OUTLINE OF RELEVANT AREAS FOR LITCOIN
The infrastructure for LC
Lead candidates are Backfeed, Holochain, etc.
—MORE RESEARCH NEEDED—
Where LitCoin comes from
- Originates at the point of infusion of capital into Cosmos
- Member dues revenue - some portion (e.g. 50%) converted to dimcoin and placed in the member’s account (“wallet”)
- A member pays more $$ if they want to get more LC (like a standard currency exchange)
- It is not taxed when a person converts $$ to LC, but when withdrawing LC into $$, a micro percentage-based tax (or processing fee) may be gleaned by Cosmos
- Each LC transaction may have a nearly-microscopic tax attached to the exchange of the currency on the platform that automatically goes to Cosmos’ reserves.
Rules governing the ratio of reserved-to-liquid capital that Cosmos maintains on its books would be set as an outcome of data analysis (AI-assisted) and human deliberation. Set by co-op leadership in official documentation (e.g. bylaw), the standard or “Constitutional” ratios affecting Litcoin and built into its blockchain can be adjusted as needed through transparent governance processes. As such rules track directly to the overall health and solubility of the enterprise, this algorithm may be automated as a standard (with human back-end access given as-needed.)
Member dues relate to a person’s stake, or “investment” in the company/system. As valuation of the co-op increases, so may LitCoin increase in value. That is, Litcoin increases in value as more investment of various forms of capital–namely, financial and financial valuation of other non-financial forms of capital exchange in C**'s system*–is incorporated. This idea of the value of LC being tied to the overall capital in the system is a philosophical principle whereby active user validation/valorization of Cosmos as a beneficial platform is dependent, ongoing and dynamic–thus meaningfully tied to those it supports as in a living ecosystem.
Cosmos may, in turn, convert some of its own capital reserves into LC to fund “bounties” on the production of needed platform capacities or performance of essential roles within the system–thus incentivizing member participation, collaboration, and tangible contributions through the shared currency–and potentially serving as a means of modest cost-savings for Cosmos (compared to having to source those needs externally.)
Special rules for starting up Litcoin [see also: Leveling up]:
■ Initially, exchanges of value on the platform can begin to be tracked using a proto Litcoin. This is so members, now, can begin to enhance the value of the platform simply by exchanging value on it through a non-cash-out-able currency. Benefits of offering a proto-Litcoin allows users to get in the habit of using LC, to test out and mock up different variations of LC’s rules in a protected or “sandboxed” way, and it can be managed on a simple spreadsheet or blockchain. It would have value internally, but would not be able to be exchanged for money.
■ In a gamified framework of how Cosmos advances, LitCoin becoming fully realized (and cash-outable!) could be framed as a “next-level reward or feature” tied to the systemic goal of Cosmos the organization becoming secure and profitable (which, typically, may take a few years after formally launching the organization). Thus LC and its popularity serves a mechanism to bridge the period of initial losses to the phase of profitability. LC becomes cash-outable only if and when a certain (gamified) point is reached, such as: when Cosmos is “in the black,” or “is x% over bottom line profitable.” This incentivizes participants organically to ramp up their economic participation within the platform, and to recruit others to the platform, too.
Converting dimcoin to Litcoin
All Litcoin starts its life as dimcoin, a “dimmed”/dormant version of the coin which does not have any intrinsic value. Dimcoin only gains value/“lights up” when the holder gifts or spends it within the system, thereby converting it to Litcoin.
Unlike dimcoin, Litcoin can be cashed out and has real value. It can also be exchanged on the platform as a currency just the same as dimcoin.
Inactivity will cause a certain portion (for example, 10%) of your Litcoin to convert back into dimcoin each set interval (for example, 1 month). This is the principle of demurrage, discussed in Charles’ Eisenstein’s Sacred Economics: “If you don’t spend it, you lose it.” It may be possible to eventually lose all your LC to dC if you are inactive for a long period, such as several months or years. (More on Demurrage below).
A means of expressing value/“capital creation” within the system.
Who creates value, how have they created it, and how would you like to acknowledge it?
Highly “mutable” and flexible to each user’s preferences. Individuals, groups, AND the meta-group (of Cosmos Collective) can all use the currency in these ways. Some possible causes for the giving/spending of LitCoin:
■ Giving it as a gift
■ Thanking someone/a “token of appreciation” (Literally! )
■ Rewarding someone’s attention (intra-advertising)
■ Rewarding a contribution that was found to be valuable to one’s cause (whether personal or collective)
■ Bartering/assigning LC-“bounties” to desired product/service
■ Compensating for mutually negotiated work
Can be cashed out for $ (according to certain terms)–serving as a means of members to make sales, passive, or contract-based income through the platform
Potential added feature: Royalties! Every project “bucket” that someone invests in, whether set up by Cosmos-as-a-whole or by individuals, their investment is tracked (via blockchain) and becomes a percentage stake in the product. Later on, if that product becomes highly profitable, they will receive residual payments into their LC account [or: their C> account?]. Residual acknowledgement in this fashion could amount to or exceed member dues, or overflow into a positive LC balance.
The only time a member might “start” with LC (and not dC) in their wallet is if they’re getting paid LC directly by Cosmos, for royalties, or as a wage.
Consider that Litcoins (in Cosmos) are earmarked as such (dynamically, or per each interval for stability concerns). Thus only a portion of the actually liquid money within Cosmos goes to “backing” LC day-to-day. However, this does not totally preclude speculative exchanges or “betting” from occurring. In fact, the attribution of LC to a proposal or project that later becomes a product could affect the product’s future valuation. Like a stock market, people could make “bets” against Cosmos’ future value and invest in LC to try to get ahead of it. Consider, however, that LC has a built-in demurrage function and is always dC until it’s spent, so as to prevent against wealth-strangling hoarding behavior.
● Litcoin’s "worth"
Both LC and dC is backed by the actual “liquid” dollars associated with that LC in Cosmos’ system. Only dC can be purchased; only LC can be withdrawn. Transacting dC turns it into LC. LC can also be transacted with.
People pay for dC directly, through two mechanisms: 1) the automatic allocation of a portion of their member dues as dC into their wallets; and 2) through a direct currency exchange where dC can be traded for $. This money is what “backs” LC.
Other revenue that Cosmos makes, such as brokerage fees, agency fees, commissions on sales or transactions, and direct donations Cosmos receives, would not “back” LC directly, but rather, would be held in capital reserves.
Cosmos “buys” dC in the same manner as the public, spending its cash reserves on LC when it needs or wants to do so. Cosmos itself would be a beneficiary of both $$ & LC donations at various request-points, ala Wikipedia.
Its value fluctuates depending on the rate of circulation / liquid $$ available.
The more time people invest in exploring how to most-satisfactorily spend their Litcoin, that can become a compelling game, itself, of self-actualization: giving members the sense that they get to “paint a picture” of the world they want to see through how they deploy their LitCoin. It’s a validating game—totally has the potential to be exciting and generative, if not addictive—I think some members might buy into Cosmos just to play that game! And when a member becomes the recipient of MORE LC as a result of being witnessed and appreciated by the community for their generosity, they’re faced with the question of “Am I going to withdraw it now and use this money in the real world? Or am I going to keep it circulating?” Especially if every member is explicitly informed and understands that keeping it circulating actually (however much TBD) increases the value of the coin itself, perhaps people would choose to “leave it in” sometimes. Like, imagine if members were informed that when a particular coin is exchanged for its 10th time (rather than being withdrawn at any point in that chain), it increases the overall value of any coin in the system. These kinds of multipliers could be backed by any LC that went “dim” through demurrage in the system. Since dollars don’t demur, the apparent demurrage reflected in members’ accounts actually represents a growth of Cosmos’ backing for LC, thus making it more valuable.
—MORE RESEARCH NEEDED—
Litcoin and "Leveling Up"
In accordance with the framework of leveling up, one’s “rate of pay” may increase by a certain factor when one’s skills increase. *Reputation factor *(?) Those more trusted in the system can access higher payrates through LC for their work in the platform (pertinent to payments from Cosmos for work or from other members for work), and may access opportunities with more responsibility.
Formula: Based on how long (or more aptly, how many substantive interactions you’ve had on the site–in LC, in discourses, through the marketplace, etc.), Cosmos will pay you a fixed rate and or a trust factor perk pay.
Because LC is intended to predominantly function as a gift economy, this only has relevance in “compensation” contexts when an agreed upon fee in LC is negotiated:
■ Cosmos paying workers to work in key roles or projects
■ A user putting a bounty on their own work “for hire” by other users, i.e. “gigging” or “contracting” for another’s project
Terms and Limitations
- Must maintain membership to access your virtual “wallet.”
- Membership (and thus access to LC) requires an acceptably valuable input (i.e. member fee).
- Possible added feature: The exact member fee (or the specific capital accepted) may fluctuate for each member, as a product of the system’s dynamic calibration and valuing of its needs (e.g. $10/month for basic services for a not-highly-contributing member, $2/month for basic services for highly contributing member, wherein their contributions measured in LC circulation, sweat equity, etc. amount to the correlating offset).
Circulation & Amplifiers of Value
I imagine the circulation factor of Litcoin—how fast it circulates—could be one multiplier factor that makes it more valueable than the direct dollar to dollar exchange. LC would somehow tie to Cosmos’ value as a company—not that it is, itself, stock, i.e. shares of Cosmos—but able to be expressive of the actual value of the company, intact as a coherent operational system. Makes sense because potentially any transactions on the platform, Cosmos takes a micro commission on. At least, there would be some transaction fee at the point of currency exchange (LC to $$, specifically)—in the sense that the fee to process the transaction of exchange (and calculate the near-infinitely-recursive exact “value” at that moment) would be culled then. A very small fee, but all of that ends up adding up to Cosmos’ net worth on the books, which makes the company more valuable, and that can affect the actual speculative value of Litcoin.
*Inactive members, by default, may have their LC convert to dC gradually over time through demurrage. *This really only represents a risk to withdrawable value, not to actual “value” in one’s wallet. The system would alert members that they were at risk of incurring demurrage due to dormancy.
● But then, how would this demurrage mechanism in any way not incentivize people to just withdraw their LC asap (unless the transaction fee is significantly high to withdraw)?
● What causes demurrage? Is it “lack of spending of LC/dC” or is it “lack of signing in/showing up in the platform” or is it “failure to meet your goals on the site in this period”, etc.?
■ The idea of demurrage is to drive engagement, to drive each person to “do more business” with Cosmos in each period–though engagement can look very diverse person to person.
■ *How could we offset the incentive to withdraw LC internally, through other norms or rules? *Some people, like sustainers, will be on the site mainly to give and not to earn LC, so to them, it doesn’t matter if some of their coin is dim and some is lit–it has the same “value” to them. This is also true for creative members who want to spend money on the site in procurement of relevant products and services, and using LC affords them discounts “shopping” with LC vs. with dollars. Whereas those who are low in financial capital would be incentivized to withdraw ALL their LC each period. Would this naturally balance out if we get the right “mix” of customer segments participating? Depending on the fluctuations in value affecting LC, people may treat the currency like a stock—withdrawing LC and then buying dC as they please.
■ Dimcoin IS backed by liquid cash (because if dC is there, someone paid directly for it.) But it is not withdrawable. Therefore, a $-to-dC transation is a one-way transaction, benefitting Cosmos as the host of the currency. LC undergoes demurrage to dC because dC is “held” by Cosmos until it is given or spent and thus becomes LC again. So the demurrage limits what a given user can withdraw to cash–but it does not affect the buying power held in a given wallet. It’d be like if you had some of your money locked up in a financial instrument like a CD–you still “have” that money, but it’s not liquid.
■ If ALL a user’s LC reverted back to dC because they had been dormant in exchanging it for so long, that would effectively “close” the user’s wallet and deactivate their account, stopping any subscription membership payments they were making. Membership could not be reactivated until the reason for their non-participation was addressed. In this way Cosmos communicates that we won’t just take your money if we are not providing you value. Thus, using/exchanging LC may be an explicit standard of participation for members, and failure to do so may forfeit membership.
○ If a member is dropped “for cause,” their LC or dC could also be seized as “unclaimed assets” by Cosmos at the time of member termination, after a set grace window of time allowing them to withdraw any LC in their account. Cosmos may also (reversibly or irreversibly) convert all of a user’s LC into dC (and thus, non-cashable) as part of a member rehabilitation effort (or, certainly, if Cosmos suspects fraud).
—MORE RESEARCH NEEDED:—
- Working out objective (and evolveable) equations or algorithm for determining LitCoin value. Some mathematics needed here; also researching currency valuation mechanisms in general, and other esp. cryptocurrencies.
- Should LC allow for or involve automated transactions? I.e. someone gives you a quality comment of over 500 words and the system automatically compensates them for that from your LC account, then you can opt to “tip” extra? Or is it on the honor code—no auto payment, users must autonomously choose to pay at every point of transaction (and are prompted to do so, perhaps?)
- Is it possible to try on a cryptocurrency and MODEL some of the rules postulated here? Like, run a simulation with a limited # of users? I’d be curious to see if any of the rules result in unforeseen disaster…
Radical valuation possibility:
What if Cosmos could braid members’ goals (self-actualization) with the dynamic pricing in the system? !!! What if Cosmos displayed dynamic prices (within a consensual range) to members based on their goals & their engagement levels? For instance, showing a product as more expensive to a user when it doesn’t intersect with a user’s stated goals, or showing it as more affordable if it does relate to their stated goals? This could interweave with “Enoughness” factor: if a member reports that they are low on money and seeking ways to mitigate that reality, the system could display more affordable base prices to users. [Users always have the option of tweaking the price they actually pay, but this would be the price they’re shown.] What if when a user completed a goal with flying colors, Cosmos offered that member free or discounted services toward her next goal as a celebratory reward (ala Artist Way/artist dates)?