Many business have a net-30 policy, so they will not mind sitting on the GD for 30 days until they convert to 30 dollars.
I'll copy a comment from other user:
> What happens if there's a "bank run" where everyone waits for their GD to mature rather than spending it?
In a normal "bank run", the people are afraid that if they don't exchange the bad currency now at a discount, they will get a worse exchange later. But in this case there is a guaranty that waiting only 30 days they will be converted to dollars.
In a normal "bank run", the people are afraid that if they don't exchange the bad currency now at a discount, they will get a worse exchange later. But in this case there is a guaranty that waiting only 30 days they will be converted to dollars.
Hmm. Not exactly. Initially, this is true, but that's just an early part of the bootstrapping process. Further down the road, the total amount of GD will be greater than the amount of USD in our reserves. At that point, if everyone decides to sit on their GD at once, not all of it will convert because we would run out of USD reserves.
But this is what makes Greshm Dollar shine. If people don't trust their GD to convert to USD in 30 days, the only way for them to get rid of it is to spend it. By spending GD , they cause the GD's expiration to reset thereby protecting our USD reserves.
Who would accept it (at par value) under such circumstances?
Right. So, during the initial phase, all GD will be guaranteed to convert to USD when it expires because we'll literally have enough USD in our reserves. During this first phase, we will sign merchants to contracts that require them to accept GD at par with USD (i.e. one price) so a dollar is a dollar.
If there are people who happen to be paranoid about Greshm Dollar during that time, they will be able to spend their money to get rid of it. If they're not paranoid about it, they'll still probably spend it before they spend their USD because a dollar is worth more to them than something that will become a dollar in x number of days.
Then, later on, once we've established that GD is continually circulating and that our USD reserves are stable, we start increasing the supply of GD to be greater than our USD reserves. This process will be very transparent. Nobody will get screwed over. We won't make any promises to pay and then go back on them. For example, if we decide to only back GD at 90%, merchants can decline to renew their contracts.
I'll copy a comment from other user:
> What happens if there's a "bank run" where everyone waits for their GD to mature rather than spending it?
In a normal "bank run", the people are afraid that if they don't exchange the bad currency now at a discount, they will get a worse exchange later. But in this case there is a guaranty that waiting only 30 days they will be converted to dollars.