Points

Webdiplomacy points

If Kestas monetised the purchase of points as an option i.e. buy 1000 for $5 then think of the fabulous high stakes games we could have and the money raised could be used to help prevent the system crashes, buying points would still be optional.

Would refund to 100 be free?

yes

But we could have a few high stakes games rather than wait 5 years to try and earn the points

Thinking about steephie's question: I guess the first thing you'd need is a community where this money starts circulating, something of a critical number of people.

For ease of conversation let's define the "redcoin". On the date I release the first batch of "redcoin", there will be 1 redcoin in the system. I may or may not release the entire set in one go. The value of 1 may or may not be fixed for eternity (to be discussed here).

We will call 1/1.000.000.000.000.000.000.000.000 (of a "redcoin" a "rocto" - this would be like the dollar or the euro, the quantity of exchange - where I merge the words "redcoin" and "yocto" (http://en.wikipedia.org/wiki/Metric_prefix).

For ease of conversation, let's introduce:
Megarocto (MR, one million roctos: 10^6)
Terarocto (TR, one trillion roctos: 10^12)
Exarocto (XR, one quintillion roctos: 10^18)

millirecto

Sorry guys, but yeah, bump. I think it's an interesting conversation to have even though not a lot of responses were provided yet; it'll bump itself down if really nobody cares :-)

The currency needs to have value attached to it. The fact that you earned bitcoins for taking part in the transaction was what made it work. Ie. it's not just an exchange for currency.

So you'd have to make it that webdip points were created by winning X number of games, which would cause the currency to inflate and have value irrespective of exchange rates

I think the key question for the redcoin is: why would I want one? Because you're guaranteeing a certain value for it? What value? Dollars? Then it isnt a currency.

In a way, that's an issue with Bitcoin too. Even the employees of the bitcoin foundation have their salary agreement in dollars. Sure, they're paid in bitcoin, but the basis of the calculation is the dollar value of their contract.

In more abstract terms, a currency is *by definition* a consensual illusion that is of value because we jointly define it is of value. Just you issuing a coin doesnt do that. Issuing a coin which has thousands of people excited, well that maybe.

The easiest way is to start from the supply side, to launch your own vouchermoney, e.g. having an eshop that would only accept your own virtual currency or design a computer game with microtransactions in your currency (convertible with some established currency). Such a commodity backed currency is easily acceptable by customers as there is little difference trustwise between your promise that they can buy your goods for your currency and any regular financial obligation you might have towards them - they are still ultimately trusting he same person, you. Once your business grows, you can offer your monetization solution to other businesses until the point when they will start offering their customers the possibility to pay in your currency by themselves. Such currencies are almost omnipresent, although most are only covertible one way, so that their issuers can reap all the benefits of controlling the money supply. The step where you convince other businesses that you wont meddle with the money supply when you want is a big big challenge though (unless you use the bitcoin approach and relinquish all such rights).

MoW, the thing that gave bitcoins value was that they were earned by Bitcoin mining, which as I understand it is a process of cryptography used to make transactions anonymous via Tor.

@SYnapse, yes that's how they were issued. The mining is basically trying to solve mathematical puzzles, and the solutions to those puzzles are bitcoins. But that still isnt value in itself. It has gotten value due to the value given to it by the community.

Perhaps Webdip points aren't even that bad of a parallel. If Kestas would introduce that you could purchase points, would people buy them? Probably some would. Why? Because people find value in webdip points.

A thing is of value because people value it. Not because it is valuable in itself.

@uly
That's exactly the direction I was thinking in.

Let's say I manage a goods exchange site.

Let's say I do the following: you can buy roctos for x dollars/euros/yen etc. on the site for (1+c(x))*x dollars. In other words, you buy roctos and pay a small commission, some kind of function of the amount you buy ((log x)-.5) rounded down to cents and with a minimum purchase of 10 dollars/euros would be an example. I store the money and sign a contract with all buyers and sellers that at any time, they can exchange roctos for their original currency and get (1-d(x))*x dollars/euros for their roctos, d being a similar function to c (although somewhat more favorable for the customers, in other words, it should be a little bit easier to get rid of redcoin than to buy it). This is very similar to currency exchanges.

Basically I store any amount x dollars/euro in bank accounts, because I need it when people want their money back: the system would be completely non-fiduciary in the sense that I legally oblige myself to have, at any time, the same amount of money stored as I have issued roctos. This means that you'd have different kinds of roctos in circulation: dollar-roctos, euro-roctos and so on.

The amounts x*c(x) and x*d(x) are for site maintenance and - if I choose to launch a profit-based currency - for profit. But that's not the point: I'm studying this problem as an intellectual exercise.

At some point, when no new roctos are issued, I guess the value of the redcoin can appreciate, but never go below the value of what people put in it, because any rocto can be converted back to its original currency.

bumpity

It largely depends on what purpose this currency is to serve as well. Do you want it for anonymous transactions or do you want to represent an actual commodity (like when the dollar was tied to gold)?

Video games are increasingly offering what could be considered currencies. Many games allow you to farm points by playing or buy different points with real money. Because you can purchase the same items with different currencies, you have a fluctuating exchange rate. This could be the start of a larger market, although it's unclear what the advantage is.