Hard Money Project Raison d'être

Currencies are a requirement of economies

Bad Currency Systems can distort economies

THE HARD MONEY PROJECT

The Gold Standard for the digital age

Product-Market Fit

Self-regulating currencies prevent insider capture

Incentives to use a SELF-SOVEREIGN DIGITAL CURENCY

NATIVE CURRENY SYSTEM for a Global Payments Settlement Ledger

Unleashing Asset-Object Tokenization Power

Explainer

Payer

Payee

Price = Unitary Ratio

X : 1

CURRENCY DEMAND A

Payment for Economic Goods and Services

Tokenized Economic Object Good or Service

Tokenized Currency

Foreign Exchange = Unitary Ratio

Buyer

Seller

Y : 1

CURRENCY DEMAND B

Payment for Exchanging Currencies or Assets

Tokenized Currency B

Tokenized Currency A

Input Spending

Price = Unitary Ratio

Debtor Issuer

Creditor Investor

Interest/ Price = Unitary Ratio

X : 1

Z : 1

CURRENCY DEMAND C

Payment for Financial Contracts OR Investments/ Insurance

Tokenized Economic Object Good or Service

Tokenized Financial Contract

Tokenized Currency

DIGITAL CURRENCY MAP Possibilities and their characteristics

Towards more inclusive currency for society

Explainer

Stablecoin Challenges

Peg=Dependency

SUPPLY NATURE

ELASTIC

DETERMINISTIC

FIXED

Currency Value

CRYPTO w/ Infinite Supply + Peg Tokens

FIAT CURRENCY + Peg Tokens (Stablecoins)

INFLATIONARY

Economic Distortions

STABLE ECONOMY & PURCHASING POWER

Self-Sovereign Digital Currencies (SSDCs)

ECONOMIC CONDITIONS

CRYPTO w/ Finite Supply + Peg Tokens

CRYPTO w/ Deflarionary Supply + Pegs

TOKENIZED GOLD/ Commodities + Pegs

Currency Value

DEFLATIONARY

Economic Distortions

PEG = DEPENDENCY lacking Sovereignty by design

Independence and Dependence in elastic digital currecy systems

Explainer

EXCHANGE RATE ARRANGEMENTS

Digital Currency Example

INDEPENDENT CURRENCY SYSTEMS

Fiat ( CBDC)

FREE FLOAT

SSDCs

TARGET Nonimal Anchor

Domestic Economic Indicators

dollarization

Primary POLICY TOOL

Ex: Policy Interest Rate/ Monetary aggregate

CURRENCY BOARD

USDC ( Circle)

DEPENDENT / PEGGED CURRENCY SYSTEMS

CONVENTIONAL PEG

Libra ( Facebook)

PEG FLEXIBILITY

TARGET Nonimal Anchor

Foreign Exchange Rate

HORIZONTAL BANDS

OHM ( Olympus DAO)

Primary POLICY TOOL

Ex: Foreign Exchange Reserves Foreign policy tools

CRAWLING PEG

Nuon ( Fflatcoin)

CRAWL LIKE

RAI ( Reflexer)

Price/ Exchange Rate Anchor

STABLECOINS Fiat Currency Pegs without parity guarantee

Asymmetric rules preventing fungibility between currency issuers

Explainer

ASSETS

LIABILITIES

Redemption chain of Claims Promising Fiat Value

(IOUs Chain)

Hardest Settlement Asset (Fiat IOU)

L1

CENTRAL BANK

Fiat Currency Value (PP) regulated here

L1

PULIC BACKSTOPS

CB Deposits/ Reserves

Credit

Paity Guaranteed

rCBDC & wCBDC

L2

COMMERCIAL OR NARROW BANKS

L2

Deposit Tokens

CB Deposits/ Reserves

rCBDC & wCBDC

Reserve-Backed Tokens (RBCs)

L3

L3

NON-BANKS (E-MONEY)

Deposit Tokens

Paity NO Guaranteed

Fiat Backed Stablecoins

Reserved-Backed Tokens (RBCs)

L4

L4

"DECENTRALIZED" PROTOCOLS

'Decentralized' Stablecoins or Flatcoins

Fiat Backed Stablecoins

No Guaranteed Parity Redemption

Guaranteed Parity Redemption

Non Redeemable

SSDC Self-Sovereign Digital Currencies

Time for a Digital Currency Standard for all

Our analysis indicates that a common Global Payments Settlement Ledger, with transactional information accessible to the protocol mechanisms, enables the establishment of an immutable Digital Currency Standard. This standard serves as a rule set governing the following principles for each community's Self-Sovereign Digital Currency.

Hover to expand

AUTONOMOUSLY ADAPTABLE CURRENCY SUPPLY

VALUE-BACKED CURRENCY

FREE ENTRY & EXIT

DEMOCRATIZING THE DISTRIBUTION OF NEW CURRENCY

NON-COMPETITIVE SSDC CURRENCY EXCHANGES

INCENTIVES FOR HOLDING & TRANSACTING WITH SSDC

Community Participatory Budgeting

True Seigniorage Income

Stable Purchasing Power Currency

Financial Inclusion for all

Freedom of Economic Choice

DEMOCRATIZED

Censorship & Corruptability Resistance

Inter-Community Cooperation

Community Wisdom & Cooperation

Democratic Decision-Making

Secure Web3 Custody

EMPOWERMENT & AGENCYIndividual and collective

Backed by Appreciating Money

Network Validation Rewards

Currency Debasement Resistant

EarlyParticipation Benefits

HODL Digital Commodities for stable value

ECONOMIC

Utility in Ecosystem Evolution

XRD Appreciation Pressures

Native Currency System

Robust DLT Payments System

NETWORK &ECOSYSTEM

As a citizen or business, it's crucial to trust that the money tokens I transact with – which underpins my income, stored wealth, and daily economic transactions – will retain parity in the purchasing power of a specified X fiat currency (e.g. USD) that I believe I have.

However, can this promise always be guaranteed?

Currency issuance in Fiat Systems: IOU claims backed by assets

The nature and risks of assets backing IOUs matter

Parity challenges for issuers without Public Backstops

Achieving uniformity in Bank-Issued Currency Claims

The Role of CB Liabilities

General Conclusions

Conventionally, in Fiat Currency Systems with elastic supply, Commercial Banks generate deposit money through loan issuance. They then borrow liquid reserves from the interbank market or the central bank's discount window, lender of last resort, for payment settlements, withdrawals, or central bank requirements. This process yields a net interest as benefit for banks in the creation and distribution of new money (private seigniorage). In summary, new money in circulation is issued based on credit demand and distributed through the banking system (although not all agents are banked). The Central Bank, as the issuer of base money like bank reserves, regulates circulating currency through Monetary Policy, albeit challengingly. The conventional tool is passive, adjusting the policy interest rate range, the incentive for credit, in a credit-elastic system, and proactive tools are used contextually for influencing this rate, including open market operations and reserve requirements (not currently). These inject or withdraw central bank liquid reserves from the banking system. Monetary policy employs various instruments within these tools, tailored to the economic context and policy framework. In these flywheel systems, National Governments are the largest legal debtor entity, financing themselves theoretically for public goods spending and repaying this debt by taxing the population or issuing more debt in need of monetization (Fiscal Policy), largely monetized by the central bank. However, they also govern the central bank, the fiat regulator. In cases where the independence between the central bank and the government is unclear, the latter can continually demand the monetization of their issued debt. Understanding the overall dynamics, it's clear that not all Fiat Currency Systems are equally disciplined in their central bank-regulated policies, but none will ever achieve economic balance. The majority of the independent central banks have a positive inflation target in their policy framework, that we know it leads to redistributive consequences and social inequality, just by design.

The need for a native on-chain currency system leads us to decide on the nature of its money supply over time. This can be fixed, determined by a time-based multiplier that can increase or decrease, or elastic, requiring backing by assets for expansion or contraction, and a monetary policy framework to regulate it. If an economy's purchasing capacity, indicated by its economic outputs or objects, isn't rigid or predictable and is influenced by various factors, then the purchasing power, represented by circulating currency, also can't be rigid but must have necessary flexibility to avoid causing distortions and imbalances in the economy. This capacity is influenced by heterogeneous factors in each geography and economy, such as technology, labor productivity, resource availability, and consumer demand. A monetary system puts inflationary or deflationary pressures when the velocity or currency spending goes to Demand A (Economic Payments). Monetary policy need to be calibrated to demand A to not distort the economy. But it is important to understand the nature of its money supply to understand the pressures it may converge to if widespread use. A marginal increase in the money supply ready to circulate and be spent, without a corresponding increase in economic objects, will cause inflationary pressure in the economy. Inflationary currencies lose purchasing power. A certain amount of currency buys less goods and services overtime. Conversely, a marginal increase in economic objects due to productivity, without a matching increase in monetary objects, will lead to deflationary pressure. Characteristics of both: Deflationary currencies gain purchasing power. A certain amount of currency buys more goods and services overtime. while induces a decrease in nominal GDP. Both cases are distortive for an ordered society if currencies with these characteristics are widespread used.