A New Currency of the Future: The Novel Commodity Money with Attenuation Coefficient Based on the Logistics Cost of Anchor

TL;DR

This paper introduces Decayed Commodity Money (DCM), a novel currency model that incorporates logistics costs and an attenuation mechanism, enabling effective wealth storage with self-decaying value over time.

Contribution

The paper proposes a new form of commodity-based currency, DCM, integrating logistics costs and attenuation to address limitations of traditional commodity and credit currencies.

Findings

DCM incorporates logistics costs into its valuation.

DCM's value decays over time, reducing hoarding issues.

DCM offers a new approach for wealth storage across entities.

Abstract

In this paper, we reveal the attenuation mechanism of anchor of the commodity money from the perspective of logistics warehousing costs, and propose a novel Decayed Commodity Money (DCM) for the store of value across time and space. Considering the logistics cost of commodity warehousing by the third financial institution such as London Metal Exchange, we can award the difference between the original and the residual value of the anchor to the financial institution. This type of currency has the characteristic of self-decaying value over time. Therefore DCM has the advantages of both the commodity money which has the function of preserving wealth and credit currency without the logistics cost. In addition, DCM can also avoid the defects that precious metal money is hoarded by market and credit currency often leads to excessive liquidity. DCM is also different from virtual currency, such as bitcoin, which does not have a corresponding commodity anchor. As a conclusion, DCM can provide a new way of storing wealth for nations, corporations and individuals effectively.