You incentivize merchants with new customers that will shop exclusively at GD accepting merchants. After you have these merchant agreements in place, it will then be easier to incentivize the merchant suppliers to accept GD in order to stay competitive in their market.

Yes. Gresham Dollar would creep up the supply chain.

The model, as I see it here so far, does not take into account the administrative costs of doing business. I'm talking about human resources, database servers, credit cards for BI recipients, transaction fees over credit networks... how do anticipate meeting these overhead costs?

We'll take a small portion of the investments we receive and put it toward paying operation/capital expenses. The rest of it goes toward boosting our USD reserves. I won't get into specifics because I don't have the specifics worked out. Even if I did, they'd be boring.

One of the arguments for BI is that it eliminates the overhead costs associated with various agencies of social welfare and passes that savings on the public.

Basic income is more than just "efficient welfare." Consumer spending is the bedrock of any economy and basic income enables that. The labor market does not exist for the purpose of distributing consumer income, so naturally does a poor job of it. We, as a society, have devised all sorts of rules and regulations to try to force the labor market to be our economy's primary income distribution system, but it's an uphill battle.

Nevertheless, GD is a transition currency that will not originally be available to everyone as BI, which means that there will need to be some sort of selection mechanism.

Initially, there will be two selection mechanisms and they're both very simple:

1. We'll pick a city to start in, we'll sign up some merchant partners in that city, and we'll hand out a certain number of basic accounts every day to poor people in the city. These accounts receive the "basic income." We'll repeat this process from city to city.

We'll partner with local social services organizations, such as homeless shelters and soup kitchens, in finding people to give these accounts to. What we'll physically hand out will be tokens (e.g. something like debit cards) representing accounts in our system. Merchants will use the tokens to receive payments from the appropriate accounts.

2. On the other end of the spectrum, anyone can sign up for a starter account online. A starter account doesn't receive the basic income. Starter accounts allow you to:

1. Hold a GD balance.
2. Accept payments in GD
3. Buy Future Gresham Dollars

In the long run, we will upgrade all starter counts belonging to individuals into basic accounts. In the short run, individual starter accounts participate in the Gresham Points system, which is the other selection mechanism for determining who receives a basic income.

When an individual starter account user converts USD to GD (e.g. by transferring money from a linked bank account), that starter account earns a corresponding number of Gresham Points. Periodically, the individual starter account with the highest number of accumulated Gresham Points will be upgraded to a basic account. Although most new basic accounts will be handed to low income people, a small number (orders of magnitude smaller) will be created, in this way, as a part of the Gresham Points game. In addition to motivating people to use Gresham Dollar, the Gresham Points competition helps build our reserve of USD.

Users can monitor the high scores to determine how many additional points they need to win a basic account.

How do you quantitatively measure the popularity of GD?

There are a bunch of different variables we can track including:

1. Number of users
2. Number of merchants
3. Size of USD reserves
4. Velocity of GD (how often it gets spent)
5. Number of transactions.

Will you be collecting data on transactions that feed into this analysis?

We will record every transaction in a ledger.

What metrics are used to calculate the acceptable reserve level? Is this what will influence the production and distribution of new GDBI?

Good question. If our USD reserves dip to the level where we can only fulfill our existing promises and nothing more, then the system goes into Disruption (explained in another comment). We probably would not expand to a new city without first securing enough USD reserves to provide USD-backed basic incomes to its poorest citizens for at least a couple of months.

But we don't want to expand too slowly, because, as you said, popularity helps us build our USD reserves. We would want to bootstrap ourselves while riding as much hype as possible.

Lots of details still to be worked out.