Technical Design Notes

This is a tentative design.

FairFunds Diagram 8-21-26 Simplified with bank added finished cr.png

The above diagram is for the paper scrip only.

The description below is paper+digital.

Do What Works

Based on demurrage of the 13th century Renaissance, the Worgl, and Chiemgauer

FairFunds goal: A modern digital backbone with paper backup for outages. Five AI's were unanimous that the currency should be a dual paper+digital design. But at this time with the world in turmoil and at war, it would be prudent to start with paper to protect from a national monetary failure. It also allows those without phone to use the currency. Or, do them simultaneously. It is modeled after the Chiemgauer, a dual currency, which did 79% of transactions in digital exchanges (2015). See Chiemgauer.info (to translate to English (in Chrome) right-click on the page - click Translate to English).
FairFunds will trade 1:1 with the dollar; with a ratio other than 1:1, every transaction would require computation before use and would hinder acceptance and usage. Instead of being a high-velocity currency it would be hoarded with the expectation that it would increase in value with time. It would also prevent acceptance by the City which deals in dollars only.
Renewal: Paper FairFunds are valid for 6 months and then expire (February 1 and August 1). To renew an expired paper bill, you must purchase from an approved non-profit, a renewal stamp worth 3% of the FairFunds face value, and attach it to the paper. The annual demurrage (holding fee) rate is 6%; whoever holds the FairFunds must pay the fee to renew it. Fairfunds are valid 3 years after issuance and must be revalued 5 times with 3% fee.
The entire 3% stamp fee will go to pay administrative costs. The non-profit is paid when a business converts FairFunds into dollars.
Paper FairFunds comes in denominations of 1, 5, 10, and 20. Experience will show if we need other denominations (2 or 50 ). Change can be paid with stamps: 3¢, 15¢, 30¢, and 60¢.
Digital FairFunds (future implementation) demurrage is 0.0164% computed daily (6% annually, same as paper). It is fractional and requires no denominations. 90-Day Grace Period: The demurrage does not kick in immediately. The electronic system grants a 90-day grace period for any newly acquired digital funds. The daily depreciation only begins applying to balances that have been held continuously for longer than 90 days, giving users ample time to spend the currency locally before losing any value.
Structure: Community Board, Independent Unincorporated Nonprofit Association (UNA) with transparent rules, with City as accepting partner. This gives legitimacy without making it a partisan budget instrument. The City would help launch it.
Placing into circulation: The City will request funds from the UNA which will approve it; the City will then spend it into circulation paying a portion for wages, public works, and for projects. The City's role will be the single most important design lever: Accept the currency for a portion of municipal fees, permits, parking, rents, fines, and taxes. That creates real demand even if private sentiment weakens. This was the actual engine behind Wörgl's success. FairFunds is removed from circulation by this method.
Launching: We want 100 businesses signed up before launch.
Quantity of circulation: Start with City spending capacity. Later, when sellers can sell and buyers can buy, that would indicate the gap has been bridged. The quantity of scrip in circulation can be regulated by the level of unemployment. By survey we will measure how many people want a job that does not have one, and increase or decrease the quantity as indicated.
Sign-up dividend: When people post their first job on the jobs board, they will receive F25 (pending. By City or UNA?). This primes the pump and places some into circulation. OR, give the entire population F10.
Community Dividend: Fund local priorities chosen by City or participants—such as parks, arts programs, food security, etc. This gives every user a visible reason to support the system.
Following the Chiemgauer model, customers can buy FairFunds with dollars 1:1, where 3% of the value is donated to a local non-profit of their choice. Consumers cannot redeem FairFunds into dollars, but must spend them at a participating local business. This restriction is part of the currency's "spending incentive" (demurrage - a "use it or lose it" charge) model. If consumers could easily trade their FairFunds back into dollars, it would defeat the purpose of keeping the money circulating strictly within the local economy.

Businesses can redeem FairFunds into dollars at a 5% conversion fee. This fee acts as an incentive for businesses to keep the currency in circulation by spending it with other local suppliers rather than converting it back to dollars. 3% supports local nonprofits chosen by consumers; 2% covers system administration costs.
A liquidity fund needs to be created, amount to be decided, to cash out businesses.
Banking: Partner with local credit union for dollar holdings, card issuance, or account services; don't self-issue banking functions.
As the last day before expiration approaches, businesses will be reluctant to accept FairFunds because they don’t want to pay the 3% renewal fee. To counteract this, FairFunds, accepted by a business on or before their expiration date, may be used by that business for qualifying City payments during the following 14 days without renewal, or can be deposited into the business bank account without a fee. The purpose of the demurrage fee is to promote circulation, not hinder it. Allowing businesses to avoid the fee only facilitates its acceptance by businesses.
If digital is implemented, customers can deposit their paper FairFunds into their digital account, and pay the prorated 3% fee.
Planned resilience mode: Before any crisis occurs, participating businesses and organizations should sign agreements specifying how the currency would operate if the dollar experienced severe inflation or banking disruptions. Rather than improvising under pressure, the community would already have rules for temporarily suspending dollar redemption and valuing the currency based on a published basket of essential local goods and services. That kind of advance planning could make the difference between a local currency that collapses with the national currency and one that continues to facilitate trade when it is needed most.
For digital design: Obtain this software https://cyclos.org and build your own. It allows for demurrage as listed here https://www.cyclos.org/products/cyclos3/features/ as does Cyclos 4 https://www.cyclos.org/features/. See https://communities.cyclos.org/
Any local institution—including municipal offices, local businesses, and non-profit entities like schools or community centers—can apply with the UNA to become an authorized exchange point to convert dollars into FairFunds.
Legal & taxation: Consult local counsel early on city acceptance, whether FairFunds counts as taxable income, and any money-transmission implications.
Future Implementation
1. The FairCard (a debit card to be implemented in the future, modeled after the Regiocard - Chiemgauers version) takes a dollar deposit from your bank, and converts it to FairFunds to be spent at a business, a cashless transaction. When you withdraw FairFunds the corresponding amount is debited from your bank's dollar account. When you pay a business, the same amount is credited to the business account. This allows exact amount payment, no change required. And you don't have to carry paper scrip around.
2. A club or association can register for funding. Clubs and associations represent the community of people. They foster new connections, bringing people together through shared activities. Clubs and associations are a pillar of a region's cultural identity and make essential contributions to social cohesion in our society. Considering this, the financial situation of most clubs and associations appears rather modest. Membership fees and donations often barely cover the necessary expenses. The club can receive a 3% subsidy from all consumer spending by club members. See here.
Suggested Launch Sequence Summary:
1. Finalize UNA rules + City partnership agreement (acceptance list + spending commitment).
2. Print first series of paper notes + stamps.
3. Recruit 30–50 initial businesses + a few exchange points.
4. Soft launch with city spending + consumer purchases.
5. Scale businesses, refine operations, then add digital.
If the City wants to pay employees e.g. 2 weeks prior to expiration, employees won't want to pay the 3% re-stamping fee. This cost can be included with the payment.