Financial hacking with Faircoin


Community currency engineer, Matthew Slater, reconsiders his opinion of FairCoop.

Having kept an eye on the altcoins for a good while I wasn’t initially impressed by the claims of Faircoin.

There have been several coins issued attached to good causes but without a clear monetary function. The idea is usually to set up a cryptocurrency, premine some, market the brand and sell the premines for a good cause. In this, there is no consideration of what makes the coin a desirable purchase, and the coin is so useless i.e. unused and therefore unusable, that its purchase constitutes little more than a straight donation.

It seemed to me that Faircoin was something similar, but making spurious claims about being more fair in its configuration. It was premined and distributed initially with an airdrop to everyone who had registered. Proof-of-stake is fairer and less energy intensive than proof of work. The undistributed premined coins were allocated for different areas of development. FairCoop activists were easily able to send the coins between themselves and convert them to Euros using Chip Chap.

As I probed I learned that Enric Duran, the mastermind of FairCoop who is famous for borrowing EUR500K and giving it to charity and who is now in hiding, was behind the scenes manipulating the Faircoin price to make it more stable. Clever perhaps, but also a cause for concern. Did he know what he was doing? With activists selling Faircoin for Euros, how long could Duran keep the price up before he ran out of resources and the price crashed?

When I visited activists in Barcelona a fuller picture emerged. It turns out that since wide publicity has lead to a strong demand for Faircoin, Duran containing the price for the sake of stability rather than inflating it. By constant buying and selling, he is cushioning users from the usual cryptocurrency volatility. Also he is not doing so only with his own resources but with a group of Faircoin holders. In a normal crypto this collective power would be extremely concerning but since Faircoin holders trust this group, it is extremely reassuring.

That’s what makes the difference in any financial system. Trust. The cryptocurrencies have attempted to remove trust from money, and in so doing have created dark and dangerous marketplaces. Faircoin is overlayed by the users’ trust in an outlaw “Robin Hood” character, and a pervasive ethic of solidarity.

Furthermore Faircoin is only part of a larger financial system that Duran is building. It is the part that provides a way to move hard value around and withdraw Euros when needed. Alongside that
Faircredit, a mutual credit system (planned)
Fairsavings, a faircoin savings fund which gives a yield while the coins are used elsewhere in the coop
FairMarket, a directory of goods and services for exchange
Fairstarts, an incubator for small enterprises
Fairfund, a way of donating to various organs of Faircoop
Coop Shares, equity crowdfunding

Duran’s achievements in building a financial system outside existing structures are remarkable, and this templates and tools deserve more attention and more support from like-minded movements.

I think Faircoin would be more fit for purpose if Duran and his team were able to calm the price by issuing new coins, rather than using a preprogrammed release schedule. Publishing a target price for the coin and having the tools to maintin it, would deter speculators and reassure serious users.