FairShares and the Blockchain

Useful/interesting piece on the blockchain in Wired mag: http://www.wired.co.uk/magazine/archive/2015/06/features/bitcoin-reid-hoffman

Patrick - depending on how you go about your research, perhaps you could go one further and co-produce something for (or based on) FairShares with members of the association?

Are credit unions engaged (or engaging with these technologies)?

We would need to figure out the best approach but I would be open to this idea.

Credit Unions as far as I am aware use limited amounts of dated technologies, but for the same reasons it opens them up for disruption in this area which would warrant further investigation.

Dear All

There are good and bad things about the blockchain for a Fair share society
The good is that it allows every monetary transaction to be tagged with the tax number of every user.
If all notes and coins are eliminated then this would expose the black economy to tax authorities to increase government revenues without increasing tax levels.
Refer to my articles" Why should the UK adopt a digital currency?” posted at http://www.longfinance.net/news/long-finance-blogs/the-pamphleteers/931-why-should-the-uk-adopt-a-digital-currency.html.

Refer also to ‘Financial reform author argues: Australian needs a crypto currency’ by Maras Elliot, Cryptocoin News, March 19, posted at https://www.cryptocoinsnews.com/financial-reform-author-argues-australia-needs-digital-currency-like-bitcoin/

However, my reference to crypto currency is not necessarily a blockchain. It is much more economical on natural resources not to use large block chains that need over 50% or all connected computers to accept any change in ownership of any bitcoin in existence.

An article dated 16 April 2013 on “Digital Drills: The monster machines that mine Bitcoin” quotes electricity cost of $150,000 per day! Refer to http://www.gizmodo.com.au/2013/04/digital-drills-the-monster-machines-that-mine-bitcoin/ Today the problem and cost are greater. Bitcoin miners need tons of equipment to cool down the computers. As a result miners are setting up in Iceland! Refer to "Geothermal gold: Why Bitcoin mines are moving to Iceland”, posted at http://www.ibtimes.co.uk/geothermal-gold-why-bitcoin-mines-are-moving-iceland-1468295 October 7, 2014.

The problem indicated by the following blog: "After a time; the minted bitcoins goes away, leaving miners reliant on transaction fees. These fees are unlikely to even come close to covering the expenditure in power and time that the miners will be putting in, the result will be dwindling resources put into mining; is an ultimately easier to “hack” currency.”
It is now possible to establish ”pegged side chains” as explained by: Black, A., Corallo, M., Dashjr, L., Friedenbach, M., Maxwell, G., Miller, A., Poelstra, A., Timón, J., and Wuille, P. 2014. Enabling Blockchain Innovations with Pegged Sidechains. Posted at: http://blockstream.com/sidechains.pdf, The authors point out the need for a “usage fee” to be included to cover the cost of transactions.

So it could be that that the most economic, efficient and effective monetary system may still be centrally controlled by say the tax office? Encryption would only be needed to protect privacy.

Regards

Shann

The problem of Bitcoin mining - and the associated high environmental costs - have led to a number of so-called altcoins to be designed in such a way as to avoid this problem. FairCoin, which is the cryptocurrency that I'm familiar with, adopts a different approach, rewarding savers (which help to provide stability) with small amounts of FairCoin based on the size of their stake and the time they have held it. More at https://fair.coop/faircoin/

FairCoin isn't alone in this respect, and even the BitCoin miners are now fizzling out as the returns on their efforts no longer cover their costs.

In terms of central control, one of the fundamentals of blockchain based cryptocurrency is that there is no central control, which for many users, myself included, is very important. If recent years have taught us anything, it is that banks are - on the whole - extremely dangerous institutions. I'm sure there are banks that are socially responsible, but I see no evidence that governments are either willing or able to regulate effectively, even as we rush headlong toward the next financial crisis.

As you suggest with your comment about tagging transactions with tax data, it is the potential for the additional data that the blockchain can carry that is perhaps most exciting, enabling the decentralised ledger to be used to support a wide range of transactional information above and beyond simple financial ones.

Graham
Like you I am a decentralist.
I should not have used the term “centrally controlled”.
What I had in mind was a democratically co-orinated system as discussed in London in January last year in a panel session on "Evolution or Revolution? Democratising money" as posted at http://www.longfinance.net/index.php?option=com_content&view=article&id=828 ( http://www.longfinance.net/index.php?option=com_content&view=article&id=828 ) It has a link from this page to

Further Reading

• Dr Shann Turnbull, "Can Democratic Money with Environmental Values Reduce Market Failures? ( http://www.longfinance.net/long-finance-blogs/the-pamphleteers/722-can-democratic-money-with-environmental-values-reduce-market-failures.html )", Long Finance blog The Pamphleteers (February 2013)

Kind regards

Shann

Some of this is over my head (being a researcher into the 'human' side of governance, and all), but I think it is fantastic to be having this discusion here.

Graham - how feasible would it be to crowdfund FairShares (to make investments in FairShares enterprises) with FairCoin. My (marketing) taste buds are positively drooling at the prospect of FairShares enterprise funded/developed using a FairCoin currency. It there are ways to make it work, FairCoin, FairShares, FairTrade etc. - the jigsaw start to look like a picture.

Shann - thanks for joining the conversation - your expertise on this is appreciated and I'll have to schedule a time to catch up on this side of the challenge.

BTW - I've scheduled an announcement that you will be a Key Note at the July conference. It will go out on Wednesday. Today/Monday there is a communication to announce the new website and FairShares V2.1. By annoucing you as a key note speaker shortly after, it should help increase the number of bookings.

All the best
Rory

Downloaded the FairCoin wallet...the exploration begins!

Graham - I've created a FairCoin folder in the FairShares Model DropBox - I don't think you have access to this, but would you like to? (If you were able to lead on the financial systems to support FairShares development, that would be great). I met John Goodman at the Coop AGM yesterday - he's up for something similar to Innovation Coop you are describing here. Nailing the finance side would give us such a boost - so much more attract to work with something like FairCoin that go down traditional routes....

Rory
I do not understand FairCoin.
But I suspect it is not fit for purpose in either providing short term liquidity for enterprises or sustainable equitable democratic prosperity.
Our Sustainable Money Working Group was set up to further both these objectives as set out at: https://sites.google.com/site/smwgorg/ ( https://sites.google.com/site/smwgorg/ )

I have identified why Bitcoin is not fit for purpose in my submission to the Australian Senate committee of inquiry into digital currency and in my report to the UK Treasury that requested information on digital currencies.
Both these documents are posted at http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Digital_currency/Submissions ( http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Digital_currency/Submissions )

So please do not get too committed to FairCoin unless it can meet the 25 criterium in my UK submission.
Cheers
Shann