The only difference in what I'm saying is how the bitcoins erode.
Your proposal is
F% of the amount is lost with each transaction
or
F is lost with each transaction
I don't know, but i guess you mean the first
My proposal is:
D% of the amount is lost annually
Hi JT, F% of the amount of each coin is lost each time its spent.
The fee with each transaction punish the spend and therefore reduces the velocity of circulation. On the other hand, the demurrage stimulates the spend and trade with the currency, because the longer you hold the money the more you lose.
Their are equal pros and cons in each case. but..
I guess time here can be measured with the block counter.
Here we got the formula we're supposed to be talking about if we want to reach stable prices(
http://en.wikipedia.org/wiki/Money_supply#Monetary_exchange_equation):
MV = PQ
M is the total dollars in the nations money supply
V is the number of times per year each dollar is spent
P is the average price of all the goods and services sold during the year
Q is the quantity of assets, goods and services sold during the year
Demurrage increases V and make it more predictable.
...I hate that equation. Money doesn't have 'velocity' contrary to popular imagination. Most of the time a money token just sits in one location. Very occasionally it moves. At the moment, each dollar of base money moves about every 8 months. Thats not like velocity, like water thru a pipe, its more like electrons tunneling. So more of a stochastic, quantum type event than a flow.
I don't think that equation is that useful in the real world.
Secondly, you say you don't like interest but demurrage per year is not only interest, but it is imposed artifically.
Whereas what I propose, the fee charged when spent is a transaction fee , which I promise you will make more sense to everyday people than a negative nominal interest rate will do.
For me the most important thing for me is suppressing interest, which is the reason I became interested in Ripple in the first place.
Its a shame you feel that way. You cannot load political or ideological views on a money system and expect it to succeed. Ripple is a pure system of bilateral agreements and as such there is no business for you or I to impose a particular form on these voluntary bilateral contracts. If two consenting adults would like to charge one another interest, so be it.
OTOH, the transaction fee is perfectly understandable as a fee payable to the community who enable, via the donation of their MIPS, trade to take place.