Hi everyone, in our second open letter to the community we want to talk a little bit about the principles which drove us to create Rya.
If you really drill down to the most basic cornerstones of Bitcoin ideology, you find the cypherpunk manifesto and the Austrian School of economics. The marriage between the cypherpunk obsession with privacy and the celebration of the individual associated with the Austrian School is natural and compelling. This, combined with lasting impressions from the 2008 financial crisis, caused millions of new converts to view Bitcoin as the cure for the weaknesses inherent in the centralized banking system.
It’s easy to forget that the economics powering Bitcoin adhere to a very extreme interpretation of Austrian economic theory — namely a fear of inflation. This is one of the reasons Bitcoin has a fixed supply of 21 million coins. In Bitcoin’s experimental infancy, this homage to gold standard probably seemed like a necessity. When something is valued at close to zero, inflation is a truly scary thing and creating a ‘hodl’ culture is beneficial for creating value.
However, the realities of cryptocurrency valuation and mainstream acceptance today open the door for a more relaxed expression of Austrian economics. Is it possible to adhere to strict cypherpunk tenets of privacy while using a monetary model that is not deflationary in nature? Perhaps even achieve a structure that is more price stable by design?
We at the Rya community believe so. The theory is simple — instead of naively fixing money supply and preventing inflation as seen in Bitcoin, the amount of Rya coins in circulation is based on credit, as seen in fiat. Unlike fiat however, credit is determined in a decentralized way in the free P2P loan market and not manually set by a central bank.
The Rya blockchain supports 2 different coins — Rya is transact-able and Trust is static in each wallet. Each P2P loan transaction has a direct impact on the Trust balance of the wallets that engaged in the loan. If the loan was defaulted on, the Trust balances of both the lender and borrower decrease, otherwise they increase. During the min(t)ing process the Trust balance of the min(t)er’s wallet has a direct impact on the amount of new Rya coins they can create. This modification to traditional PoS is termed Proof of Trust.
The resulting monetary model has a supply which expands and contracts based on the price of money in the economy in a fully decentralized and autonomous fashion. This is a different way of interpreting Austrian economics, but nevertheless sticks to the core principle of keeping the money market competitive and out of the hands of the government.
We believe that Rya’s dynamic monetary system can coexist harmoniously alongside Bitcoin, providing a more stable medium of exchange and unit of account for everyday transactions while Bitcoin remains the ultimate store of value.
The Rya project is an open source, community driven monetary system and cryptocurrency. The project was initially forked from NXT source code and then developed in a very different direction. It is published under a modified version of the Jelurida Public License. The project did not ICO and is instead distributing its initial supply to the growing community. Main net is launching on the 25th of December 2018. Merry Christmas!