Ghost Credits: Practice Currency

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📚 Academic Version

Ghost Credits as Non-Security Practice Tokens: Regulatory Design and Implementation

Ghost Credits represent a carefully designed practice currency engineered to facilitate platform familiarization while maintaining clear regulatory separation from securities under SEC guidelines and state money transmission laws.

Regulatory Framework

The SEC’s analysis under SEC v. W.J. Howey Co. (1946) establishes the investment contract test for securities classification:

  1. Investment of money
  2. In a common enterprise
  3. With expectation of profits
  4. Derived from efforts of others

Ghost Credits are explicitly designed to fail ALL four prongs:

Howey ProngGhost Credits DesignClassification
Investment of moneyGranted free; cannot be purchased❌ Fails test
Common enterpriseIndividual sandbox; no pooling❌ Fails test
Expectation of profitsZero cash value; cannot appreciate❌ Fails test
Efforts of othersUser’s own practice activities❌ Fails test

This quadruple-negative design ensures Ghost Credits cannot be classified as securities regardless of regulatory scrutiny.

Technical Implementation

Ghost Credits implement the following constraints:

Issuance Rules:

  • Granted upon account creation (1,000 GC initial)
  • Awarded for specific learning activities
  • Cannot be purchased with any currency (Credits, Marks, Joules, cash)

Expiration Mechanism:

  • 30-day rolling expiration window
  • Unused Ghost Credits expire automatically
  • No rollover, no banking, no accumulation

Non-Transferability:

  • Cannot be sent to other users
  • Cannot be traded peer-to-peer
  • Cannot be converted to any other currency

Redemption Prohibition:

  • No cash redemption pathway exists
  • No third-party exchange relationships
  • No secondary market participation

Users must affirmatively accept Ghost Credit Terms of Service before receiving any Ghost Credits. This acceptance is:

  • Timestamped in immutable database record
  • Versioned (current version 1.0)
  • Required annually for continued access

The acceptance record includes explicit acknowledgment that:

“I understand that Ghost Credits have NO CASH VALUE, cannot be redeemed for money, and will expire if unused.”

Precedent Analysis

This design follows patterns established by:

  • Casino play chips (no cash value outside casino)
  • Video game practice modes (no real-world value)
  • Educational simulation currencies (pedagogical purpose)

Courts have consistently held that such practice instruments do not constitute securities, currencies, or stored value when properly implemented with adequate disclosure.

References

  • SEC v. W.J. Howey Co., 328 U.S. 293 (1946)
  • SEC Framework for “Investment Contract” Analysis of Digital Assets (2019)
  • FinCEN Guidance on Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (FIN-2019-G001)

🎓 College Freshman Version

What Are Ghost Credits? (And Why They’re Not Real Money)

Ghost Credits are like the fake money in a board game tutorial. They let you practice using the platform without risking anything real.

Why They Exist

Starting on a new platform is confusing. Ghost Credits let you:

  • Practice buying and selling
  • Test out marketplace features
  • Make mistakes without consequences
  • Learn how everything works

Why They HAVE to Be Worthless

Here’s the thing: if Ghost Credits had ANY real value, the government (SEC, specifically) might classify them as securities. Then we’d need lawyers, registrations, compliance officers… and suddenly your practice tokens cost us $500K in legal fees.

So we made them deliberately worthless:

FeatureGhost CreditsReal Credits
Can buy with cash❌ No✅ Yes
Can convert to cash❌ No✅ Yes
Can transfer to friends❌ No✅ Yes
Expires if unused✅ Yes (30 days)❌ No
Can buy real stuff❌ No✅ Yes

Four ways they fail the “is this a security?” test:

  1. You don’t invest money (they’re free)
  2. They’re not pooled (your sandbox is solo)
  3. They can’t go up in value (they’re worthless)
  4. Nobody else’s work makes them valuable (just your practice)

Before you get any Ghost Credits, you have to check a box saying you understand:

  • They have no cash value
  • They can’t be redeemed
  • They’ll expire
  • They’re just for practice

We record the timestamp of when you agreed. This protects you AND us.

Think of It Like…

  • Practice mode in a video game — your stats don’t count
  • Play money at casino tutorials — looks real, isn’t real
  • Monopoly money — only works in the game

🎒 6th Grader Version

Ghost Credits: Play Money for Learning

You know how some video games have a tutorial mode where you can practice without it counting? Ghost Credits are like that.

What They Are

Ghost Credits are pretend money you use to practice on our platform. They look like real credits, but they’re not worth anything.

What You Can Do With Them

✅ Practice buying things in Ghost World
✅ Try out how the marketplace works
✅ Learn without worrying about mistakes

What You CAN’T Do With Them

❌ Turn them into real money
❌ Buy real things
❌ Give them to your friends
❌ Keep them forever (they disappear after 30 days!)

Why They Have to Be Worthless

If Ghost Credits were worth ANYTHING real, the government would say “hey, that’s like a stock or a special kind of money, and there are a LOT of rules for that.”

Those rules cost a lot of money to follow. Like, enough money to buy a house.

So instead, we made Ghost Credits worth nothing. Now they’re just practice tokens — like the play money in Monopoly.

Before You Get Any

You have to click a button that says “I understand these aren’t real money.” That way, nobody can say later “but I thought they were worth something!”

Quick Example

Imagine you’re learning to cook, and you have fake ingredients made of plastic. You can practice chopping and stirring, but you can’t eat what you “make.”

Ghost Credits are like plastic ingredients. They help you learn, but they’re not the real thing.

Additional Resources

For Educators (Didasko Integration)

This page demonstrates Ghost Credits as a pedagogical tool for platform familiarization while teaching regulatory literacy. Key learning objectives:

  1. Regulatory Literacy: Understanding why financial tools have restrictions
  2. Practice vs. Performance: Value of low-stakes learning environments
  3. Contract Awareness: Importance of reading terms you agree to

“Practice without risk. Learn without loss.”