Natural Demurrage
Natural Demurrage:
Brief Definition
Reduction of the Production Cost of one unit of currency/token in a Use Value ( http://en.wikipedia.org/wiki/Use_value ) based monetary creation system - such as P2P Energy Economy -
as technological improvements increase the potential production of the resources ( such as energy units ) on which the creation of currency/token units is related to through the monetary creation protocol of the financial system.
Example:
Monetary Creation Protocols related to Energy Production : As the improvements of technology over time allow the production of energetical ressources with greater efficiency ( ex: one surface of solar energy panels producing more energy with the use of solar panels with latest technologies then solar panels with older technologies ),
there is less incentive for a peer in a use value monetary creation system to hoard units of such resource as the production cost per use value unit decreases over time.
Important Notes
Such difference in Production Cost of the Use Value of the resource units on which the monetary creation is based does not necessarily decrease Exchange Value ( http://en.wikipedia.org/wiki/Exchange_value ), as the exchange value of the monetary units in such a system still depend on the state of offer and demand for the currency units of the system, and the potential of monetary unit availability ( sufficient use value unit production as to meet demand for monetary unit creation )
Example:
Even if the production cost of the use value resource unit ( such as a measurable quantity of energy production ) decreases through technological innovation,
if the "potential increase" of resource unit production does not meet with the increase of monetary unit creation demand,
or if the "potential increase" of resource unit production is hoarded ( / not implemented, or not put to the benefit of all the peers in the system / the market )
the Exchange Value of each Currency Unit in such a system may increase.
But if the potential increase of resource unit production is implemented, and meets demand for monetary creation within the system, or exceeds it, it may "reduce" the Exchange Value of the monetary unit.
Conclusion
Natural Demurrage only applies to the Reduction of "Production cost" per unit when there is technological innovation increasing efficiency of production.
It is still to be understood if such mechanisms in a monetary creation system such as P2P Energy Economy relate more to "Natural Inflation": difference in production cost of one unit of use value resource over time through the increase of efficiency by technological advancement ) ; or if it is "Natural Demurrage": cost associated with owning or holding currency units over a given period of time.
User:Dante believes that when there is technological innovation increasing efficiency for production of the use value resource, it can potentially create a natural deflation ( http://en.wikipedia.org/wiki/Deflation_(economics) ) of the cost of production of a chosen use value resource unit ( especially when this resource production is not dependent on scarce resources ), but for such resource unit Production Cost to decrease Exchange Value of the "Tokens"/Currency Units "created through the selling of excess production of such resource to a monetary creation inventory", the "potential increase of production" the technological innovations may contribute to over time need to be implemented and sold to the monetary creation inventory as to increase monetary production as to increase the amount of "offer" versus "demand" of monetary units in this financial system.
- If an algorithm of the inventory specifically controls monetary creation by buying only a certain amount of potential resource unit production as to maintain the same offer/demand levels,
there would be no change in the Exchange Value of the monetary units.
Although the Exchange Value of the initial resource ( such as energy units ) on which the token/monetary creation is based on, does change when it becomes easier and less costly ( in terms of other resources/infrastructure ) to producer more of it.
Hence it is important for such monetary creation system inventory to find a right balance in its algorithm choice, as it may be competing with other similar protocols for monetary creation inventory systems.
Finding an optimal algorithm taking into account
( cost of production per measured unit resource in terms of other resources ) Vs ( actual production by the peers in the system and buying by the monetary creation inventory system = offer for tokens in the system ) Vs ( demand for tokens in the system )
http://en.wikipedia.org/wiki/Inflation
http://en.wikipedia.org/wiki/Demurrage_(currency)
Further questions
Competition with other Inventory Systems
License
License of the ideas released in this text under GPL 3.0
http://www.gnu.org/licenses/agpl-3.0.txt
Author(s):
- User:Dante-Gabryell Monson - ... - ...