July 2020

About Digital Banking
21th 04:58am EST

All a centralized banking system is, is a system of banking that is controlled by an authority. Your nation in this case would be an authority.

A decentralized system has no one person or body in control specifically. "Everyone owns it." So to speak.

In this case by declaring its existence, and accepting exchange you can make a centralized bank for anything.

For example, I could except your Legos in exchange for my Gatorade. As long as I keep excepting Legos to exchange other things. I can store those Legos on behalf of other people so they don't have to carry around heavy legos. I can give them a sheet of paper with a value in Legos, they can redeem at any time. You could hand your 20 Lego bill to the sandwhich guy, and he could give it to me and get 20 Legos back. That is how a bank works and why it exists.

Banks began to exist because gold, silver, and copper are heavy; and people REALLY want to steal them. Banks keep it secure and give paper money in exchange for the value of the material. That is how they were supposed to work originally. It is more complicated now because banks trade debt rather than gold.

In order to build a successful bank. You need to hold material that has a value in capital. Let me say you have a bar of silver, 1kg. Valued currently at like 650 USD. Your bank is holding 650 USD in silver. If you mint 650 current units, it doesn't matter what they are called... Florps. You have 650 Florps, each with the value of 1 USD. But that value will fluctuate, because your Florps are not pinned to the value of the dollar. They are pinned to the value of silver.

If you mint 650 more Florps, the value will decrease. Because you have 1300 Florps minted with only 650 Dollars in silver. Each Florp is worth 50 cents. If you rip up a Florp, so that you only have 1299 Florps, the value of every Florp goes up by 1/650th. So Your Florps become worth 0.5008 USD.

With your minted Florps, you can distribute them. As long as you are holding the silver, the Florp has a value. Theoretically speaking, a person with 1 Florp in hand should be able to give you the Florp, and get the silver back. In actuality, if someone made that request, it would be frivolous. You would not cut up a bar of silver into 650 pieces. You would not ship a dollar of silver around the world at your own cost to redeem the Florp for silver. When you get the paper money Florp back, you would need to destroy it because the silver it represents is no longer being held by you.

So, instead, the money is honored on a system (the honor system lol). Where a person who holds a Florp can be assured that...

  1. You actually have the silver, gold, copper, etc... you say that you do.
  2. You are not minting Florps for silver, gold, copper, you do not have. Decreasing the Florps value.
  3. Nobody is counterfeiting Florps, decreasing their value.
  4. That in a time of distress, they could potentially redeem the value of the materials they hold the currency for.

If you meet those promises and can prove that to others, the currency will gain trust. I would know for certain that a Florp is worth 1/1299th of a kilo of silver. I could give 2 Florps in exchange for 1 US dollar. Both parties would be happy. I would be able to spend the dollar. The person receiving the 2 Florps would have 2/1299ths of a kilo of silver.

So in short, what you need for a centralized bank.

That in a time of distress, they could potentially redeem the value of the materials they hold the currency for.

  1. Capital. Gold, silver, copper, platinum, items of appreciable value, other currencies, stocks, bonds... etc
  2. That capital must remain safely secured by you.
  3. That capital must remain in the hands of the banking authority.
  4. Paper money that you mint must remain trustable. If any person can mint your money, then they can devalue your money.
  5. You must know the amount of paper money in reasonable circulation. How many your bank has printed, how many have been counterfeited, how many have been destroyed over the course of normal use.

You can defeat 4 and 5 by simply using a digital currency. It cuts out alot of problems. At the same time, you don't have a paper money, and you lose the culture that surrounds it.

In order to build a centralized bank around a digital currency, you have some complicated things you need to figure out.

Regelis, at this time, is entirely in control of its digital currency. This means that any person who wishes to make a transaction must send a transaction request to the central bank of Regelis to make a transaction.

If you want people to have the currency on their person. They need to have some sort of card, some access to the bank, an automated system of some kind. Engineering that system is a problem you just have to solve on your own. There is no tutorial for that kind of thing. No company wants the public to have that kind of information. It is all proprietary, locked up in patents and research papers.

Making a digital currency itself is not hard. There are discord bots that do it, forum plugins, and of course smart contracts with Ethereum which is the closest you can get to a real currency with little effort.

Regelis has resorted to writing its own framework with python, where banking requests, transactions, currency minting, taxation, economic value balancing... it is all handled with command line entries. We wrote our own software, and like any bank, in order to maintain our economic security. We aren't sharing that code with anyone either.

In truth, the answer to the question...

How can I create a currency that is solely based online or a crypto currency?

...depends on the answer to the question...

Do I want a one click solution that everyone is using and pretend I have a currency, or am I actually trying to build a functioning bank?

If the former, than just use a cryptocurrency, discord server, or a forum currency plugin. Hell just open a website like Gaia Online or Habbo, where accounts have a currency value variable. They can log in to exchange that with each other. Works well enough.

If the later, than you need to start learning how to secure data. Encrypt transaction data, secure a ledger with double-entry book keeping. Then distribute that ledger to multiple locations, update them, and make regular backups of ledger entries. It becomes alot data. You just have to learn how to do it, there is nothing more to it than that.

- Office of the Monistace

State of Regelis
18th 07:21am EST

A number of changes have taken place in Regelis over the last couple of weeks. Following our departure from Promatia, we have gone dark communicating with each other in a closed area before preparing a rebranding of the nation to the micronational community. With that rebranding comes the aforementioned changes taking place. The changes are as follows.

Regelis now has a website. - None of that weird website builder garbage. I tore apart bootstrap and made website from it. It is responsive, and straight to the point. The citizen and military registration forms are functional. There is information about the nation on the main page. We plan to have all of our legislation information visible, and banking in Houros available via email request.

We are opening ourselves up to diplomatic relations with all states. - We have previously taken the approach that we would only develop relations with serious micronational, new country projects, or secessionist states. We are retracting that decision. We are willing to open up diplomatic relations to any state we deem to be of sufficient size and age. Please message me if you want to make diplomatic contact. Our flag. - We previously announced a change in the design of the flag. After a community-wide heated argument about the flag being changed, we have decided to return to a 3-color variation of the original flag design with a little better alignment.

Regelis will prioritize the drafting of legislation. - The whole legislation drafting thing has been slow when it comes to almost every nation. Regelis' government wants to set the example it should be for other nations to follow. Despite our age we have done very little drafting of documents, mainly because the governmental model has a slow voting system. Ministers of Regelis may now propose expedited drafts.

We will strengthen the Houro. - It cannot be understated how powerful our economic model is, and strengthening it should be primary goal of the Regelian government. Its might seem weird to think a micronational currency might be worth something. Here we are trying to do that exact thing. Because the Houro is already pinned to the value of the person-hour (manhour), it already has intrinsic value. In practice no Regelian citizen trades one houro for one hour of work. Trades in houros are in the hundreds for very short project works, like artwork, or graphic design. We are looking to backing the Houro with silver and gold to better solidify its value among those trading it.

We have abolished minted Houro denominations. - The minted houro coin, and formerly printed Houro bill have been removed from circulation. A total of 238.33 Houros have been invalidated. The amount in cash has been digitally refunded to the holders of the currency, with an additional multiplier paid out by the Regelis National Authority and office of the Monistace. The 1 dayero, 4 houro, 1 houro bill, 30 minero, 15 minero, 5 minero, and 1 houro coin denominations are no longer legal tender of Regelis. This now permanently rids of the Houro Real and Houro Regular dual currency system in favor of a full digital currency.

Our digital economy is now supplemented by chain ledger. - A chain ledger, much like a blockchain, is a method which can be used to digitally validate transactions, to prevent tampering and ease investigation of financial crime. Each transaction made on our system, even those which are automated by the tax system, generate a one time hash and nonce. This data is saved using the data from the previous transaction to generate a new hash value. Attackers upon our digital currency will be required to have both a copy of the chain ledger and the computing resources build the ledger in reverse. Because they are signed, they will have to compute the entire chain from the beginning and rebuild it. Additionally, each type of transaction is coded. The checksum of each data set can be validated even if the chain is rebuilt. We are confident anyone with the motivation to attack our financial system will be unable to do so.

We have removed some of the openly-democratic parts of the voting system in favor of operating as an oligarchical republic. - Our voting system still takes the 10 random citizens for the passing of laws that it used to with the old system. Elected officials are no longer chosen by preferential vote by the public. They are instead internally voted upon by representatives. Because the selected representatives individually have little impact to how the laws are passed, collectively they have little impact on the appeal cycle of the drafting of legislation. This will help expedite the process we use to draft laws.

That is all I have for now. Keep up what you are doing everyone.

- Premiere Soaring