MonetaryCoin: Key Features Review
MonetaryCoin is the first cryptocurrency, implementing the economic theory of monetarism. According to its basic principle, the money supply in a country changes in proportion to the growth of the economic activity.
The Idea Of MonetaryCoin
The monetary policy pursued by financial regulators is impossible without the regular emission. The government manipulates the money supply by constantly increasing its quantity. The newly created money quickly diverges, and the regulator issues it again. It is immediately affects the price of produced goods. This is done to control inflationary processes, but it can also be used for a short-term price level manipulation.
MonetaryCoin shows the way how this cycle can be enhanced by a coin with the algorithmically controlled money supply. A natural process of price equalization can work without the influence on the money supply by financial regulators. The only thing that will directly affect it is the GDP level.
Milton Friedman, who claimed that the role of financial regulators can be taken by computers over time, predicted this «crypto monetarism» in 1976. Back then he won the Nobel Prize in economics for the study of monetarism. Today, his words can come true thanks to the combination of three main components of MonetaryCoin:
- Econometric Oracle software for the research of macroeconomic indicators and an algorithmic control over the crypto money supply.
- Proof-of-Stake as a method of token distribution.
- Elective AML-KYC policy for identity verification only if necessary.
MonetaryCoin As A Cryptocurrency
MonetaryCoin tokens are designed as a cryptocurrency, supplementing fiat money. The tokens are to be initially issued in the quantity of 1% of the total amount of fiat money in the country. 10% of them will be sold during 180 days of the ICO. The remaining 90% will be distributed by the Proof-of-Stake method among all participants of the network during the next year and a half.
MonetaryCoin tokens are developed on the basis of the Ethereum ERC20 open protocol and are used depending on a subject country. The initial offering includes tokens for the European (MERO) and Chinese (MCHI) markets.
The supply of new tokens depends on the economic situation of a particular country, or more precisely on the GDP level. If the GDP rate is negative, a mechanism for producing special M5 tokens is created. It will be used once the distribution is over. Thus, one of the key features of the MonetaryCoin project is the use of econometric oracle to track changes in economic indicators.
The science of econometrics is used to study economic interrelationships involving mathematics and statistics. Econometric methods allow to determine the impact of certain economic indicators and to identify dependencies.
The program, developed in accordance with econometric methods for studying the interrelation of economic indicators, allows analyzing the current trend of a country's GDP. The GDP growth rate has a strong influence on the cryptocurrency supply and its growth.
For instance, if the country's GDP increases by 2%, the amount of tokens also goes up by 2%. However, if the analysis shows a negative GDP growth, the production of special M5 tokens begins. They can be converted into ordinary tokens only after the GDP growth recovery.
The number of tokens available for forging is calculated once a quarter. Data for the analysis is taken from the official sources:
- Financial regulators provide data on money supply.
- The State Bureau of Statistics or similar institutions provide data on the GDP level.
At the same time, the difference between these two types of data is also taken into account, as countries provide information on various monetary aggregates in open sources. The econometric software uses the M2 Monetary Aggregate in calculations. If the state does not provide data on M2, other indicators are used.
Proof-of-Stake As A Method For Distributing Tokens
The creators of MonetaryCoin deliberately refused the idea of using Proof-of-Work as a method for distributing tokens. Proof-of-Stake is less power-consuming and resource-intensive, and at the same time provides a fair token distribution among participants.
With Proof-of-Stake, the system pre-selects a participant to be appointed as a new block owner, based on the number of his tokens. Thus, the competitive element is supported during the token sale within the ICO. This is also emphasized by the fact that the creators plan to distribute 100% of all tokens among users without keeping a "bank". At the heart of this lies the idea that the reward should be accrued not for daily transactions but for the commitment of MonetaryCoin for forging in accordance with the investment logic.
The calculation of compensation amounts is also simplified to make the use of blockchain calculations and storage more efficient. In order not to keep records of all obligations at all stages of the participants' interaction in blockchain, the amount of compensation is estimated by linear functions that depend on the average values of the tokens number and the reward for previous blocks.
AML-KYC Security Policy
One of the key features of MonetaryCoin is the voluntary use of the AML-KYC policy. What do these abbreviations mean?
AML stands for “Anti-Money Laundering”, the measures used by financial regulators and banks to combat money laundering.
KYC stands for “Know Your Customer”, the term denoting the need to identify clients of financial companies.
- Once the identity is verified, the information can be deleted. It is even possible to delete the wallet and create a new one at the user's request.
- Collected customers' data is not visible in blockchain since only its hash is stored there. Security is achieved through smart contracts. This approach has a positive effect on the speed of blockchain operations, as the system is not overloaded with unnecessary information about each user.
- Information which is stored off-chain is encrypted using a key which is known only to the user and the recipient (e.g., a financial institution). Not to any other party.
The customer's personal data will be visible only to him and the other side — for example, to the bank. Thus, the creators of the MonetaryCoin project emphasize the lack of personal interest in collecting information about participants. In particular, the AML-KYC policy is used to protect the project from financial regulators’ allegations of fraudulent antedating and money laundering. In addition, this is a mandatory requirement for certain categories of customers, for example, for accredited investors. No one requires participants to enter any personal data by default.