Topic: DECENTRALIZED crypto currency (including Bitcoin) is a delusion (any solutions?) - page 8. (Read 91144 times)

No our methods are completely different and do not "lock up" users funds in any manner.  Simply:

To increase supply the system creates new units and distributes them according to a set of rules (accounts with balance, work performed by nodes). 

The act of stabilizing the short term bumps in the price trend requires that the system acts as a narrow market maker, which in turn leads to "profit".

In the event that a supply reduction is required, the "profit" from market making is burnt for all to see.

Overly simplified but provides a 100,000 ft view.

The critical part is the market making activities which I'm not going to disclose the low level details of just yet...

I know another crypto trying to do the same... to artificially try to reduce volatiility or try to reach a target price but funds are essentially locked.. although im skeptic about the design as you cannot generate money velocity without intrinsic demand for the token i am nontheless open and interested in learning of the outcome of the experiment. How do you plan to reduce supply and expand in a decentralized way? I guess you would be locking and unlocking aswell?

I think iamnotback is referring to the disruption of what makes a monetary asset into a monetary asset: a recursive belief system, while you are referring to market forces of offer and demand.  Of course, both are related, but iamnotback is perfectly right when he talks about hyperinflation as the breakdown of the recursive belief system.

After all, why does a monetary asset have monetary value ?  It is because Joe considers it of value and is willing to give goods and services to obtain some, because he believes that Jack will also give goods and services for it, because Joe believes that Jack believes that Mary will accept goods and services against it, and Joe believes that Jack believes that Mary believes that... Joe will accept it against goods and services.  In other words, there is a community of users of that monetary asset that believes that each of them believes that each of them believes that .... believes that others in the community will accept it.
This is a bi-stable system: or everybody believes it, and the belief is self-sustaining ; or essentially nobody believes it, and that non-belief is also self-sustaining.  It is like many bi-stable systems, with isles of stability, and regions of instability (transition zones) between them.

When the belief is not there, the "value" of the asset is near zero.  It doesn't have to be strictly zero.  It can have "fun" value (collector value, joke value, ....).  When the belief is there, it has a significant value.  What value ?  Well, THAT will be determined by the market of course, by offer and demand.

During a transition zone from non-belief to belief, there is a speculative region which looks a lot like a "greater-fool game".  Early adopters may think that if the asset is going to get generally believed to hold value, they can still get hold of it for not much.   During the onset of a monetary asset, fortunes can be made.  In fact, a monetary asset usually starts its journey as a "speculative bubble that fails to pop".

The transition from belief to non-belief, hyper inflation, is in fact, that speculative bubble that finally pops.

A speculative bubble of which the main or sole drive is "greater fool theory" has to pop, because one runs out of greater fools.  But with a monetary asset, one doesn't need a GREATER fool, just a SAME fool.  This is why the infinitely recursive belief system is sustainable: the same entity can appear several times in it (like in my example: Joe believed in Jack who believed in Mary who believed in Joe accepting the asset).  There's no expectation of gain.

Now, whether an external event has as a consequence a price fluctuation (a "crash" for instance) or has as a consequence a hyperinflation, depends on whether the stability island of the belief system is left or not.

Last try here for education sake.

If you try to achieve mass adoption you need to understand phase separation mechanics in physics.

Think of getting control over density of water when you reach 100C at 1 atm by having a fast heating velocity.

You just cant. If it starts boiling the density drops  hyperbolic and as far as I can remember there can be higher order phase separations less understood and even harder to 'control'. We learn about that a complex system needs to find equilibrium at its own dynamics. Who dares to have this understanding and power individually?

Findinig this equilibrium quickly, simple rules are your friend + maximal distribution from start.

You're talking about black swan events, rapid loss of confidence due to some uncontrollable (usually external) factor.

There are plenty of examples of marginal confidence loss that did not end in disaster....Brexit for one.

Upon announcement a large amount of confidence left the £ and headed for other currencies such as $, but it didn't result in the UK burning to the ground because the £ didn't go to zero.

Now tell me, if the Bank of England was able to reduce the amount of sterling in circulation immediately to match the appropriate confidence levels that the value of a single £ would not have remained the same.

Well with money, isn't it more of a waterfall collapse. The public confidence is there until it isn't, then you have hyperinflation.

Hyperinflation is not caused by overprinting of money, but rather when the public looses all confidence in the government that is backing the currency regime.

As for speculation on value, that is distinct from confidence. Confidence is more like an on/off switch, not a fluctuation.

For example, if tomorrow everyone became convinced that Bitcoin has a bug which makes it possible to create units of currency willy-nilly, then confidence would plummet and the value would go to near 0.

I don't think speculation value can be tightly controlled by quantity theory either though. Dogecoin's spike in value is one evidence.

You can quantify that.  

There are 2 independent monetary systems, say fiat and X.

Value is inflowing into X, therefore you can state that confidence is leaving the fiat system and entering the X system (bull market anyone?)

The same is true in the opposite direction, value is leaving X and flowing into fiat thus reduced confidence in X (bear market).

It's as simple as that and simple is king.

Although I would argue that public confidence rarely comes into it anymore, especially with fiat.

Furthermore to your statement, the value of a commodity is also dictated by public confidence.

The latest Samsung phone is case in point....everyone wanted them and was willing to pay for them.  They started blowing up, thus confidence dropped, now they are worth nothing.

There are a lot of parallels between commodity & currency when you keep the economic parameters simple.

I am not following the context of this discussion, but the above bolded is incorrect.

The Quantity Theory Of Money is incorrect. The value of money is dictated by public confidence.

It is a moot point really

I could just as easily challenge your stance by claiming that the actors of the system might disagree on how much they would want to increase or decrease money supply, and now what? In this sense, the bank would be more useful. Basically, it is the "autonomous computer" that runs inside the system itself. It is interesting as a feedback mechanism that allows automatic regulation of money supply in this society. Let's assume that its aim consists exclusively in creating and destroying money as required, i.e. not in manipulating it

I think you are missing the point

There is no need for a bank, or debt for that matter, at all in such a system.  Nor is what I propose an "external manipulation", it's totally internal and governed by the actors of the system itself (everyone agrees that more/less supply is needed and who gets it).

If you introduce a bank to manage the loans and supply it then becomes centralized and the bank can refuse loans and thus manipulate the value....which is the exact opposite to what we want.

There is no need in an outside computer

The system can be easily self-regulated. Create a bank inside it that would be able to create money when an entrepreneur needs to expand production and comes to the bank for a loan. Set interest rate to 0, and you will get basically the same result without externally manipulating the money supply. If the borrower defaults (e.g. his goods are not in demand or whatever), the bank sells his collateral or his assets and destroys the money

Think of a simple example and it will help illustrate why the statment "strongest money is not elastic" is maybe not the right way to go.

A community of 10 people have 50 coins in circulation so they can use them as a medium of exchange between other members within the group for goods and services (i.e. closed economy).

These 50 coins have a perceived value as defined by the relative basket of goods and services each coin can procure.

The coins themselves are basically worthless intrinsically, but they have value in that they are mutually agreed to as a medium of exchange between the 10 citizens.

Over time the population of 10 people now grows to 50 (through normal birth and immigration activities).  At this point in time there are still 50 coins in circulation, but there are not enough of them to transact normal business activity and thus their percieved value increases as they are now a scarce resource.  This increase in perceived value of the coin doesn't really reflect an increase in the true value of the goods and services produced by the citizens, but merely an increase in the demand for the coin (which isn't really a good or service that adds value to the economy). 

This warped scarcity now drives volatility in the overall normal flow of business activity and can cause some businesses to fail in the short term and eventually nearly all to stall out if there aren't enough coins to do the transactions required for business.

If instead there was an autonomous computer that continuously monitored the supply of coins relative to the overall demand for them and instantly deposited the newly created supply into each citizen's wallet at a proportional and fair value relative to their existing holdings then the net effect would be a zero increase in inflation since all holders increased their holdings at the same level as before the increase.  However, the new supply now enables businesses to continue operating and growing at optimal levels.

I m human, I might.
If you ARE god, you set the rules.
If not, decentralization is best approach also for defining the rules by evolution and selection of the strongest. So they must be simple and genius = from god.
I hope your stuff is better than ETH and you re not like VB try to play god.

Strongest money is just not elastic, cause money is base entity for valuation of all goods and services.
Compare to numbers in math.
Compare to work in pyhsics.
Not good to change basis of any metrics.

Huh??  How can I be a regulator and "get rich personally" if the system is decentralized and I have no control over the elasticity of the supply once the initial rules are set and are fair.

I think perhaps you are confusing me with someone else :-)

I see you try to do your last fight here and regulators like you need more and more words for that to tweek logic.

All what you do with your ellastic supply of money, work, store of value is taking the risk from the lemmings, keep them uneducated and get rich personally. I would recommend you have good disclaimers on that.

I try to,educate the lemmings. You judge what helps more to our world.

As the old expression goes:  Money doesn't make the world go round, but it sure does grease the wheels.

Effectively, money (whether you want to call it a commodity, currency, sovereign stock certificate, SDR...or whatever) is much like the oil in an engine.  Too much oil (inflation) and the real working parts of the engine of progress begin to breakdown due to stresses on the seals and eventually leads to engine leaks.  Too little oil (deflation) and the engine runs the risk of locking/freezing up (depression).

Managing the supply is something that needs to be monitored in near-real time autonomously and be responded to accurately (i.e. without emotional or political bias).  Keeping the level "just right" is what the system should do (and does).