Mainstreaming BitCoin into the Digital Coin economic system

[segovro]

In “Bejond Money… Digital Coin” it´s said Perpetual Coin is to be the foundation of the system and the unit in which all things are priced. Perpetual Coin is to be a permanent and anonymous unit of trade, much like a gold coin.

Perpetual Coin is not supposed to be used for trade. That is for the Credit Coin.

1.- BitCoin network could become the ideal p2p distributed machine to calculate the value of the Perpetual Coin unit of trade

It is proposed that (initially) Perpetual Coins be exchanged for existing national currencies. The national currency spent to purchase Perpetual Coins, will be held in trust so that the Perpetual Coin can always be redeemed for the exact same amount of the exact same national currency that was paid for it. The price of Perpetual Coin in national currency can be set by an arbitrary formula  that makes Perpetual Coin the most stable trading medium to use in international trade.
But then we come to the question ¿at which exchange market? Exchange markets differ a lot in the prices of exchange of currencies. Therefore we would need to agree all on some software placed somewhere making the agreed calculation.
In “Bejond Money… Digital Coin” i´s said that for a liberated trading medium, we cannot assume the existence of any authority. Nor do we really want to. Therefore all means of dictating the value of Perpetual Coin are not just unavailable but also unwanted.
But that is precisely what BitCoin is doing. The growing number of traders of Bitcoin are publishing the BitCoin charts, which show the fluctuating exchange of the BitCoin against all currencies (sell and buy), which is different by trader, time, and currency.
But then, as BitCoin is also used in the real world, for worldwide sales, it creates a common floor, worldwide, that anchors its commonly agreed value against goods purchased worldwide. The BitCoin network does not require any central server or authority and is supported by thousands and hopefully hundreds of thousands and the millions of peer to peer participants.
¿What better calculation machine could we propose to calculate the formula proposed in  “Bejond Money… Digital Coin”? It is not the formula proposed in the booklet, but it has all the needed requirements, and IT HAS STARTED!
The value of the Digital Coin PERPETUAL COIN could be agreed to be 1 PP = 1 BTC

2.- BitCoin coins should not be fiat money but can become a useful piece in Digital Coin economy

BitCoin has all the drawbacks to become the fiat money to be used as the ones explained in Money as Debt III for the Government Money, as proposed by the American Monetary Institute, and also for Gold.
The proposal to use for trade Credit Coins anchored in real goods, basically first NEED goods, has radical transformation properties to the economy that not any fiat money based on any commodity (as BitCoin is) has.
Having said that, there are several properties of BitCoin to be looked at, because BitCoin could play a role in a Digital Coin based economy. Therefore we would probably be talking about a convergence.
As commodity, BitCoin shares, with advantages, many of the characteristics of gold, with the advantage that the extraction of BitCoin by the BitCoin miners will end one day (which is not the case of Gold) when the 21 Million Coins have been produced, those providing a great stability to one side of the basic Monetary Formula. If the amount of Coins is stable forever, the only thing that may change is the speed of trade. Given that most trade will be done in Credit Coins, the use of BitCoin would slow down to only special cases where something like BitCoin is needed.

A.   Investments:
Credit Coins have an expiration date. Thus Credit Coin would not be desirable for long-term savings. Savings would have to be stored in Perpetual Coin, precious metals, real estate, durable goods, or other equity investments.  ¿What better than BitCoins? Users will have a securely encrypted Coin Vault online. ¡BiCoin has already developed a full range of secure wallets ranging from PC, Mobile, Paper Prints, Online, etc., all these Wallet systems using the same p2p world network as guarantee.  ¿If Perpetual Coin has the value of one BTC, what better thing to store savings than the BTC wallets?

B.   ROI Fractional Reserve:
The weakest link in the Digital Coin system is the risk that the Credit Coin Issuer company does not fulfill its obligations, and there is in the end no product. It can be by an unexpected disaster, bad management or fraud.  In “Bejond Money… Digital Coin” it´s said that this is the part that should be monitored more closely. ¿But by whom?
If you look at the full loop at Digital Coin, there is a very special corner. That very special corner is the requirement that profits have to be spent at the beginning of the loop at issuing all the Credit Coins equivalent to the full amount of the future sales.  ¡Hang on, hang on! All other issued CC coins pay services or goods needed for the production, including payrolls, including the fixed salaries of the managers. First, this spenditure is not needed for anything to production. And it means that you pay all the stakeholders and managers before commercial success has happened. If we do so, we are strongly promoting the fraud described above. ¡Take the money and run!
In my view, the profit Credit Coins should be spend to buy BitCoins,  stored in the company wallet, and only sold at the end of sales for Credit Coins to pay shareholders, bonuses, etc. ¿What would be the legal fraction of this new “ROI fractional reserve”? Easy, the expected ROI. This could be even hardcoded into any software issuing Credit Coins.

Comments are very welcomed

[segovro]

As it can be seen in Slide 1, Profits are paid to the company stakeholders at T = 0, when the cycle starts, in order to put in circulation all CC needed for the sales.



It looks much more prudent to do the same by acquiring BTS (BitCoins) in the market, and only paying the stakeholders at the end, at T = 1. The BitCoin broker is the one that puts the profit CC´s in circulation.



However, last year´s CC´s have expired, and cannot be used to pay the stakeholders at T = 1.

In practice, it would be enough to buy and deposit BTS for the expected profit the first year. Next year, you pay the real profit with this years CC´s, and you touch (increase or decrease) the BitCoins fractional reserve only to adjust expected increases or decreases in profit. In a stable, sustainable, economy, these should be minor.

In a growing successful startup you would need to invest each year in the increase of expected profits.