Since about two years I am thinking about a blockchain currency where coins are constantly distributed to all people participating. Obviously the challenge to solve is the identity problem.
This proposal might be a solution to this problem. I thought about doing it as a new coin/blockchain but I guess it is instead a perfect potential usecase for the ethereum platform:
This is the latest version of the proposal:http://piratepad.net/kjTwIzn5u3
(feel free to comment directly or here)
Proposal for a cryptocurrency implementing the "unconditional Basic Income
This is a proposal for a new cryptocurrency. In the system outlied in the following, new money is constantly distributed to every account participating in the system. The coins in every individual account are uniquely identifiyable and only gain in value if the account connects to other accounts and joins groups. This incentivizes every user to limit themself to one account.
A 2% demurrage fee ensures that the total supply of money is limited.
1. coins will be distributed as follows: 1000 coins per week per account. (number does not matter and distribution can be constantly)
2. coins in new accounts are worthless - they gain in value as soon as the account is trusted by other accounts or the account becomes a members of a group
3. if two accounts trust each other they express their willingness to exchange their money 1:1
4. as long as there is a liquid connection between to people they can pay each other
5. it is in the interest of a person to focus all their connections to other persons and memberships of groups (like citzenship) into one account to make the coins worth as much as possible
6. all coins constantly have a demurrage fee of 2% per year to limit the total supply of coins
7. arbitrary groups can be made: (>10 bitcoin holder, bitcointalkaccount with >x posts, citizen of germany, ...)
8. creators of a group are responsible for rule compliance
9. all members can convert their private money into group money
This coin could grow very quickly because people can join and get coins at no costs. As soon as they do so, it is in their best interest to get others to accept their coins to make them worth something.
The demurrage fee of d = 2%.
The fee determines the ratio between the final total coin supply per person and the income per month. The number is subject to discussion. It should be choosen to maximize the value of the income.
Note that a high demurrage fee destroys the capibility of the currency for the storage of value. Consequently, the potential dollar market cap is a function of the demurrage fee, f(d). d should be choosen to maximize d*f(d)
The same effect that the demurage fee has can also be achieved by constantly increasing the basic income (by d per year). Mathematically these two approaches are identical but the second one might be better psychologically as it is more similar to our current financial system.
Groups are necessary to bring more stability into the system. Holding coins of a specific person always carries a certain risk. In some sense the value of theses coins is always backed by the person. If the person dies or more broadly speaking the trust in this person sinks, these coins may become worth less. However, as long as a person is member of a group the money can irreversibly be converted into group money. It is in the responsibility of the groups themselves to keep them tight on the one hand to not dilute the value, but on the other hand have a positive network effect. This makes it interesting for merchants to accept such group money.
A possible modification of group money conversion:
If A and B trust each other, and B and C trust each other, then A and C can pay each other as long as B is liquid. If A is a customer and C is a merchant, A could send money to C. The network will automatically send coins from A to B and from B to C.
It is not necessary to do something like "coin creation". You only need an account with an timestamp and you can directly calculate how much money is on this account at a given point of time.
Can I create 100 fake accounts that all trust each other and abuse the system?
You can create them but this will not create value. As long as nobody else trusts these accounts they can only exchange money with each other, rendering all the money worthless.
What is the money of an account worth?
In theory it should be max(value(group1), value(group2), value(group3), ... , value(connection1), value(connection2), ...). Note that only connections to liquid people count. As long as the memberships in the groups and the connections are stable (or expected to be stable) there should be no incentive to convert money into group money.
This concludes in the assumption that it is not necessary to convert your money into group money or to exchange it to money with one of your trustees. Just having the ability to do so makes your money at least as worthy. This could stabilize the system and allow user A to connect to user B despite the fact that user B's coins are worth less. This connection could raise the value of user B's coins without changing the value of A's coins. However, this stops if B tries to abuse this connection but in this case A can cancel it.
From time to time users could lose their connections because they cause panic. This is the unliklier the better the user is connected. This strengthens the incentive to concentrate all your social connections/ reputation into one accout.
(Edit: Numbers added for easier referencing)