MICROPAYMENT

Overview

The goal of this project is high: Provide an electronic currency, backed with commodities or current currencies, that can be used as an alternative for the current financial system but without the hassles that come with it.

Some key features:

• free
• ranking of sponsors
• simplicity (it should be usable by 4 year old children)
• 100% transparency (you can see every transaction)
• interest free (to avoid uncontrolled growth and speculation)
• know your partners (build trust to the people who live with you)

Other ideas:

• Self printed credit notes (SPCN) can be used to facilitate payment.
• automated taxes
• circulation stimulus
• see the list of ideas at the end

Payments of small amounts (up to 100 C (credits)) is possible in an electronic way.

Usecases

The use cases have two participants (Person A and B) and a total amount of 25,00 credits. The amount is always constant.

UC1 - electronic payment only

          Person A                    Person B
Step 1    10,00 C                      5,00 C
          10,00 OPCN

Step 2    Person A buys something for 3,00 credits from Person B electronically

Step 3     7,00 C                      8,00 C
          10,00 OPCN

UC2 - combined cash and electronic payment

          Person A                    Person B
Step 1     7,00 C                      8,00 C
          10,00 OPCN                        

Step 2    Person A buys something for 3,00 credits from Person B with a credit note of value 10
          Person A gets back 7,00 credits from Person B

Step 3    14,00 C                      1,00 C
                                      10,00 OPCN 

UC3 - print a credit note

Step 1    Person A
          14,00 C

Step 2    Person A prints a credit note of value 10,00

Step 3     4,00 C
          10,00 SPCN(A)

UC4 - cash payment

          Person A                    Person B
Step 1     4,00 C                      1,00 C
          10,00 SPCN (A)              10,00 OPCN

Step 2    Person A buys something from Person B and gives him his printed credit note of value 10

Step 3     4,00 C                      1,00 C
                                      10,00 OPCN
                                      10,00 SPCN (A)

UC5/1 - validating of a credit note - credit note is valid

Step 1    Person B validates the credit note of person A - credit note is valid

UC6 - deposit a credit note to your electronic purse

                                       Person B
Step 1                                  1,00 C
                                       10,00 OPCN
                                       10,00 SPCN(A)

Step 2    Person B deposits 10 credits to her electronic purse

Step 3                                 11,00 C
                                       10,00 OPCN 
                                       10,00 SPCN(A) (invalid)

UC5/2 - validating of a credit note - credit note is invalid

Step 1    Person B validates the credit note of person A - credit note is invalid

Facts/Conclusion

Everyone can act as a Bank: Give me a credit note and I transfer credits to your electronic purse. Everyone can print a credit note: Print a credit note with the credits of your electronic purse. Credits on an electronic purse and a credit note are equivalent. You cannot print more credits than you have. SPCN can be used like original ones. The amount of an SPCN can be a fraction of OPCNs.

Graphical User Interface

                  10 C
Picture/Logo     ------>    Picture/Logo
Sender                      Receiver
id person A                 id person B
business volume             business volume
current total               current total

button send credits

Security

• Dealing with small amounts of money.
• Regional users.
• Costs should be kept to a minimum.
• Make all users public. Photo and Name.
• Make the electronic purse balance public up to 100 C (e.g. ?.???.?56,479 C)

Conclusion: Keep it simple.

Implementation Notes

• Central platform
• support mobile devices (web-browsers)
• Securing a SPCN with a barcode (like tickes of deutsch bahn) and data of both (including picture)
• Quantity structure:
• 1 million participants with 2 trades a day between 6:00 and 21:00 -> 37 transactions/second
• If each payment takes 15 seconds we have 555 concurrent users.
• audit proof

Iteration 1

• Basic Infrastructure
• Object model
• Web-Application with authentication
• User pictures from gravatar
• ranking of sponsors
• UC1
• show business volume (all users and per user)
• ranking by volume

Iteration 2

• account for state and regions

Open questions

Q1:

What is the amount of credit that a person needs for trading in one day / week / month?

Q2:

Why is the circulation stimulus not the equivalent to a 10 % interest? e.g.: I buy 100 C for 100 Euro (5 x 20 C) After a year I have to pay 10 Euro (20 x 0,5 Euro) to get a new 100 C credit note. And this year after year. Hint: the circulation stimulus must be generated from nowhere (outside of the own credit system). If the amount is used for something else then it better should be called tax and we have simplified the tax system to a bare minimum - as a side effect.

Ideas

Idea 1:

The circulation is 3 to 4 times higher compared to Euro. (Source FAQ www.regio-im-oberland.de) -> Replace all taxes with a 10% VAT tax and do not distinguish between private and business. -> Add a fee from 10% to 40% depending on the distance of the persons involved exceeding more than one 1 kohr = 21 km. -> You can vote for which projects 50% of the taxes and fees are used. -> there are special accounts for the state and regions and they have the same rules.

Idea 2:

Take gold and silver as securities.(1 troy ounce = 31,1035g) Price: Silver: ~20Euro/troy ounce Gold: ~1000Euro/troy ounce -> commodities are the currencies => 1 gold credit (GC) is 1 gram gold and 1 silver credit (SC) is 1 gram silver => a specialized pawnshop gives the credit for the given security (see PfandlV). => a fee must ensure the insurance payments for the gold an silver stored.(preferable in per cent of the stored commodities.

Idea 3:

Each new participant needs a certain amount of money to participate in trading (my personal guess: 60 SC). -> But there should be no club and club fee - everyone can participate. -> You can sponsor the currency and there is a ranking.

Idea 4:

Let the payment platform produce its own money: -> one tenth of a per cent for operations. -> one tenth of a per cent for development.

Idea 5:

Plan an upward revaluation of the credits and a complete isolation of the credits over a couple of years (~5). -> secure regional trades with goods for the daily life.

Idea 6:

Suggest prices for services. -> e.g. 1 hour cleaning - 8 C

Idea 7:

Circulation stimulus: -> every quarter for OPCN

20 C -> 0,5  C = 10%/year
10 C -> 0,25 C = 10%/year
 5 C -> 0,10 C = 8%/year

-> every day at midnight for credit or when placed on deposit for all days since SPCN was printed

   1 -    10 C -> 0 C 
  10 -   100 C -> 0,0003C/C = 10,95 %
 100 -   500 C -> 0,0004C/C = 14,60 %
 500 -  1000 C -> 0,0005C/C = 18,25 %
1000 - 10000 C -> 0,0006C/C = 21,90 %

Exceptions:

• only the credits above the business volume of the day is included in the calculation.
• if you give someone a loan (in steps of 500) this diminishes the amount from the higher end. => Examples person|credits|businessVolume|loan|lower limit|upper limit|circulation stimulus| A | 1499| 600| 500| 500| 499| 0| B | 3000| 50|1000| 50| 1000|0,015 0,16 0,25 | C | 89| 54| 0| 54| 89|0,011 |

if the money on the special accounts is not used, then it flows back to all users.

Idea 8:

Exchange for other commodities/energy -> no idea - ask Kuno again

Idea 9:

Create own bank.

• account balances over HBCI?
• There is a client app for iPad that can display balances of all different online banking accounts created by Star Finanz and is available for different bank brandings (comdirect, sparkasse)
• There is HBCI server implemented in java (I asked for the sources) hbci4java

Idea 10:

Include a rating and new ideas for:

• the paymentprocess
• the other party in the payment process (build your own reputation)

Idea 11:

Franchise the pawnshops.

• vault
• documents
• ...

Idea 12:

Loans are given personally or by the gouvernment. The risk holds the lender.

Idea 13:

Let other regional currencies use the same system.

Idea 14:

All languages and regional dialects should be choosable.

Idea 15:

Use 10 as the base -> no fractions(?).

  0% (  0%) person           I
 10% ( ~9%) family           children, parents
 20% (~17%) local group      friends, wagnis 3
 30% (~23%) district         messestadt
 40% (~29%) city             munich
 50% (~33%) one kohr         21 km
 60% (~37%) rural district   munich
 70% (~41%) province         bavaria
 80% (~44%) country          germany
 90% (~47%) kontinent        europe
100% ( 50%) planet           earth

If you leave the planet, it costs you 50% of your assets :-).
-> calculation is exact to 4 decimal points.

Idea 16:

There is the possibility to fund the following accounts:

• own account
• micropay account
• state account

Idea 17:

Print stamps

Idea 18:

identify persons with face api

Idea 19:

different accounts with a time currency of hours.

MODEL:

 ------
 |user|
 ------
   |     ---------1
   |-----|account|----|
        *---------    |*
           1|       ---------
            |-------|payment|
                   *---------
                       1|     -----
                        |-----|tax|
                             *-----              

taxes are a special kind of payment

ROLES:

• user (4years, 20 years, 50 years and 70 years old)
• disabled users
• pawnshop (can register funds)
• state (can spend the money on his account)
• admin (can create pawnshop)
• sponsor (can fund the project)

GUI:

o rate the transaction process
  o easy  o cumbersome o ...
o rate the other party
  - friendliness
  - ...

Abbreviations

C       Credit
OPCN    Officially Printed Credit Note
SPCN    Self Printed Credit Note 
VAT     Value Added Tax

Translations