Topic: BitCoinTokens - an alternative currency approach. - page 2. (Read 2929 times)

The same question could be asked about the bitcoin network once all 21 million bitcoins are mined. The strength of the network is obviously backed by the processing power of the individual "authenticator" participants. I'm assuming we have a solution to that. Don't we? Isn't that the point of transaction fees? If we don't, my proposal might be what we're looking for.

I'm merely bootstrapping from a different starting point. All of the coins are pre-mined. The decentralized distributed exchanges extract a fee to put digicoin tokens (exactly like bitcoin) into circulation (vaulting/storing the fiat USD) and pay it to the "miners" or "authenticators" who use their bitcoin clients to verify the transaction for you. There would be no currency exchange exposure at this point.

The transaction fee is proportional to the amount of fiat dollars they would spend to pay for their rigs, their electrical costs, and other attendant capital costs. It's a known cost at the outset, not exposed to the BTC/USD exchange rate as it is now, thus less risk to the miners. Mind you, electrical costs are still denominated in fiat currencies. This wouldn't be an issue if you could purchase electricity and hardware in BTC contract prices (interchangably). I fully intend for the "miners" to be incentivized.

Processing power is still used to secure the network as it is now in the bitcoin network. I'm merely presenting a 1:1 BCT-to-fiat conversion until the all of the pre-mined coins are exchanged for fiat (which sits in a vault executing the occasional bailment service).

I'm starting out with a transaction-fee based system first, as opposed to the mining incentive system then fee. It's almost like bitcoin, but from a different starting point.

What's to stop someone from attacking your ability to audit your block chain and then counterfeiting your BCTs?

Why not just pre-mine a fixed 21 billion coins (or some arbitrarly large fiat dollar amount that's eventually harder to manipulate) and then use those coins to do a fiat-to-bitcointoken bailment service until you run out of the bailed token digital coins. We could call them BitCoinTokens (BCT).

It would be exactly like E-gold or GoldMoney (or similar to Paypal, Dwolla or Amazon Payments) but decentralized and initially tied to fiat currencies. It's audited dayly if not hourly (using a blockchain like bitcoin) so that everyone sees that the total number of digital coins in circulation represents only the total in fiat reserve on the exchange.

The exchanges are open source and immediately auditable. You want and need as many exchange participants as possible to effectuate a distributed fiat exchange trust network. All of them vying to put the pre-mined BCT's into circulation but restrained by the market participants (account holders of circulating BCT) to only introduce 1 BCT for every 1 USD fiat vaulted until they exceed the 21 billion coin total.

Everybody purchases or exchanges to BCTs until they're all in circulation and the equivalent fiat value sits in a digital vault doing nothing (except the occasional bailment event). Fees are paid to miners to handle the transaction authentication instead of engaging in mining into existence more coins, as this tends to not track world currencies very nicely (too much volatility for some reason). The BCT in circulation will initially represent exact equivalent USD (or other fiat currency) until the fiat market reserve in the vault total exceeds the total pre-mined amount of BCTs (i.e. USD in reserve/vault >= total pre-mined BCTs).

Once you exceed the reserve amount (it's no longer a 1:1 ratio between BCT and fiat dollar reserves), you let your BCT float against the major currency pairs in the real world. At this point your BCTs will probably rise since most fiat currencies are inflationary (typically not desired) but not as quickly now since it represents a 21 billion dollar fiat market as opposed to a bootstrapped currency. At this point it should be more stable, at least you hope. More BCT critical mass as it were.

The author of the BCT alt-currency can't spend the coins without the permission of the majority of the constituent traders in the network (done mathematically via smart contracts with the "miners" or "transaction handlers"). That way the author can't arbitrarily introduce into general circulation the supply of token coins independent of the users (i.e. not allowed to introduce into circulation more BCT than the equivalent amount of fiat in reserve in the vault). Remember this is primarily and initially a bailment service. Once you exceed the total BCT token quantity you immediately go to a floating scenario. Everybody sees this and can verify this event as the audit of the fiat vault reserve is always made public.

A BCT currency economy is still deflationary by nature (only 21 billion coins total), but less volatile now since the market capitalization in fiat dollars is much larger. The fiat volume built up (vaulted fiat currency) creates a stability and reduction in volatility. It's preferable to cause small ripples in an "ocean" of a 50 billion dollar BCT market, than big waves in a "pond" comprised of 50 million dollars of digital money (where bitcoin's economy is now), where speculators manipulate the price to the chagrin of merchants and other users who want some stability and don't care much for speculators. I'm not biased against speculators BTW, just want to grow the bitcoin economy quicker with less instability issues.

What you need is both a bitcoin network and and open source exchange system that can connect to major banking systems. The exchangers should also be able to easily transact interchangably between bitcoin and BitCoinTokens for ease of use (plug and play). You could use the Open Transaction software developed by FellowTraveler as a good example.