| Internet-Draft | Monee Requirements | January 2022 |
| Van Rein | Expires 31 July 2022 | [Page] |
Monee allows people to operate a currency under a domain name, using a monetary system that expresses value added, not debt. Currency is intentionally created where and when value is added, and destroyed where and when value is destroyed. Inflation is possible, but revealed as a temporary blot on a currency. New currencies are bootstrapped locally and may then expand in expanding circles.¶
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This requirements document introduces the currency design of Monee, along with the data and procedures that are needed for it. The design is abstract, framing the requirements of an interoperable protocol.¶
TODO: Much of the Introduction section is interpretation, and not technical. Unsure whether this should stay here, but some introduction into the underlying concepts of Monee are necessary, somewhere.¶
Monee supports two economic schools of thought; TODO-check-literature-for-details: it defaults to the Austrian school of economics around Mises and Hayek, where money is fully backed, like under the gold standard; it can also support Keynesian economy of inflation through partial reserves as a temporary approach to growth. A core value of Monee is that it makes this distinction abundantly clear, and enables markets to trade with fully backed currency with individual exceptions being made outside of such markets and based on detailed information about the level of inflation. Gresham's law suggests that users will prefer fully backed currencies. Currencies with partial backing complicate the negotations because of the risk involved.¶
Monee can achieve price stability, and has no need for any interest rate. Rather than borrowing and debt, the concept of the currencies is to show added (real) value. For bootstrapping of new initiatives, early adopters may choose to share in the risk and possibly receive a higher award upon success. Islamic banking bans interest, and has shown similar mechanisms to work well.¶
During barter trade, two persons swap goods at a negotiated ratio. Using money as an intermediate value, barter trade can be split into two transactions. These halves of the barter trade no longer need to find each other to trade directly.¶
The first forms of money were coins from valuable materials like gold or cocoa beans; or they were rare natural things like sea shells. When these monetary forms were replaced with debt statements, they became easier to handle. But paper statements are easy to produce, so it was however necessary to trust the party who issued such debt statements. Initially, debt statements were issued by gold smiths who stored gold in their vaults; later, this became a service of national banks.¶
Given the convenience of handling money, stored gold is not taken out a lot, and it could be assumed that only a part of it would ever be called for, which paved the way for betrayal, wherein more debt statements were issued than covered in gold. This is called inflation. More debt statements represent the same productivity and the market mechanism renegotiates prices; after some time, the purchasing power of a debt statement is lower.¶
Inflation used to be done in secret, and later publicly introduced as a temporary measure. Having learned that it is never reversed, the democratic variant on secrecy is to present it openly but in an incomprehensible manner. Deflation, which is the reverse process, calls upon the original over-spending party to destroy their debt statements, which is a painful encounter with their over-spending; it corrects the purchasing value, but this advantage is evenly spread over all other debt statements. So it calls upon a party to weaken its own position to benefit others. Deflation is highly unlikely and is rarely implemented.¶
The situations worsens when inflation is not measured as a coverage ratio of debt statements divided by its backing, but if it rises as an annual percentage. This means that purchasing power is continually being eroded, and discourages long-term savings such as pensions. It also suggests towards fast consumption, instead of investing in future purchasing power.¶
Since inflation benefits those who release debt statements, it disadvantages those who work to add real human value to an economy. The result is a financial industry that trades with excessive amounts of money that have no relation to the amounts of money available to people who are actually productive. Also, without democratic controls over how this money is spent, it has become completely uninteresting to the financial industry to deal with the small amounts of money involved in sustaining productivity.¶
Inflation causes current savings to reduce in purchasing power in the future. This is a motivation for consumption, rather than saving or investing for future financial resilience. This triggers consumption, even if this is unwise in the long run and makes humanity as a whole consume more resources than our one planet can sustain.¶
Under inflation, people with more money than they can spend see their posessions erode, unless they invest it somewhere. A common structure is then to apply an interest rate to compensate for inflation, compensate for a risk of defaulting and perhaps add extra for profit. Interest works as a money pump from those who lack money to those who have it. Contrast this to Islamic banking, where the lender partakes in business risk and profit, often with some control over how the investment money is put to use. Combining this system of investment with one free of inflation, there would be no principal cause left to hamper price stability. Investing always incurs a risk, and should never be done with money that cannot be missed; in this light, it is a good sign that price stability takes away the pressure to invest. Those with money to invest can use it to help develop the economic activity of others, and may spread their risk by relating to more than one other.¶
Monee permits inflation, but only as a local property of a currency, and it is blatantly clear. This clarity will usually limit trading partners to those who want to support a new business initiative, and who are willing to take a temporary risk while it is starting. As long as the value added exceeds the value taken for it, there is a possibility for profit, which allows the currency to deflate and evolve to one that is fully backed.¶
From then on, there is no longer a need to risk inflation and price instability when trading with this currency; as long as growth takes a careful pace, it can be fully backed by confirmations of having added value. By constraining trading partners until this point, it is now beneficial to the currency issuer to deflate it to the point where value has been added. Any excess value can be spent freely in trading, both in support of uncertain new initiatives and for everyday trading with fully backed Monee currencies.¶
TODO: Find a way to represent interest, outlandish as it may be to Monee.¶
Monee uses network connectivity to allow people to trade directly, and express offering of value by minting their own currency. Value is considered to have been added when it is confirmed by another who cancels some of their own currency in return for it. This might be called a trade, but the currency is an expression of value added rather than a debt statement; under the Monee system, being rich is the same as having been useful to others.¶
Monee needs to establish a market mechanism, both to find the exchange ratios between currencies and to establish trust in any statements made for a currency. The exchange ratio must leave room for mutual profit, so the ratio is not the same in both directions, but comparing them is a possible factor to consider when evaluating trust. Other elements of this trust evaluation are the degree of overlap in mutually trusted relations. Parallel and sequential paths via such relations can be used to derive a suggested trading ratio between the currencies. This information is free for interpretation by anyone (and their software should help with this) and will depend on individual taste and the level of risk that one can tolerate. In the absense of inflation it does seem reasonable to expect price stability by default.¶
Contrast that with speculation, like on markets for bulk goods (rice, beans, ...) which works by predicting their future prices and trading them through bond futures, causing a rise in the sales price of such bulk goods. This benefits traders but is financed with inflated money and can raise the cost of living for the poorest on the planet. Such derived financial products are difficult to make with Monee. Debt is transferrable, but that is not true for confirmations of value-adding, nor for promises of such future confirmations. Without interest, many financial derivatives are impossible. Price stability takes away most gambling power, because it makes Monee currency owners less prone to accept uncertainty, in the interest of their own purchasing power. TODO:IS:ALL:THIS:CORRECT?¶
Monee currencies work like a wallet. Currency increases in return for work, and it decreases when taking out value added by others. This is how everyday money works. The difference is that the wallet has its own currency, which is created when and where value is added, and destroyed when and where value disappears.¶
Being empowered to create currency astounds many, but it allows Monee to express added value, rather than owning someone else's debt; Monee has a more constructive approach to money. Most considering money creation get naughty, imagining the minting of piles of money, but they soon realise that money is not a purpose of its own. Their real wish is purchasing power, which calls for trust in the currency, and inflation backfires on that. Inflation has bad karma in Monee, and modesty forbids from boundless creation of currency. This makes Monee a tool for achieving price stability.¶
The ability to create money is an open invitation to people to think about how they can earn it. Put differently, how they can be producers rather than mere consumers driven by market powers. Even the backfiring effect of inflation should not be a show-stopper, because it is simpler than monetary restrictions imposed by banks, employers and governments. Most people can be useful to others in ways that they themselves find trivial; it is social and economical to let that develop. Variety in currencies has been shown before to empower people who failed to function under the stifled mechanisms of national currencies.¶
A vital part of Monee is that it can be bootstrapped from small communities, without any call on outside funding. Barter trade is the simplest way to establish trust between local peers, but more elaborate schemes can also be founded in local trust. An initial currency may be inflationary, and show for it, but locality can provide an alternate basis of trust and help a new initiative to get started by sharing in its risk. To this end, promises to future payments may be considered acceptable, as an explicit inflationary form of spending but possibly at a different exchange ratio than would have been the case without inflation. All this can be done without a bank.¶
Note how this means that interest is not required under Monee. Interest is a problematic concept, because it rises at an exponential pace while pumping funds from those who need it to those who already have it. To achieve price stability, one should not engage in offerings with interest rates but instead be open to differentiated pricing to reflect variations in risk.¶
Most businesses generate a profit at some point, and this allows them to deflate their currency. Since inflation is blatantly obvious, it quickly becomes a personal wish to get it out of the way. Providers who started off with inflated currency will see the gradual drop in inflation and that would keep them happy. In general, businesses may need to pop in and out of inflation, and the amount of inflation can be taken as a sign of some despair.¶
When businesses mature, they will start looking for more customers. This would be a gradual process, based on an expanding network where potential customers judge their connectivity to a new business relation based on overlap in networks. Initially a new business may be mostly isolated from anyone else, but it is normal for the network to spread and bring new customers in reach. This may call for more uncertainty, increasing with distance.¶
This mostly repeals branding strategies of marketing; the network offers word-of-mouth as a better recommendation, and there is little use to instignate some perceived value to give the product a superficial gleam; this would work when customers are disconnected, but connections between them may easily lead to ridiculing an inaccurate gleam. In short, this model is not a yellow-brick road to World Domination. It is not expected to scale at an exponential pace, or to a monstrous size. This may make it more supportive of diversity and less of monotonicity.¶
Inflated currencies erode purchasing power. Such currencies are unfit to save money in, but the same effect eases the burden of payback on a loan. Governments are aware of this, and sustain loans over very long periods, if not indefinitely.¶
Monee can offer price stability, and is therefore likely to become a currency of choice for everyday trading (according to Gresham's law). It is also a more likely form of savings, possibly with 100% backing by commodities such as gold.¶
This may cause users to move away from inflating currencies, which can be tolerated if it happens at a calm pace. Cash withdrawal pulls inflated portions away from financial markets, but if those are expected then it is feasible to prepare for the change. In the asymptotic case, only loans would remain in these inflationary systems. These could be based with 100% covering commidities that the banks take out of circulation.¶
Monee can also be used to express inflationary national currencies, posted under the domain names of (central) banks. This would release vital trading information in an easily understood form, and may be seen as part of democratic accountability. It may also be used for risk assessment while trading it with Monee currencies. Monee considers a (central) bank as any other user who mints their own currency.¶
Governments are encouraged to interact with Monee and not force their citizens to convert to an inflationary currency. History has often shown that it empowers citizens to welcome alternate currencies, provided they can be normally earned and spent. Being able to interact with one's government in terms of these alternate currencies offers great protection in times that a national currency fails. This yields protection from such catastrophies as runs on a bank, attacks on banking infrastructure, hyperinflation and bursting bubbles. This protecion works for citizens as well as their government.¶
This transition may well remove funds from financial markets. This should reduce investments with unbacked currency that drive up prices of bulk goods such as corn and soy. It will also improve the ratio between the circulated debt and any commodities held by (central) banks, and thereby deflate their currency. The trick is now to use this change to remove inflation completely, and grow into a fully backed currency. The adoption of Monee as a payment system for everyday trade is likely to incraase sensitivity for partial reserve, and make a currency less acceptable if it is inflationary. After all, under Monee a (central) bank is just another creator of money.¶
It is a good idea to have standardised exchange options, which remove money from one system and inject it into another. The exchange task may involve a mix of accounted storage of cash with audited destruction of superfluous cash. Such things might be organised by individuals, under guidance of a bank's statements as to what no longer constitutes legal tender, but this is could be a bit messy; it does not benefit monetary stability if people start posting videos in which they give public proof of an exchange by burning uniquely numbered bank notes. Standard exchange options should be helpful to smoothen any such transition.¶
Assuming that everyday trading converts to one with stable prices, it would be riskful to take out loans that incur an interest rate. The model of Islamic banking is the more attractive form of external funding, bringing participation and financial guidance instead of relentless payment obligations with a worst-case risk of bankruptcy.¶
This transition is expected to reestablish trust in the financial industry, and a gradual process as described above is probably a more desirable process than waiting for the rupture of banks and their currencies.¶
Monee currencies are identified by a public key and it has a starting time that is incorporated into every signature with the key. Signatures are used to commit to balance sheets and transactions. Detached signatures are summarised in a distributed hash table, rendering the signed information undeniable because the currency looses control over publication locations.¶
Besides an identity, a currency can have any number of names that consist of a domain name and a currency name. The currency name may be prefixed with "+monee+" (without quotes) to form a user name; for a domain name ecb.int and currency name euro, a URL-style name +monee+euro@ecb.int can be used with protocols like email, chat or telephony. The domain name is used to locate a database that can provide balance and transaction details to match the signature information found in the distributed hash table. Aliases could exist, but the signing key that forms the identity is the only way to engage in minting transactions.¶
During its life, a currency may add or remove names. There may be multiple consecutive names, but for the same identity they must represent the same information. In times when a currency has no name, it cannot be operated. This specification considers only domain-based names, but future extensions may add variants. Not all implementations may be able to connect to all names of a currency, and the domain-based form should be a fair default scheme for most general uses.¶
To support the functions of a Monee system, parties must learn of each other's currencies by way of a balance sheet with standard items that software can evaluate to guide policy-based decisions. The information that is made available aims to balance between the privacy of individual trades and the purpose of establishing how a currency developed in history.¶
Transactions take place on two balance sheets at the same time, and each has its own currency and value. In addition, conflict resolution may call for third party involvement. The following symbols will be used to change the balances in the respective currencies used for the role:¶
VAR CURRENCY/ROLE MEANING $1 producer amount of currency $2 consumer amount of currency $3 arbiter amount of currency #1 producer arbitration fee #2 consumer arbitration fee #3 arbiter arbitration fee¶
This is an example of a basic balance sheet for a Monee currency:¶
Liquid 123 Minted 7
Valued 116
----- -----
Debit 123 Credit 123
¶
Transactions often make an atomic change to two balances:¶
1.Liquid 123 1.Minted 7 2.Liquid 479 2.Minted 0
1.Valued 116 2.Valued 479
----- ----- ----- -----
1.Debit 123 1.Credit 123 2.Debit 479 2.Credit 479
¶
TODO: Find a way to represent interest, outlandish as it may be to Monee.¶
In this picture, the posts have the following meaning:¶
In this simple balance sheet, inflation is defined by Minted.¶
The following table summarises transactions that operate on these balance sheets:¶
TRANSACTION PRECONDITION UPDATES
create 1.Minted += $1, Liquid += $1
destroy $1 <= 1.Minted, 1.Minted -= $1, Liquid -= $1
$1 <= 1.Liquid
value $2 <= 2.Valued, 2.Valued -= $2, 2.Liquid -= $2,
$1 <= 2.Liquid 1.Valued += $1, 1.Liquid += $1
devalue $1 <= 1.Valued, 1.Valued -= $1, 1.Liquid -= $1
$1 <= 1.Liquid
barter2 $1 <= 1.Minted, 1.Valued += $1, 1.Minted -= $1,
$2 <= 2.Minted 2.Valued += $2, 2.Minted -= $2
¶
Note how value does not change 2.Minted but just adds the value as new liquidity. Minting is a currency-local operation. Devaluation exists for symmetry but does not usually make any sense; it deletes information about approval. Barter trade is mutual value-addition. The pattern is simple, with an example shown for 2 people. Unlike the value transaction, the barter operation does not implicitly create currency. The reason is that barter trade always occurs with both parties present.¶
Note how barter trade offers an elegant mechanism for bootstrapping currencies; first each currency mints currency to represent goods available for barter trade, and after completing the barter trade they have shown the value of the goods they traded by way of the currency.¶
As an extension to the basic balance, this adds a few posts that help to bootstrap a currency:¶
Liquid 123 Minted 7
Promised 6
Future 20
Valued 90
----- -----
Debit 123 Credit 123
¶
Transactions often make an atomic change to two balances:¶
1.Liquid 123 1.Minted 7 2.Liquid 479 2.Minted 0
2.Promised 6
1.Future 20
1.Valued 96 2.Valued 473
----- ----- ----- -----
1.Debit 123 1.Credit 123 2.Debit 479 2.Credit 479
¶
In this picture, the posts have the following meaning:¶
In this balance sheet, inflation is defined by Minted + Promised + Future.¶
This example balance shows the two sides of a promise in one balance sheet; this is not always combined. Once in stable operation, a currency is likely to have no Promised post left, but it may still support others through the Future post. Those others then have the matching Promised post.¶
The following table summarises the new transactions that operate on these balance sheets:¶
TRANSACTION PRECONDITION UPDATES
promise $2 <= 2.Minted 2.Promised += $2, 2.Minted -= $2,
1.Future += $1, 1.Liquid += $1
monetise $2 <= 2.Promised, 1.Future -= $1, 1.Valued += $1,
$2 <= 2.Valued, 2.Promised -= $2, 2.Minted += $2,
$1 <= 1.Future 2.Valued -= $2, 2.Minted += $2
#TODO# CHECK THIS CAREFULLY, DISAPPEARS TWICE FROM 2.Credit?!?
deliver $2 <= 2.Promised, 2.Promised -= $2, 2.Liquid -= $2,
$2 <= 2.Liquid, 1.Future -= $1, 1.Valued += $1,
$1 <= 1.Future
#TODO# CHECK THIS CAREFULLY, DOES NOT DISAPPEAR FROM 2.Valued?!?
defect $1 <= 1.Future 1.Future -= $1, 1.Minted += $1
#DROPPED# $2 <= 2.Liquid,\n$2 <= 2.Promised, 2.Promised -= $2, 2.Liquid -= $2,
¶
Note how promises show up as inflation until they are delivered by the consumer or monetised by the producer; promises are like holding a promise to payment without having turned it into money. Defecting on a promise is considered a destructive step to take, but it stops weighing on this inflation post.¶
It would be harmful to stability if a statement of added value could be retracted. On the other hand, trading conflicts are a reality that should be dealt with. In fact, showing (unresolved) conflicts as part of the balance information can provide useful information. This option exists for those currencies who intend to promise confliction resolution to simplify the formation of new trust.¶
Disputes should not be a one-sided mechanism to overpower a currency. Disputes made by parties who complain all the time must be considered of lower impact on a currency's trustworthiness than complaints by parties who rarely complain.¶
A complaint about falsely provided information, such as suppressing a transaction or forking another sequence of balances is considered well-founded, and can be formally verified. Temporary downtime of a database may end up as unfounded when the currency comes up in reasonable time.¶
Procedures to settle a conflict may start with an attempt by the currency issuer to correct any problems. When this is not considered reasonable, a mutually agreeable third party may be asked to provide arbitrage. To enable such settlements, the parties should allow the third party to control the currency booking, which they reserve on special balance posts. The arbiter may require additional funding of the procedure by the loosing party.¶
When trading conflicts is raised after a party adds value to our currency, we need a few more balance posts:¶
Liquid 123 Minted 7
Argued 0
Debated 3
Arbiter 1
Valued 112
----- -----
Debit 123 Credit 123
¶
Transactions often make an atomic change to two balances, and not shown here, may even update the balance of an arbiter:¶
1.Liquid 123 1.Minted 7 2.Liquid 479 2.Minted 0
2.Argued 1
1.Debated 3
1.Arbiter 1
1.Valued 112 2.Valued 478
----- ----- ----- -----
1.Debit 123 1.Credit 123 2.Debit 479 2.Credit 479
¶
Note that the Argued post is on the client side of an argument while Debated and Arbiter sit on the serving side.¶
In this picture, the posts have the following meaning:¶
In this balance sheet, inflation is defined by Minted + Argued + Debated + Arbiter. The reason to include Debated is that it is not Valued and may be a sign of inflation. Individual policies for trust in currencies may of course override this, and choose to not take Debated into account as part of inflation.¶
The conflict resolution operations reference a prior transaction, but they introduce their own values for $1 and $2 which must not be higher than in the referenced transaction, and whose ratios must match that of the original transaction.¶
The following table summarises the new transactions that operate on these balance sheets:¶
TRANSACTION PRECONDITION UPDATES
debate $1 <= 1.Valued 1.Debated += $1, 1.Valued -= $1,
2.Argued += $2, 2.Liquid += $2
settleF $1 <= 1.Debated, 1.Debated -= $1, 1.Minted += $1,
$2 <= 2.Argued 2.Argued -= $2, 2.Valued += $2
settleU $1 <= 1.Debated, 1.Debated -= $1, 1.Valued += $1,
$2 <= 2.Argued, 2.Argued -= $2, 2.Minted += $2
escalate $1 <= 1.Liquid 1.Arbiter += $1, 1.Liquid -= $1
rulingF $1 <= 1.Arbiter, 1.Arbiter -= $1, 1.Minted += $1,
$2 <= 2.Argued 2.Argued -= $2, 2.Minted += $2,
1.Minted += #1, 3.Valued += #3 TODO:BALANCE
rulingU $1 <= 1.Arbiter, 1.Arbiter -= $1, 1.Valued += $1,
$2 <= 2.Argued 2.Argued -= $2, 2.Minted += $2,
2.Minted += #2, 3.Valued += #3 TODO:BALANCE
¶
After a debate is opened, the two parties may reach a mutual settlement, and if that fails then the Debate can be escalted to a mutually agreed Arbiter to pass a ruling. The settle and ruling transactions can be any composition of F/U partials, for founded/unfounded. Arbitration costs an amount #3 which is split over #1 and #2, and also into F/U partials. The ratios between $1 and $2 (and $3) is always the same as in the debated transaction, as is the case for #1, #2 and #3. After handling a conflict, funds may be dumped in Minted, which may then be cleaned up locally by destroying that amount of currency; take note that a few changes in one transaction may add up.¶
Monee may develop to standardise conflict resolution procedures and funding mechanisms.¶
Operations on balances are restricted to a few well-known transactions. These transactions have preconditions. In addition, some transactions are follow-ups on other transactions and must be the only follow-up.¶
Yet another constraint on transactions is that they are signed by a deciding party, which is usually the one whose currency is disadvantaged. The other party can keep a copy and has proof at any future time if a transaction was to be removed.¶
The following table shows per transaction who will sign the transaction and for follow-up transactions which other kind it may reference:¶
TRANSACTION SIGNER REFERENCES create producer - destroy producer - barter TODO:?? - value consumer - devalue producer - promise consumer - monetise producer promise deliver consumer promise defect producer promise debate consumer value debate TODO:?? barter settle producer debate escalate producer debate escalate consumer debate escalate consumer settle ruling arbiter escalate¶
Transactions occur in all currencies impacted by them. One currency is generally disadvantaged, and this is the one to sign the transaction. The other end can use the signature to enforce the existence of the transaction. It is considered an offense if such a transaction is removed from either side, and a reason for corrective measures, possibly even discrediting the failing currency so spending it becomes difficult.¶
Old trading history may be summarised to accommodate privacy, as long as it continues to assure inclusion of past transactions. Bloom filters tuned to a low risk of false positives accommodate that. The entries would be hashes of issuer-signed agreements with others, which those others may at any time test for presence of a transaction.¶
Balances and intervening transactions are combined into a Merkle tree. This is helpful for verifying that no changes were made in previously committed records. Committing such balances is done by signing the Merkle tree outcome with the currency's public key and publishing the result.¶
The Merkle values are computed as follows:¶
The last value is signed by the currency's public key, and published in the distributed hash table as a follow-up to the prior Merkle hash for the then-latest balance. New currencies start by publishing the initial Merkle hash to make such a then-latest balance available.¶
Merkle trees are sensitive to their input formatting; this should be a canonical form, with a unique representation for every combination of data values. The traditional format for such security requirements has long been DER, and newer approaches have stuggled with these requirements, so DER still seems like the best option. DER includes framing of the encoded data.¶
To retrieve data from a remote server, we can benefit from abilities such as search, synchronise and access control. It is useful to point to a database server from DNS records [RFC2782]. There is only one portable database protocol that goes this far with its standardised support, and that is LDAP [RFC4511]. It also happens to integrate well with DER (it uses the more general BER format for the protocol).¶
The publication of data in a distributed hash tree calls for a network; ideally, this is a generally agreed-upon form, such as Kademlia (which currently is not standardised). The contents of Kademlia would point from one signed Merkle tree to the next one. An interesting variation might be GNUnet, which more difficult to attack because its route starts with a few random legs.¶
TODO¶
Monee may develop to standardise requirement profiles. This probably starts with choices between software configurations.¶
Any expression that a foreign currency has added value is paired to a reduction in a visiting currency. This calls for an exchange rate between the two currencies. A prior exchange rate could serve as a hint, especially because a system without inflation can offer price stability. In lieu of such history it can be useful to suggest an exchange ratio.¶
Suggested trading ratios are never more than a suggestion; they may be accepted or rejected by either side. The best derivations consider a risk for various trading ratios, thereby giving grounds for negotiation and even supportive of policy automation; payments for online media access can be more riskful than for physically sending gold nuggets.¶
Any paths between the two currencies can be taken into account, but the relationships for adding value form a directed graph, and the opposite relationship is strictly unrelated. Sequential paths between the two currencies can each suggest a ratio, and these may be multiplied to find the path's overall ratio. Parallel paths may be taken as alternatives, and a (weighted) average, possibly with standard deviation, can be used to combine their suggestions. Finally, overlapping portions of parallel paths may be applied with a reduced weight to allow equal impact by all legs.¶
Monee may develop to standardise ratio calculations. This probably starts with choices between software configurations.¶
Monee is not different from other currencies when it comes to trust, but a network of individual currencies does need to evaluate trust more carefully. Central banks conceal the relations of their currency to other currencies and, increasingly, debt of bankrupt nations and financial crisis circumventions. Their currency is a package deal, and we can take it or leave it. Monee allows everyone to make their own decisions while trading.¶
The reason why people trust money is rather pragmatic: "Will it buy me what I need?" and, as part of that, "Will it still be good in the future if I accept it now?" To be accepted, alternative currencies always need to take care of this, even if the default currency is in a deep crisis; mistrust in an old system does not make people accept a new system until these issues are addressed.¶
A conservative approach to these questions is 100% backing in an asset such as gold. It is a sufficient condition, but not a necessary one. Care should be taken not to resort to debt papers, and continue to focus on added value, but other than that it may well be possible to weave asset-backed value notions into a Monee currency.¶
Monee currencies may choose to add value that may be replicated easily, such as growing organic tomatoes, being attentive to another person's problems and so on. These things add value without suffering from the poor replication properties of classic money. This is why Monee allows users to mint their own currency. It simply makes no sense to centralise that function where it has no bearing on the value added, and where a lure to abuse would be created.¶
When spending Monee, the question is if the person who offers to add value will indeed add that value, if proper conflict handling is in place in case they do not, and whether others have had trust in this offering. What matters most in this situation is whether the appreciation of added value is meaningful to the prospective consumer.¶
This is why they need to explore the paths from their currency to that of the producer, and see if there is overlap with people whose judgement they value. These people are the foundation of the upcoming trade. There might also be intermediates that are considered counter-indications, but that mechanism should be used with care; this could create a destructive business opportunity consisting that adds negative judgement to a (competitor's) currency. Likewise, conflict handling is a useful measurement of problematic trading, but if a conflict comes from a customer who raises many conflicts relative to positive outcomes, then their conflicts are not very informative. Such statusses may in fact be verified by the producer before offering or accepting a trade.¶
The network over which parties trade is, at least in principle, a personal network. Communities may form, both locally or founded on a shared mindset, and function as a hop towards the parties that all others are trading with. A person may trust such a network and, if the feeling is mutual, such a network may trust the person too. This adds extra trust validation paths that allows new trading to take place. Note how this does not start from a global scale, but rather allows networks to grow.¶
In the end, the implementation of trust policies is personal, and Monee simply provides the desired information to make reasonable judgements. Software for Monee is likely to provide options with parameter tuning, and may even support scripting plugins for individual regimens. To producers, this means that they could be up to anything. The need to protect web browsers from agressive web sites suggests that customers should dictate the rules, and producers should be welcomed to follow if they want.¶
Monee may develop to standardise trust policies. It would be a consumer's choice which one to accept, a standardised one or a personal policy.¶
TODO: Trust in information being supplied, specifically completeness.¶
TODO: Where to find information that discredits a currency.¶
None.¶