MONEY 2.0 is account money. Tabs for all accounts are kept centrally (typically on a computer), much like in traditional banking. There are no paper bills or coins.
MONEY 2.0 is a medium of exchange. Instead of being issued centrally (as is typical for bank money), the medium of exchange is created automatically whenever market participants trade goods or services. Other than in the traditional money economy, where participants pay a money utilization fee known as interest, usage of MONEY 2.0 incurs no additional costs.
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Details
• In history, currency value has been typically determined either by backing the currency by a commodity (e.g. gold), or by declaring it a commodity in itself and making sure that commodity is scarce. Unlike these historical models, the value of MONEY 2.0 is basically determined by its transaction history. Stability is based on the logic that those with a positive balance won't be willing to pay higher prices than they themselves charged to earn that balance, while those with debts won't be willing to charge less than what they paid. An obvious threat to such an equilibrium would be fraud - credits that aren't actually backed by goods or services - which is why efficient protection against fraud is quintessential. Even though MONEY 2.0 isn't issued centrally, currency administrators have a set of tools to fine-tune the currency and make sure it is well balanced - if necessary, they can tweak the formula for account limit calculation, speed up or slow down account limit decay or adjust the balance fee.
• Until a transaction history is established, it is recommended that currency administrators provide a reference value. (As a possible benchmark, 100 currency units could equal the value of a specific commodity basket.)
• In MONEY 2.0, it is necessary to determine each participant's overall account balance - with anonymous paper money, however, that would be impossible. Paper money and coins can also get lost and would thereby disrupt the overall parity between debt and assets in the MONEY 2.0 system.
• In history, currency value has been typically determined either by backing the currency by a commodity (e.g. gold), or by declaring it a commodity in itself and making sure that commodity is scarce. Unlike these historical models, the value of MONEY 2.0 is basically determined by its transaction history. Stability is based on the logic that those with a positive balance won't be willing to pay higher prices than they themselves charged to earn that balance, while those with debts won't be willing to charge less than what they paid. An obvious threat to such an equilibrium would be fraud - credits that aren't actually backed by goods or services - which is why efficient protection against fraud is quintessential. Even though MONEY 2.0 isn't issued centrally, currency administrators have a set of tools to fine-tune the currency and make sure it is well balanced - if necessary, they can tweak the formula for account limit calculation, speed up or slow down account limit decay or adjust the balance fee.
• Until a transaction history is established, it is recommended that currency administrators provide a reference value. (As a possible benchmark, 100 currency units could equal the value of a specific commodity basket.)
• In MONEY 2.0, it is necessary to determine each participant's overall account balance - with anonymous paper money, however, that would be impossible. Paper money and coins can also get lost and would thereby disrupt the overall parity between debt and assets in the MONEY 2.0 system.