Topic: Decentralized, Trust-less, Multi-Currency, Interest-bearing, Bank and Exchange - page 2. (Read 3800 times)

Also consider the case of someone who bought BTC at $0.05 and the BTC is now $120 and heading to $200.   You need $USD now but there is no way in the world you would want to actually sell your BTC.   So you mortgage some part of it.  If the BTC value goes up you can easily cover your short position.  If it goes down your losses are capped at 50%.

Note that the exchange rate variations only affect the interest rate paid on $USD balances, not their redemability at face value.

But what if bitcoin crashes to $20 and I don't pay? If it's automatically liquidated, what if the orderbook is too thin and a large mortgage causes people who lent out (aka have a USD balance) to face a loss?

How does the network get the exchange rate? For example, currently credit cards are generally 8% above spot. You can't have one exchange rate for all payment services.

I think you should probably think this through, and write an actual white paper.

A key thing to note is that it is entirely ok for the individual who took out a mortgage to die and take his private key with him.   In this case his $USD balance will be paid of over time using his collateral.  The network would have received 2x the value he took out of the network by failing to pay off his mortgage.

Imagine you have 100 bitcoins that you do not want to sell because you expect them to have long-term high yield ROI value AND they are also paying you dividends (current bitcoin doesn't do that).    Unfortunately, you still need some $USD to pay your rent.    If your rent is $100 and bitcoins are $100 / bitcoin then you would inform the bitcoin network that you wish to mortgage 2 bitcoins (2x the value of current exchange rate) for $100.    You are now someone who wants to borrow $USD.

You can now be paired up against someone who wants to deposit $USD.

You both sign the transaction that creates the mortgage + a $100 deposit.

Some time later you can either sell your BTC to earn crypto-USD and pay off your loan OR you can make a deposit of $100 with someone else who wants to borrow.

Now borrowers are the source of all initial $USD in the system, but they are not the only source for making a deposit of $USD.   You can also pair a deposit with a withdraw from an account with a positive crypto-USD balance.

I don't understand how you deposit into the system, because you can't do that (involving fiat) in a trust free method. Depositing $100 would mean you must find someone who wants to borrow $100 USD, right? Then it's not going to work, because people will run away.

Here are the minimal changes I would make to LiteCoin:

This system can be modified with only a few small changes to the ‘rules’ that the nodes use to validate transactions.  These changes will create a new crypto-currency which I will call a BitShare.   These simple rules are described below:

1) 50% of all transaction fees are redistributed among everyone that currently holds a BitShare balance.  This makes all BitShare owners ‘share holders’ in the payment network and they benefit from the transaction volume.  This motivates everyone to encourage the adoption of the currency.

2) Introduce a new transaction type that allows BitShare owners to mortgage their BitShares in exchange for a loan from the network denominated in a national currency.   This transaction would be provided with fiat money by someone who wished to deposit fiat into the network.   The result is that the depositor would have a positive balance for the loan amount while borrower would have a negative balance.   This transaction would also establish a fixed payment plan that would transfer the BitShare from some of the collateral in ‘fixed amounts‘ every 10 minutes paying off some of the fiat loan balance and transferring those BitShares to those whom hold accounts with a positive fiat balance.

3) Introduce another transaction type that allows for ‘deposit’ or ‘withdraw’ of funds denominated in fiat currencies (or gold and silver)
4) Introduce another transaction type that allows an individual to place a bid/ask into the network to trade currencies.  

The critical thing to understand about this process is that those who deposit $USD can transfer the $USD to any other party which can then withdraw that $USD from any party.  The mortgage transaction does not establish a debt between two users, but a debt between one user and the network.   The automatic mortgage payments (from collateral) are not paid to any one account, but instead are distributed to all holders of $USD balances.        

Thanks for the reply. I will continue pondering.

It is 'trustless' at the exchange level and once money is 'deposited'.   Ie:  If you have a $USD balance then it is as secure as a BTC balance.  There is no 'IOU' after a successful exchange.

So now the exchanges are about trading real dollars for crypto-dollars which means there is no currency exchange risk.   The increased 'demand' generated by paying interest on $USD deposits combined with the elimination of volatility in $USD denominated cash means that finding 'local' users to match deposit/withdraw requests is much easier. 

Lastly, a simple escrow service or NashX can be used to ensure you receive fiat-USD for crypto-USD.  The end result is that you can move USD balances around inside the system without having to worry about IOUs going bad or anyone 'defaulting'.    Once you have crypto-USD the decentralized exchange between USD and BTC is easy.

No matter what you cannot eliminate the need for 'momentary trust' between a depositor / withdrawer of funds regardless of the system.  Fortunately, there exist many cheap systems that allow these 'trades' to occur.   Because funds can be denominated in fiat it also means that you can do business using crypto-fiat without any currency exchange risk.  This means that there is no need to make constant trades between real USD and fiat-USD.

I imagine it would be much easier to find someone local who wants to do a $USD trade for interest-bearing crypto-USD than someone wanting to trade BTC.  Because there is no 'exchange rate' everyone is an equal match.

I'm not sure if this was in the white paper (if it was, I missed it), but how is it trust-less when buying/selling with fiat?

I still don't see what stops Joe from saying "Hey Jane, send me your DShares and I'll send you some USD$", and then disappearing as soon as he has them without paying.

In 9 years there when 23,000,000 coins are in existence the inflation rate will be 8%, in 27 years it will be 4%, in

At 2,628,000 coins per year it would take 8 years to produce 21,000,000 coins and the inflation rate after 8 years would be 12.5%.    After 16 years the inflation rate would be 6.25%   After 32 years the monetary inflation rate would be 3% after 64 years it would be 1.5%  After 128 years the monetary inflation rate would be 0.75%. 

The current bitcoin inflation rate is about 12% and it will 'fall off' slightly faster than what I proposed; however, there is a mitigating factor.   I pay transaction fees to the current holders of the coins instead of to the miners and those transaction fees will most likely be more than the inflation rate.  So while bitcoin will eventually hit 0 monetary inflation and 0 monetary deflation, my system would pay dividends and therefore ultimately have MORE value for holding them than bitcoin would gain from deflation.

The reason I opted to always pay a fixed mining fee is because it keeps things simple, automatically scales down the inflation percentage rate, and pays the miners for security without having to worry about transaction fees.

I guess mining fees are useful for prioritizing transactions and that without fees miners wouldn't know which transactions to process.  So I could easily see keeping the bitcoin mining fee schedule / reward schedule. 

The thing I wanted to aim for was rewarding those who hold coins with dividends.  Coins are a 'share' of the exchange and my system depends upon rewording those who keep balances in the system.

First of all, I am not in favor 'inflationary' monetary systems, but the reality is that as a percentage of the monetary system the inflation rate approaches 0% and when you factor in 'lost' coins it would probably be 0% in practice.  It is the 'relative change' that matters the most.   

My proposed system does not 'depend' upon an 'slightly inflationary' monetary system and deserves more discussion than 'no thanks' as the mining reward was a very small detail of the bigger picture.

No thanks

NOTE:  All features / algorithms / hash methods are subject to change.  This is a straw man idea that I want torn to shreds so I can improve upon it.

The KEY is that all fiat-crypto is backed by real crypto and market forces will ensure that backing adjusts over time with price changes in crypto.

I have put together a white paper discussing how a new block-chain-based crypto-currency could provide all of the benefits of bitcoin (block chain, 'anonymous addresses', trust-less) and yet also offer solutions to many of the problems Bitcoin AND Ripple face.

Unique Features:

• Interest-bearing balances held in ANY currency.
• Distributed, block-chain-based, exchange between any two currencies.
• Transfers in any currency.
• No need for 'gateways', Web of Trust, or 'ripple-like' transactions.

White Paper:
http://the-iland.net/static/downloads/DShareCryptoCurrency.pdf

I believe I have solved all of 'economic' problems to create the proper incentives and prevent fraud / negative incentives.  Every single individual acting in their own self-interest will actively help facilitate the growth and decentralization of the network.  

As a software engineer familiar with the implementation details of Bitcoin, I am 100% positive that this can be developed at a technical level.

Not to 'bash' our favorite crypto-currency, but I suspect DShares could grow far faster than bitcoin and be immune to most attacks that bitcoin faces.

Feedback wanted.  Name subject to change...  Investors wanted...