened. (Satoshi did not say spendable, but that is wot he was thinking, I heard it!)]

Thus, two hard parts of the design… the making it flat part. The other harder part not yet visible to the writer is the supply management, i.e., how much or fast to grow (or shrink) the SM supply in the economy. (FYI: We may be able to learn from the Ampleforth model. They have soft peg to 2019 USD + CPI. The 2019 is used as that is when they launched. Its target is $1.15 on March 2023. A unique and pioneering innovation is that as its value rises above the target, they expand the supply in order to bring the price back down to the target. For example, the quantity of AMPL coin in every wallet is increased by the same percentage, thus the owners of the AMPL coin own their respective percentage of the network, this does not change as the quantity increases or decreases.)

One more diversion: PoW or PoS — not sure, and TBD. However, the writer is trying to use the idea of the human energy and work to be the “work” to be the “intrinsic” value to balance the equation as its replacement for the electrical (and equipment investment) in the Bitcoin system. BTW — this intrinsic work of the users can be 1) pre-seeded (gifted as Level 1 below), 2) earned in present time, or 3) can be advanced for “future work”.

In the following we describe the three parts of the distribution, the value finding, and scaling:

1) How the coins are created and distributed.

2) How the intrinsically no value coins can start to have value.

3) How the system is managed, the supply, and so on as the system matures, scales, and sustains.

Before we start to the three below, this system can be implemented in a large enough community, or a blockchain, the Ethereum sphere, or the entire crypto space with interoperability. However, to start the system and to experience it, I am envisioning like the fractals or Fibonacci growth patterns, i.e., start small then let it expand. Like a reverse: https://en.wikipedia.org/wiki/Mandelbrot_set

Observations (#2) to help figure out the mechanics and tokenomics

- Users or people do want to get or acquire the spendable fiat money in order to … spend, trade up, keep. < So, how do we do this with the Money 2.0. We can do the below Levels 1, 2, and 3. They acquire by doing low/er level activities and trade up. This may mean that only the users whose time and effort are lower/lowest compared to other users will start this.

- Commercial entities will pay to get the energy, data, attention, ____ of the users; access to the ecosystem; and _______ . < What are these and how to get them.

- The Haves are the users who are beyond the need for the currency. The fiat wealthy and the OGs.

- The effort need to kill or 51% attack bitcoin in the early days was not worth the effort as bitcoin was not meaningful even though the attack was not difficult or even was cheap.

(This is made more difficult in a global ecosystem where the “average” monthly income can range from $100 to $10,000 (Silicon Valley).

How the coins are created and distributed, say about 1/3 to each of the 3 levels.

Level 1) Gifted for just being there, alive and breathing:

To gift users/members of an ecosystem such as a blockchain or a community for just being there. (It is important to gift, as life is a gift, as in universal basic income).

Level 2) Participation from their normal use of the ecosystem/services, but just moving around:

Award points or tokens for their general active use of the ecosystem or contributions — gas fees, staking, just showing up by logging on to the dashboard or wallet, surveys, etc.

Perhaps being “consumers” of the ecosystem.

Level 3) Extra earnables due to extras efforts — which are valuable to firstly the subject ecosystem and then secondly to the greater industry*:

Award based on behaviors and actions beyond the Level 2 such as recruiting, verifying identify (vs. being anonymous), governance participation, etc.

Perhaps being “contributors” or builders of the ecosystem.

(*TL;DR so far, the design challenge is to make this system to be appealable to the entire crypto industry, beyond the Layer 2, even Layer 1 — what do all these have in common?

The wallets. To make this system to interoperable at the wallets, regardless of the protocols… for example, that a wallet has the identity of the wallet user to be associable to the human is valuable information to multiple different protocols and services. Thus, then the user will be awarded points (aka the spendable tokens) … the various protocols are paying their monies into the system, ads, and so on. Now this money will be used to give monetary fungible value to the tokens.

Desired behavior can include such as providing a wallet or information with real world backed identity (using ZK or what not) as opposed to be random anonymous (in DeFi, no one knows if a dog is owner of a wallet…), using the network or blockchain for their services and paying gas, etc. etc. etc.

Overtime these points-coins-tokens will accumulate. THEN, the magic: They will start to find their water level as monetary units. Then, these units are spendable!!! And this replicates the fiat money’s spendable property. Thus, a blockchain such as ____ can airdrop tokens… into wallets every time the desired behavior or actions of a wallet, a Dapp, etc. are given.

This is a theory on how a deliberately a fungible currency could be created, in the following…

D. Okay, we have to separate the haves from the wanting.

Now, what I established in above C. is that the wallet could be the key application which is the point where all this happens. However, the wallet can be an application, a browser extension, a browser like Brave or Opera, or desktop application. So, the SM technology and business strategy has to fit to all these different technology and also benefit them.

We all know that the Web 3 wants to monetize the data and profiles and the activities of the users which in Web 2 have accrued to the service providers (i.e., Facebook, Google, etc.)

Web 2 activities and data is what we can trade off to get to add value to the SM coins.

The insight is that the wallet is where these exchanges are done. What I am visualizing is that the data of the Web 2 is being funneled up through the wallets to the Web 3 space where the money values are coming down into the wallets.

Reference. Added March 29:

Okay. Just found: Robert Breedlove’s Bitcoin Gaming Education with Des Dickerson (WiM290). https://www.youtube.com/watch?v=1KinVOn9ubM

(Notes to myself: Gaming seems to give me the clues to how to design this: The first minute of the video is exactly the Levels 1, 2, 3. TCPIP, VOIP, Money over IO…?

Idea: How to rate, rank, color the users.. data and history. For one, the longer the user is the more valuable their data, and we want to discourage mercenary account creation to get the free points. So, lets say the coins given are colored and linked to their age of the account. So, the data that the account creates if within 2023 and Month is associated to their data and coin??? A question is how organic does this need to be .. can we prove it w/I 1 year of launch,. 3 or 5 years?

3 Levels of … tag the data with the wallet address so that the data can phone home?

1. The application itself benefits and uses the data and gives to the user.
2. Then, blockchain or more general uses.
3. Then, the world?

Can we let the applications to get the benefits from their upper chain (Amazon) and give to the users.)

https://youtu.be/1KinVOn9ubM?t=793 — people started to create monetary value on their own!

13:00 Robert: was there was no money in the game but there was this little tiny ring you can only have like 40 spaces you could put items on and this ring only took up one of the spaces so it was very divisible I guess you would say and people started pricing things in terms of that ring it was called The Stone of Jordan ring so the price everything in … so I guess that kind of left a mark too it’s like oh you know money is not a thing someone imposes it just emerges .. Des D.: yeah I mean I think there’s like things that are like inherently human and it’s one like social interactions it’s play it’s also the transfer of value and I think those things just like they’re always going to be intertwined in anytime that someone like takes one out or you know tries to control one like…

16:26 the users drive this thing and you know the minute that they hate something we completely change it so I think again like the kind of economies that developed around Diablo 2 like that’swhat we want to see happen um and like I think we’re just like we don’t intend to make money off of what the players are doing between themselves and we want to let that happen totally naturally and I think that’s how you build a good game economy is by letting people drive it for themselves

56:25 like the world’s becoming a video game yeah and what you just described sounds like the a pinnacle of that perhaps yeah I mean I think and you see it like now like if you look at like Deloitte like all these places like they get into like gamifying anything like gamifying um employees expense reports right yeah exactly so I think people get it where it’s like as humans we want to play and we want to interact and so I think like gaming like people are just becoming like okay with that and want to like I don’t know evolve into a society where like everything we do is just naturally gamified

Robert: yeah yeah yeah it’s definitely fun it’s one of the most reliable ways to induce the Flow State so like if you find a game you like you it’s real it’s a very enjoyable experience and if you can tie that to doing something productive…

(Added: April 14, 2023)

GPT4 response:
If there were no money in the world or a country, there would be a need to develop alternative systems to facilitate trade and transactions. While bartering is one option, it indeed has limitations and does not scale well. Below are some alternative ideas that could be considered:
1) Time Banking: In a time banking system, individuals would exchange services based on the time spent providing those services. For example, if person A spends an hour helping person B, person A earns a time credit, which they can then use to receive an hour of service from another person in the community. This system values everyone’s time equally and encourages mutual support.
2) Local Exchange Trading System (LETS): In this system, members of a community create their own currency or “credit” system to exchange goods and services. Credits are earned by providing goods or services to other members and can be spent on acquiring goods or services from others. This system promotes local economic activity and could be regulated to ensure fair distribution and usage of credits.
3) Resource-Based Economy: A resource-based economy focuses on the equitable distribution of resources to meet the needs of all citizens. In this system, goods and services are provided based on the availability of resources, rather than the exchange of money. This would require a central authority or advanced technology to manage resources, track needs, and distribute goods and services accordingly.
4) Reputation-Based Economy: In this system, individuals would earn a reputation score based on their contributions to society, such as providing goods, services, or other forms of assistance. This reputation score could then be used to gain access to goods and services provided by others. It would encourage individuals to contribute positively to society to maintain or improve their reputation score.
5) Digital Ledger System: A digital ledger system, similar to blockchain technology, could be used to create a decentralized and transparent record of transactions. In this system, individuals would have a predetermined amount of credits, and each transaction would be recorded on the ledger. The credits could be earned or lost based on specific actions or contributions to society. This system would encourage responsible usage and prevent excessive spending. Regardless of the system chosen, it is crucial to establish clear rules, limitations, and regulatory mechanisms to ensure fairness and prevent abuse. The ideal solution would be adaptable and scalable to accommodate the needs of individuals and the country as a whole.

My response to GPT4:
My thesis: argues that spendable money must be the lowest common denominator for transferring economic value. This can be achieved through three sources:
a) Freely received or gifted (ex. UBI),
b) Earned from mundane routines, and
c) Earned from active intentional efforts.
Spendable money should be modeled on the fiat money-lending creation model, as this has been “perfected” by the centralized banking system, which encourages spending and allows for various forms of store of value.
So if I were to associate the a), b), c), and add a new one — d) Earned from investing the spendable money, to their closest in your above 1 -5
1 and 2 seems to be close to c) — bc doing extra efforts to earn. 3 is like a) — like UBIcome, gifting, welfare for the needy. 5 is like b)
Then, this seems to solve how the spendable money is created and comes into existence in that say country… can you summarize and critique.

GPT4:
Summary:
PeerZ’s proposition for spendable money can be associated with the alternative systems mentioned previously:
a) Freely received or gifted (ex. UBI) — aligns with 3) Resource-Based Economy, where resources are distributed equitably to meet citizens’ needs, which may include provisions like UBI or welfare.
b) Earned from mundane routines — aligns with 5) Digital Ledger System, which could reward citizens with credits based on specific actions or contributions to society, including daily routines.
c) Earned from active intentional efforts — aligns with 1) Time Banking and 2) Local Exchange Trading System (LETS), where individuals exchange services or provide goods and services within a community-based credit system, requiring intentional efforts.
d) Earned from investing the spendable money — this new component could be integrated into any of the above systems by allowing citizens to invest their earned credits or reputation scores in projects or ventures that benefit the community or society, generating returns in the form of additional credits or reputation points.

Critique:
This association of PeerZ’s components with the alternative systems provides a comprehensive framework for creating and distributing spendable money in a country without traditional currency. The combination of these systems addresses various aspects of earning, spending, and investing money, promoting a more equitable and sustainable economy.
However, the implementation of such a system would face several challenges, including the need for robust infrastructure, clear rules and regulations, and widespread acceptance. Additionally, incorporating all these components into a single system might complicate the management and regulation of the economy. It would be crucial to strike a balance between the various components and ensure that the system remains adaptable to changing circumstances and scalable for a growing population.
Furthermore, integrating the new investment component (d) into these systems could introduce additional complexity and potential risks, such as speculative behavior and unequal distribution of resources. Careful regulation and oversight would be necessary to mitigate these risks and ensure that investments contribute positively to the community or society.

(4 PM)
How can you solve this: In order for me to get something I have to pay with money, or maybe my time, or barter. But really its money, like a business needs large amounts of different parts, they buy with money. Lets focus that to different currencies. If I have one and need to pay for something, I need to spend my currency. Is there a way to give the value to the seller w/o me spending my money.

GPT4:

In a situation where you need to transfer value to a seller without directly spending your currency or using conventional methods like barter or time exchange, you could consider the following alternatives:

1. Credit or IOU system: In this method, you can create a system of credits or IOUs that represent the value of the goods or services you need. The seller can accept these credits or IOUs in exchange for their goods or services, with the understanding that you will fulfill your obligation to provide the equivalent value at a later time. This approach relies on trust between the parties involved.
2. Tokenization: You can create digital tokens representing the value of your currency or assets on a blockchain platform. These tokens can be transferred to the seller in exchange for goods or services. The seller can either hold onto these tokens for future use or exchange them for another currency or asset, depending on their preference.
3. Community-based currencies: In a local or specialized community, members can create their own currency system to facilitate exchanges. These community-based currencies can be used for transactions within the community, and their value can be derived from the goods, services, or resources available within that community. In this case, you would exchange your currency for the community-based currency and use it to make your payment to the seller.
4. Mutual credit or barter networks: Members of these networks agree to exchange goods and services without using traditional money. Instead, they keep track of the value of the transactions on a shared ledger or platform. As a member, you could provide goods or services to someone else in the network, receive credit for that transaction, and then use that credit to “pay” the seller without having to spend your own currency.
5. Escrow or collateral: If you have an asset of value that the seller is willing to accept, you can create an escrow arrangement or provide collateral to guarantee payment. The seller would receive the goods or services once the escrow conditions are met or the collateral is released.

Keep in mind that these methods depend on trust, shared understanding, and sometimes legal agreements between the parties involved. Additionally, they may not be suitable for every transaction, especially in cases where large amounts of value need to be transferred or when dealing with parties who do not have a pre-existing relationship.

Okay, for esp. 1 to 3 above, there seems to be or have been that EM first mover that took enough risk to get the ____ going or in the converse the users have faith in a backstopper that would underpin their trust

GPT4:

Indeed, for options 1 to 3, the success of these alternative value transfer methods relies on the presence of a first mover or a backstopper to inspire trust and confidence among users. Let’s discuss their roles in each case:

1. Credit or IOU system: The first mover in this scenario would be an individual or entity who is willing to issue or accept the first IOUs. This could be a well-respected business, a community leader, or a financial institution. Their reputation and the trust that others place in them would encourage more people to participate in the system. Alternatively, a backstopper could be an individual, organization, or institution that guarantees the value of the IOUs and steps in to cover the obligations if the issuer fails to fulfill them.
2. Tokenization: In the case of tokenization, the first mover could be the organization or individual that creates the digital token and establishes the necessary infrastructure for its use. They would need to convince others of the token’s value and utility. A backstopper for tokenization could be an established institution or a group of well-known entities that guarantee the token’s value or pledge to redeem the tokens for other assets or currencies, providing a sense of security to users.
3. Community-based currencies: The first mover in this scenario is typically a community leader, a group of community members, or a local organization that initiates the creation and adoption of the community-based currency. They would be responsible for promoting the currency, creating rules and guidelines for its use, and fostering trust among community members. The backstopper in this case could be the community itself, a local government, or a well-respected institution that guarantees the value of the community-based currency or provides support in case of challenges.

In all of these cases, the first mover plays a crucial role in kickstarting the system and establishing initial trust, while the backstopper provides an additional layer of confidence for users by ensuring that the value of the alternative currency or credit system is maintained. It is essential to have one or both of these elements in place for a successful and sustainable alternative value transfer system.

Added May 23 (After watching the Three Stooges skit on money.)

To GPT4: How can liquidity be provided if they don't preexist? For example, such as by the bank creating liquidity from “nothing”. What is the bank doing, assuming the borrower has no collateral, or references, or cosigners but only a business or project idea?

ChatGPT

Banks have the power to create money through the lending process. Here’s a simplified explanation:

When a bank approves a loan for a customer, it doesn’t hand over physical cash. Instead, it creates a deposit in the borrower’s account. This deposit is a liability for the bank (it’s money the bank owes to the customer) but it’s also an asset for the customer (it’s money the customer can spend). The act of lending effectively creates new money out of “nothing.”

Now, banks can’t do this indefinitely. They are subject to reserve requirements (rules that require them to keep a certain percentage of their total deposits as reserves) and capital requirements (rules that require them to keep a certain amount of their own money, or capital, as a buffer against losses).

If a borrower doesn’t have collateral, references, or cosigners, banks will look at other factors to assess the risk of the loan. They may look at the borrower’s credit score, income, job stability, and the feasibility of the business or project idea. If the risk is deemed too high, the bank may refuse the loan.

In the context of a decentralized blockchain system, creating liquidity from “nothing” is more complicated. The decentralized finance (DeFi) protocols that currently exist typically require over-collateralization, meaning the borrower needs to deposit more value in assets than they are borrowing.

In the future, we might see more sophisticated blockchain-based lending platforms that can assess the risk of a project or business idea, perhaps using decentralized prediction markets or some kind of decentralized credit scoring system. But for now, these kinds of loans are still a challenge for DeFi.

TO GPT4: Assume a world where there is no preexisting liquidity. How can a project or business that is deemed to be of merit but requires materials, labor, and time to make the project and then to earn profit to “payback” the required materials and labor get underway?

ChatGPT

In a world without pre-existing liquidity, i.e., available funds or resources, it’s a bit of a conundrum on how to start a business or a project that requires significant materials and labor. Here are a few concepts that might provide some insights:

1. Bartering: Before money was invented, people used a barter system where they exchanged goods or services for other goods or services. For example, a carpenter who needed iron tools might exchange furniture he made for iron from a blacksmith.
2. Credit/Trust-based Systems: Even in a world without pre-existing liquidity, trust can be used as a form of credit. This would involve the project owner promising to pay the labor and materials suppliers at a later date once the project is completed and begins generating revenue. This kind of arrangement would rely heavily on trust and could be documented in contracts or other forms of agreement.
3. Cooperative Business Model: In this model, everyone who is a part of the business or project is also an owner. They invest their time, labor, and materials with the understanding that they will share in the profits once the project starts generating revenue.
4. Investment from Wealthier Entities: If there are wealthier individuals or entities in this world, they might be willing to invest in the project. They would provide the necessary resources upfront in exchange for a share of the profits later.

In the modern world, of course, we have more sophisticated financial systems and institutions that provide loans and other forms of financing to help get businesses and projects off the ground. But even without pre-existing liquidity, it’s possible to start a project or business using these alternative methods.

My MxMfi.com is based on the above 2 and 3 and happens to be Shariah Law compatible. It uses profit sharing and equity vs. interest payments.