Topic: Crypto-currencies in 10 years - page 5. (Read 5762 times)

Just like the bitcoin network has a protocol for transactions this banking network would have a protocol for issuing the debt. You can set the required collateralization to the desired level for each respective network as easily as you change the block reward on a bitcoin fork. Bitshares is already creating a decentralized bank and exchange with 200% reserves. There is a lot more information at bitshares.org and bitsharestalk.org. 


I don't believe that this system is impervious to bank runs even though it does not use the fraudulent fractional reserve system.  If markets are not efficient and there is a run on the bank then ppl will lose money. But this is true of any banking system as we will soon see in the US when interest rates adjusts and banks default again.

Neo and Bee Bitcoin bank aimed to do something similar to what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

No you've entirely misunderstood, both my statements and the economic reality. I'm saying back crypto-debt with crypto-equity and use that debt as a currency because you can achieve any measure of price stability through debt instruments. What I'm trying to say is create a digital banking system that offers its clients the option of storing value in whatever asset they want. Collateralize the value of the debt with the equity of the network. You do realize that money is debt? You give the bank your collateral. They hold on to it and they give you a claim to your collateral. When banking first started, you gave the banker your gold and got a promissory note from the bank. Now you give the bank your fiat currency and the promissory note comes in the form of a debit card. In the digital banking system you give the bank your collateral and they give you a promissory note (crypto-currency) not for the collateral but for the purchasing power power of a specified asset. Lets say I have a  1 btc ($436) but I do not like the volatility of bitcoin. I put my bitcoin in the bank and get back a crypto-currency form of the usd, so I have 436 crypto-usd. If the price of bitcoin falls it doesnt matter to me because I have claim to $436 worth of bitcoin. I simply end up with more bitcoin than I started off with. If the price of bitcoin rises well then I end up with less bitcoin than I started off with but still maintain the purchasing power of $435 usd.

Money has throughout most of history been debt and that is not a bad thing. But as you have alluded to, debt plays a very perverse role in our society. As I mentioned early I think the proper use for debt is money and not financing production, which should be done through equity. Also I have said nothing about forcing people to do things. It is simply in there best interest to use crypto currencies that have the users desired purchasing power. Crypto currencies will become mainstream when they have all the properties of bitcoin but maintain the price stability of the dollar.

A crypto-currency backed by another crypto-currency?  That's like saying backing silver with gold. These things don't need to be backed by anything because they have intrinsic value in themselves. Doing this to force debt does not make any logical sense. Crypto-currencies such as bitcoin are only unstable relative to USD or EUR..etc. Once they are the only currency in town, then their will be no price stabilization issue and people won't be forced to create useless goods and services by destroying the planet in order to keep this debt based economy alive. I prefer a scenario where people are actually able to store their economic power than force to spend/use it due to the way the economy works.

You are right. People still aren't looking enough at the technical features of coins such as Darkcoin (or others). The dogecoin community is what keeps its price up, even though it offers no real/new features.

how can you tell how large the community is?  If you go into altcoins, one of the largest topics in that section is Darkcoins yet no one has subscribed in reddit.

Be careful holding Dogecoin..Over the past few weeks the hashrates have decreased and it seems like people are migrating to other coins.

Yes you are right, value is subjective, but at a certain point you have face the objective reality of scarcity. The usd is just as overvalued as dogecoin because of the community behind it, but just like the usd will inevitably go to zero so will dogecoin.

And to get a community that will be bigger than bitcoin, requires the crypto-currency to have certain properties...The question is what properties would it need to have to reign over bitcoin. Price stabilization is the key property for me.

Nxt has a lower market cap than doge despite it being innovative is its lack of user friendliness, poor distribution and poor marketing compared to Doge. These are properties that a top contender needs to have. I'll also add there is no reason for anyone to use nxt over bitcoin when we don't take into account return on investment.

I'm saying create a p2p network like bitcoin that has its own crypto asset like bitcoin but is not distributed through mining and maintains a set or more stable money supply. Embedded in this network is a banking system that creates debt instruments (collateralize by the underlying equity of the network) that can be used as currency. There is a reason why we have historically used debt as currency, because it is stable. You invest/save through equity and you spend through debt.

Digital currencies themselves can be Fiat.  Why does Dogecoin have a larger capitalization than an innovative coin like NxT or layered improvements like Mastercoin / Counterparty?  Why does BTC and LTC maintain their position ~ despite hordes of technically better coins?

It seems to me community is king for currencies.  Bitcoin may have an infamous reputation among the mainstream but it frankly hasn't had a serious challenger to date.

Are you suggesting backing money with bitcoin instead of backing money with gold like we used to?

We would be back to square one, where people would be issuing more money than what they have backed by bitcoin.

OR

Are you saying backing bitcoin with crypto-assets?

Backing anything (i.e. crypto-assets) requires us trusting the owner of that asset, which would also take us back to square one.

Once a crytpo currency uses market forces to stabalize the purchasing power then we will start seeing mass adoption.

You are essentially suggesting that we need monetary inflation and deflation to stave off price inflation and deflation. That is the wrong route. We need neither type of inflation and deflation. We need to go back to sound money, with the backing for that money coming from crypto-assets that have a stable supply.

Did you mean ethereum? Ethereum isn't layered on top of Bitcoin. Mastercoin and Counterparty are both interesting additions but still need to prove themselves creating real economic value.

Nevermind litecoin and dogecoin, they don't provide much of an improvement over the original protocol.
Check out mastercoin, counterparty or electrum, they propose some interesting ideas layered on top of bitcoin and that's what I'd love to see.

My thoughts:

Once a crypto-currency contains a mathamatical mechanism that stabalizes the price of its currency then we will start seeing mass adoption and a true alternative to FIAT. This can be achieved by dynamically changing the supply of currency units instead of the value per currency unit. This system would prevent both price inflation and deflation relative to FIAT.
Once this happens, bitcoin will no longer be a viable option as a safe and stable storage of wealth or method of transaction.

The Internet protocol has only been around for 25-30 years, it may seem like it won't be replaced but I think there will be a better alternative eventually.

This is probably one of the most fallacious post I've ever read. Yesterday 50,000 bitcoins were transacted, which is not the same as saying 50,000 bitcoins were spent.

That's a bet you will lose quickly: yesterday 50,000 bitcoins were spent.  For me it is much easier to make a purchase and I have decreased the total cost. 

I 100% agree with makebitcoin because that is what i think. This is the future.

proof of work is inherently wasteful. all proof of whatever systems "solve" the byzantine generals problem. the reason why proof of work systems have the largest portion of the market is because they are easiest to construct, but are not necessarily the best way of coming to consensus. less costly, more scalable systems that use an alternative to pow will eventually eclipse those systems that use it.

also all of these 'coins' constitute a form of equity and as such they are not viable currencies. anything can be used as a currency but what makes for a viable currency is price stability. this is why currencies as we know them have always been debt instruments. until there is a system that issues debt using the equity (coins) of the network as collateral we wont see widespread adoption of cryptocurrencies.