Core Idea

Since the value of a currency is created by those who use it, the idea at the heart of the Liquidity Network is that users should be rewarded for helping to develop the currency’s use by being given the additional units that the system needs to have in circulation as a result of their activities. Similarly, if someone is given units for doing a lot of trade in the system but then ceases to carry on trading at the level for which he or she has been rewarded, some of the bonus units that they were given should be taken away – provided, of course, that they had units in their account and the trust managing the system decided that units needed to be taken out of circulation to maintain the currency’s value because the total level of trade was in decline.

There is no question of users having units which they have earned by their work (as opposed to having been given as a reward by the trust) being taken away by the trust except in payment of account maintenance fees. However, as all units will be given into circulation as a reward, it would be possible, should the need arise, for them all to be gradually taken away as the need for the system lessened and the level of trading declined.

This system of rewards and penalties is only possible with a completely electronic currency system in which the managers can track changes in the level of activity in every account.