Say I want out of the coin but my funds are locked in the pegging scheme. I just sell him my wallet.dat and he sends me btc for it. We can use a trusted escrow and presto I have bypassed the pegging.
This.
I can't understand how such unrelated concepts could become entangled - markets and coin mechanics. You can't control a market with an algo. Buyers decide prices not algos and there's no point in restricting supply if there are no buyers.
This concept of pegging is seen from the perspective that the currency concerned is *exclusive*. i.e. it's the only currency in the world and the market has to use it because it has to have liquidity. In that case - yes, this approach would work. But what's missing from the model is that this isn't the only currency. If buyers don't want to pay a dollar per coin for Bitbay they'll just use another currency that only costs them a cent per coin instead.
If they don't want to pay a dollar per coin for smart contracts then they'll just use another coin that costs a cent per coin for smart contracts.
I can only see one scenario where this type of "pegging" algo could work and that's where there is some broader commercial context where the use of this coin is mandatory - i.e. the buyer cannot purchase the item they want without using Bitbay. For that to happen you need massive pre-existing and well established marketplaces to adopt because it won't be possible to "grow" them due to said demand deficiancy from peoepl not wnating to pay a dollar a coin as described above.
But I've seen no allusion to such large scale commercial markets. It's not specified anywhere as part of the project plan or even as part of the pegging model (which it should be because control over supply is useless without a corresponding level of demand if you want to "fix" a price).
Copy wallet.dat??? Horrible idea. Then they would both have the private keys once the coins unlock. No that would not work.
And it has nothing to do with exclusivity. People choose hedging coins as a stable hedge against bitcoin for trading. And you can copy it 100 times just the same way anyone can follow the recipe for chicken soup. But in the end, the best chicken soup wins. So the coins with not only the best tech but also the best marketing and brand.
And you can grow a pegged coin. I'm not starting at a dollar. It is impossible to go below the peg price since the supply is simply locked. A series of rules forces people to use scripts and those rules are enforced by miners. Not only is there a video on it, but im always willing to discuss it as well.
