Monetary System

The core value of fiat money is tied to the faith people have in it. A small scale monetary system shared by people with like values could potentially prove very stable because those involved in it would have a high degree of faith.

Init

To start the system, a core group would each receive a fixed amount on the condition that if they choose to leave the system, they must have at least that much in their account. It would be best if this group has common things that they wish to barter (food, crafts and labor [babysitting is a classic example that is well suited to this system]).

As new people enter and interact, they will be given a confidence rating. This is similar to page rank - if everyone in the system has confidence in you your confidence will be 100% and you will start with the same amount of money as the founders. If people with high confidence have high confidence in you, you will also have high confidence. Over time this system will go away until the only way to get money is to earn it, but this should generate a solid pool.

Unit

The unit is a Hul - an hour unskilled labor. This fixes the dollar to measurable thing and should help stabilize things (though it does suffer from instability in that the value of labor shifts, but I think for this system there's more to be had in holding labor to money constant and letting investment flux).

Interface

Fundamentally everything will be done through a web interface. The one exception is something like bearer bonds.

Concerns

I like the decentralization of BitCoin but it comes at a certain cost that all transactions can be publicly viewed so at some level, anonymity is compromised. I do like the preset growth levels though.

I think there is a way to balance distributed and centralized with 'Banks'. There is a network of trust that determines how trustworthy each bank is. That still leaves the ability for any one bank to (one time) steal all their clients money. If each dollar had a unique ID, there could be a system in place for fraud. If enough users claim bank fraud, then those dollars could be flagged and returned to the user. It's not completely foolproof, but it's a start.

Upon further consideration - the compromise would be distributed banks, but then the question is how distributed and I think the optimal answer is basically BitCoin - everyone is their own bank. Also, the ability to spin up a new account, move money though an anonymizing service and have it end up in a disposable account means transactions can be truly anonymous.