MonetaryCoin – an ERC20 Token Based on a Novel Prize-Winning Theory

MonetaryCoin is the first project that implements its token as a supplementary currency to a country’s money supply. The main goal of the project is to create an economic system with the endogenous governance and an algorithm as a financial regulator. 

A Token Which is Based on a Novel Prize-Winning Theory

More than twenty-five years ago, a Nobel winner Milton Friedman said that computers would replace financial regulators over time. Now, with the MonetaryCoin project, this time has come. In 1976, Milton Friedman presented research on the monetarism macroeconomic theory. His attention was focused on the fact that the main factor affecting the money supply should be the volume of the economic activity.

In his work, Friedman was geared to the US economic system and the Federal Reserve monetary policy. As per the FRS, the money supply is influenced by many more factors than just GDP. At the same time, this creates a huge space for short-term manipulation of the money supply. MonetaryCoin is developed to show how these manipulations can be avoided with the help of monetarism ideas implementation.

It means that within the MonetaryCoin economic system the rate of changes in the cryptocurrency supply goes along with the rate of changes in the country’s GDP. It is realized with three basic principles of MonetaryCoin:

• Proof-of-Stake as a token distribution method
• Econometric Oracle software for the realization of the control function over the money supply
• Elective AML-KYC policy

These components form a unique combination that allows creating an economic system with the algorithmic control of the money supply.

Algorithmic Money Supply

MonetaryCoin tokens are available for customers worldwide, but they are always tied to a specific subject country. The initial proposal includes tokens for the EU (MERO) and for China (MCHI). The total value of the initially offered tokens equals 1% of the country’s money supply. It is enough to illustrate the economic system in action not affecting fiat money.

MonetaryCoin tokens are based on the Ethereum protocol ERC20. 10% of them will be sold during the ICO early stage that will last 180 days, while the rest will be distributed among the network participants through forging.

Proof-of-Stake Forging

The Proof-of-Stake token distribution method was chosen because it is less power-consuming and resource-consuming than Proof-of-Work. Using Proof-of-Stake suggests that the owner of forged coins is determined by the number of tokens he/she already owns. The number of tokens available for forging changes in accordance with the GDP level. The MonetaryCoin founders use econometric Oracle, a special system for tracking and forecasting the economic activity. The forging Dapp has already been deployed to https://forging.monetarycoin.io

Unique Econometric Oracle

Econometrics as a science uses mathematical and statistical methods for macroeconomic indicators research. As applied to the project, it means that the Oracle explores last-year GDP data.

It is interesting that both growth and decline in the economic activity are taken into account. For example, if GDP rises by 3%, the number of tokens available for forging will increase by 3% as well. At the same time, in case of the GDP falling, the developers designed a smart contract that will allow the forging of a special M5 token. According to the idea, after the GDP rate stops its downtrend and starts rising again, users can exchange their M5 tokens for the regular ones.

Econometric Oracle gets information on the data analysis from official government sources. Therefore, any country that publishes reliable data on its GDP level and the money supply may have its own MonetaryCoin token in the future.

Elective AML-KYC

Another key feature of the MonetaryCoin project is the possibility of non-compulsory proof of identity. What does this mean? AML and KYC are policies used to prevent money laundering and financial crimes. However, MonetaryCoin does not oblige clients to verify their personal data. Though, a user may need to verify his/her identity to cooperate with banks or other financial organizations. (For example, if the client is an accredited investor).

Only the user and the bank can see the personal data provided. This information is not visible on blockchain and stored separately in the encrypted form off-chain. In all other cases, the MonetaryCoin users stay anonymous.

The MonetaryCoin distribution is open at https://monetarycoin.io