Kamakara: online cash with constant value all the time
A kitchen scale measures weight
A wooden ruler measures distance
Kamakara cash measures price
Recent innovation in cryptography has enabled anonymous online transactions without a third party. Implemented by using an anonymous append-only ledger know as the blockchain. The verification of the ledger is rewarded with digital tokens, which was pioneered by Bitcoin. The token is security, like the vault at Fort Knox.
Online cash will be built on top of a blockchain. Kamakara will be the first stable online cash to issue a token that is asset-backed. To ensure stability Kamakara will be pegged to the US dollar with inflation removed.
Kamakara is proposed as a medium of exchange, unit of account and a store of value in one, a powerful combination.
The modern financial system is awash with debt as bankers parlay the alchemy of money. Outside money is only 3% of the money stock, with the rest promises to pay at a future date. Public debt is high but private debt too is at levels not seen since the Great Depression. This debt is a Jupiter size ball and chain wrapped around our global economic productivity.
Our economy is transformed in many ways because of this; new businesses formation is at the lowest level since recording began, declining numbers of people working, stagnant wages, and high house prices have kids staying home longer than ever. We have a generation that will for the first time in hundreds of years earn less than their parents.
The global financial crises of 2007–08 displayed the potential damage when those promises to pay at a future date are called into question. Coinciding with this credit hyper-cycle, police authorities and law institutions prisoned and bankrupted individuals that were moving the technological frontier forward by creating internet cash. Hobbling technology that could be a boon to mankind by reducing market transaction costs.
Human creativity however cannot be thwarted. Imagination and the breakthrough use of cryptography made law enforcement and law a non issue by creating an anonymous append-only distributed ledger known as the Bitcoin Blockchain. This enclosed system created a predetermined quantity and distribution schedule of digital tokens that cannot be changed. Released during the global financial crises, it was used as a medium of exchange to transact on the internet, without a third party. Bitcoins became digital gold.
Since the introduction of bitcoin nearly a decade ago, further software development allows bitcoin to become a platform to be built on top of. This Second Layer provides the opportunity to create other digital tokens, which currently include the US dollar and gold.
Like gold, Bitcoin has price volatility due to its limited supply and its demand fluctuations. This is a barrier for widespread adoption as a unit of account (displayed prices). To address this missing function of money, Kamakara is proposed as a medium of exchange, unit of account and a store of value in a single product.
Kamakara will be a constant value all the time and fully backed with property assets from cities with good planning policies. Treasury Bonds are also being considered.
The blockchain results in detachment from the real world of price. Kamakara can re-establish that connection through a peg. The US dollar was considered best because of its wide use as a global reserve currency. It is pegged to 3 October 2008, the day that Wall Street was bailed out.
Constant value over time
For the perfect measure of price, we want a constant value over time. The US dollar has roughly 2% inflation, which helps deal with sticky wages. But this is like your 12 inch ruler at the beginning High School shortening to 10.5 inches by graduation. So inflation will be removed. Kamakara will use the Chained Consumer Price Index which measures inflation and accounts for substitution affects.
Kamakara will be fully backed with property assets from cities with good planning policies. These cities have low private debt so the property assets will have low leverage. Selected cities include Dallas, Houston, Atlanta and Jakarta. Treasury Inflation-Indexed Securities are also being considered.
Kamakara’s competitive advantage is not blockchain technology. But, the blockchain is the riskiest part of the business model. The technology is just too new for all the risks to be known. The cryptography could be broken, a transaction verifier may gain an absolute absolute majority. The blockchain may not work adequately with transaction fees only and no reward. The controlling parties of the blockchain may select proposals counter to the interests of Kamakara.
Kamakara has selected the Litecoin blockchain. Litecoin will implement Segregated Witness first. Theoretically, in future this will enable fast transactions. Time is required for anonymity on blockchains. So unfortunately, Kamakara will be slow online cash initially.
The Second Layer
Platforms built on top of a blockchain enable the issuance of digital tokens. Currently circulating are tokens representing the US dollar, Euro and gold.
The platform that Kamakara will use is Omni Lite. Of the platforms on top of Bitcoin, the Omni Core product is widely used. Currently Omni Lite is the only Second Layer platform on Litecoin.
An important feature of the Omni Lite platform is its decentralised exchange. This will enable the buying and selling of Kamakara in a process that only takes a few clicks.
Legal & Reporting
Legal and compliance issues are of high risk. Kamakara must be proactive and ensure all regulatory requirements are followed strictly and focus on the safety of its users.There are many jurisdictions and multiple agencies that will require extensive reporting. The cost to satisfy these regulatory requirements will be significant.
Ken Rogoff, ‘The Curse of Cash’:
One should have little doubt that governments have all the tools necessary to prevent any alternative transaction media from deeply infiltrating the legal economy on a sustained basis.
Kamakara believes in the necessity of citizens having the right to private transactions. A lifetimes data of purchases should not be easily accessible by governments. For a healthy society, people need both private transactions and certain transactions that can be traced. We all still close our blinds in the evening, not because everyone is being nefarious, but because it is a psychological burden to knowingly be watched.
‘Jimmy Stewart Is Dead’ by Laurence Kotlikoff, is a step by step guide to reducing the financialization of the economy. The risk of a loan cannot be hidden within a bank’s balance sheet. If a loan is made, it must be sold to the money market mutual funds. Risk must be priced up front not obfuscated and forced onto governments during a crises.
Inspired by this Kamakara ‘conditions of use’ will not allow the creation of inside money. All debt obligations must go through money market mutual funds.
Kamakara the company will not be a hyper growth company like Facebook. It will be a very boring business with small margins. Once the cash is sold it will circulate forever. Digital ones and zeros last a long time.