Digital currency backed by Bitcoin - page 3.

Anders

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Quote from: ene on May 26, 2011, 12:20:40 PM

Quote from: Anders on May 26, 2011, 11:55:43 AM

Yes, non-interest, but it gives you the great value of having a digital, open source, non-centralized, distributed peer-to-peer crypto currency, 100% backed by solid bitcoins, lightning-fast-transaction capable, computationally light-weight compared to Bitcoin, guaranteed protection against double-spending

Bitcoin already has that.

Quote

and with the amazing property of being resilient against both inflation and deflation. It's the wet dream for online consumer markets.

Bitcoin doesn't have that, but neither does your thing. Think about it.

Bitcoin is not lightning-fast-transaction capable in reality. In fact it's tremendously sluggish. I had to wait several minutes when I did a test to receive a small amount of bitcoins. Nor is Bitcoin computationally lightweight.

And the new digital currency IS resilient to both inflation and deflation. 100 NDC today equals one Big Mac. 100 NDC next month equals one Big Mac. 100 NDC next year equals one Big Mac. 100 NDC two decades from now equals one Big Mac. Need I go on? Think about it.

ene

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Quote from: Anders on May 26, 2011, 11:55:43 AM

Yes, non-interest, but it gives you the great value of having a digital, open source, non-centralized, distributed peer-to-peer crypto currency, 100% backed by solid bitcoins, lightning-fast-transaction capable, computationally light-weight compared to Bitcoin, guaranteed protection against double-spending

Bitcoin already has that.

Quote

and with the amazing property of being resilient against both inflation and deflation. It's the wet dream for online consumer markets.

Bitcoin doesn't have that, but neither does your thing. Think about it.

Anders

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Activity: 126

Merit: 100

Quote from: kjj on May 26, 2011, 12:05:37 PM

Except that it only makes sense to unlock when the exchange rate is exactly what it was when you locked. So, you are giving up the use of your bitcoins in exchange for the chance that they will be worth exactly the same amount at some point in the future.

Oh no. Not like that. Let's say that you lock in 1 bitcoin and get 150 NDC at a certain moment in time. Then after a month, the bitcoin you locked in is worth 200 NDC. You can then unlock your bitcoin in the system for 150 NDC. So there is zero risk for you to lock bitcoins into the system.

kjj

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Except that it only makes sense to unlock when the exchange rate is exactly what it was when you locked. So, you are giving up the use of your bitcoins in exchange for the chance that they will be worth exactly the same amount at some point in the future.

Anders

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Activity: 126

Merit: 100

Quote from: kjj on May 26, 2011, 11:41:10 AM

So, you've invented the world's most complicated non-interest paying savings accounts?

Yes, non-interest, but it gives you the great value of having a digital, open source, non-centralized, distributed peer-to-peer crypto currency, 100% backed by solid bitcoins, lightning-fast-transaction capable, computationally light-weight compared to Bitcoin, guaranteed protection against double-spending and with the amazing property of being resilient against both inflation and deflation. It's the wet dream for online consumer markets.

kjj

legendary

Activity: 1302

Merit: 1026

So, you've invented the world's most complicated non-interest paying savings accounts?

Anders

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Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 10:55:55 AM

Quote from: Anders on May 26, 2011, 10:40:44 AM

Hmm... I haven't thought this through. Ok, change in strategy. You will NOT be compensated when locking a bitcoin into the system, BUT you will be able to unlock that bitcoin for the same amount of NDC you got when locking it. This was just a quick fix. I must admit that I haven't thought this new idea through either. Grin

OK so that means that my 100 NDC unlock 1 BTC whereas somebody else (who buys NDC at a different time) has 200 NDC which unlock 1 BTC? So we both hold the same currency but it has two different values?

What the fuck is this shit?

lol. Yes. Even one person can have several locks of different values depending on when the locks were done. But remember, this is only for unlocking bitcoins the persons themselves have locked previously. It doesn't change the value of the currency. 100 NDC will remain equal to the value of one Big Mac in USD in the U.S. (And, yes, if someone from the UK locks bitcoins into the system, it's still the U.S. price of a Big Mac in the U.S. that is the reference value.)

It's working! It's working!!! I think. Huh

ene

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Quote from: Anders on May 26, 2011, 10:40:44 AM

Hmm... I haven't thought this through. Ok, change in strategy. You will NOT be compensated when locking a bitcoin into the system, BUT you will be able to unlock that bitcoin for the same amount of NDC you got when locking it. This was just a quick fix. I must admit that I haven't thought this new idea through either. Grin

OK so that means that my 100 NDC unlock 1 BTC whereas somebody else (who buys NDC at a different time) has 200 NDC which unlock 1 BTC? So we both hold the same currency but it has two different values?

What the fuck is this shit?

Anders

full member

Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 10:05:45 AM

Quote from: Anders on May 26, 2011, 09:51:22 AM

The compensation will be an active and ongoing one. So if you lock in say 1 bitcoin, and let's assume that it just happened to be at a time when 1 bitcoin was worth $3.80, which also happened to be the price of a Big Mac at that time, then you will receive 100 NDC. Ok, you say, what happens if the value of a bitcoin the next week after that is $7.60? It could happen! In that case you will receive an ADDITIONAL 100 NDC from the system. That's pretty neat. So now you have 200 NDC, which, if you want to, you can use to unlock your previously locked bitcoin in the system.

So when the value of a bitcoin is $7.60 you have 200 NDC and the exchange rate is 200 NDC = 1 BTC.

Then when a week later the value of a bitcoin is $3.80 again, if NDC stays stable that means the exchange rate has to be 100 NDC = 1 BTC, the same as the time two weeks previous when bitcoins were worth $3.80.

So now I can unlock my bitcoin and now I own 100 NDC and 1 BTC, whereas before I owned just 1 BTC. Free money! Also, the remaining NDC I own is not "backed" by anything, because I can't use it to unlock BTC, which means I can't use it to buy a Big Mac.

wtf?

Please read the article I linked to: https://secure.wikimedia.org/wikipedia/en/wiki/Currency_peg

Hmm... I haven't thought this through. Ok, change in strategy. You will NOT be compensated when locking a bitcoin into the system, BUT you will be able to unlock that bitcoin for the same amount of NDC you got when locking it. This was just a quick fix. I must admit that I haven't thought this new idea through either. Grin

ene

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Activity: 42

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Quote from: Anders on May 26, 2011, 09:51:22 AM

The compensation will be an active and ongoing one. So if you lock in say 1 bitcoin, and let's assume that it just happened to be at a time when 1 bitcoin was worth $3.80, which also happened to be the price of a Big Mac at that time, then you will receive 100 NDC. Ok, you say, what happens if the value of a bitcoin the next week after that is $7.60? It could happen! In that case you will receive an ADDITIONAL 100 NDC from the system. That's pretty neat. So now you have 200 NDC, which, if you want to, you can use to unlock your previously locked bitcoin in the system.

So when the value of a bitcoin is $7.60 you have 200 NDC and the exchange rate is 200 NDC = 1 BTC.

Then when a week later the value of a bitcoin is $3.80 again, if NDC stays stable that means the exchange rate has to be 100 NDC = 1 BTC, the same as the time two weeks previous when bitcoins were worth $3.80.

So now I can unlock my bitcoin and now I own 100 NDC and 1 BTC, whereas before I owned just 1 BTC. Free money! Also, the remaining NDC I own is not "backed" by anything, because I can't use it to unlock BTC, which means I can't use it to buy a Big Mac.

wtf?

Please read the article I linked to: https://secure.wikimedia.org/wikipedia/en/wiki/Currency_peg

Anders

full member

Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 09:17:14 AM

Quote from: Anders on May 26, 2011, 08:57:12 AM

The freedom from worry would be when a person locks bitcoins into the system. If he or she only gets new currency for what the bitcoin is worth at that moment, then the person would not likely want to do that since that would be like giving away future increase of value for the bitcoin. By having the bitcoins locked into the system, the person will get fully (100%) compensated for future increase of value for the bitcoins the person has locked into the system.

The person isn't fully compensated because if they lock in 1 BTC for 100 NDC, and then bitcoins increase in value, their 100 NDC converts back to 0.5 BTC. So their compensation is actually -0.5 BTC. Hardly "full compensation".

Quote

Your example of the value of bitcoins going down... Yikes! Not good. One way of solving that problem would be to only allow people to unlock bitcoins THEY THEMSELVES previously have locked.

So in other words the bitcoins and NDC can be exchanged freely, but the NDC will never be worth more than the BTC which I put in? What's the point?

The compensation will be an active and ongoing one. So if you lock in say 1 bitcoin, and let's assume that it just happened to be at a time when 1 bitcoin was worth $3.80, which also happened to be the price of a Big Mac at that time, then you will receive 100 NDC. Ok, you say, what happens if the value of a bitcoin the next week after that is $7.60? It could happen! In that case you will receive an ADDITIONAL 100 NDC from the system. That's pretty neat. So now you have 200 NDC, which, if you want to, you can use to unlock your previously locked bitcoin in the system.

ene

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Quote from: Anders on May 26, 2011, 08:57:12 AM

The freedom from worry would be when a person locks bitcoins into the system. If he or she only gets new currency for what the bitcoin is worth at that moment, then the person would not likely want to do that since that would be like giving away future increase of value for the bitcoin. By having the bitcoins locked into the system, the person will get fully (100%) compensated for future increase of value for the bitcoins the person has locked into the system.

The person isn't fully compensated because if they lock in 1 BTC for 100 NDC, and then bitcoins increase in value, their 100 NDC converts back to 0.5 BTC. So their compensation is actually -0.5 BTC. Hardly "full compensation".

Quote

Your example of the value of bitcoins going down... Yikes! Not good. One way of solving that problem would be to only allow people to unlock bitcoins THEY THEMSELVES previously have locked.

So in other words the bitcoins and NDC can be exchanged freely, but the NDC will never be worth more than the BTC which I put in? What's the point?

Anders

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Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 08:19:42 AM

Quote from: Anders on May 26, 2011, 08:12:45 AM

This is the really cool part. Described in this previous post: http://forum.bitcoin.org/index.php?topic=9923.msg143440#msg143440

It's just a recent idea I got. I don't know yet if it's possible to implement such peer-to-peer network in practice. Huh

It is possible, you might need some alterations to the BitCoin protocol, but it can be done.

Let's say I buy 100 NDC by locking 0.5 BTC. One week later, the price of big macs is the same, but the BTC/USD exchange rate has gone down. So a big mac which used to cost 0.5 BTC now costs 1 BTC.

Now I sell my 100 NDC by unlocking 1 BTC. But where did the extra 0.5 BTC come from? Also, everybody else who bought NDC at the same time as me will choose to sell as well, because they can now get more BTC. So the system runs out of BTC to unlock and people are left with loads of NDC which they can no longer exchange for BTC at all.

Edit: also this:

Quote

The person who has locked the bitcoin into the system will receive more new currency if the value of the bitcoin increases. Therefore the person who locks a bitcoin into the system is freed from the worry of the bitcoin increasing in value.

The worry of the bitcoin increasing in value? I'm pretty sure nobody who owns bitcoins is worried that they'll increase in value. "Oh no, I might become richer!" Roll Eyes

The freedom from worry would be when a person locks bitcoins into the system. If he or she only gets new currency for what the bitcoin is worth at that moment, then the person would not likely want to do that since that would be like giving away future increase of value for the bitcoin. By having the bitcoins locked into the system, the person will get fully (100%) compensated for future increase of value for the bitcoins the person has locked into the system.

Your example of the value of bitcoins going down... Yikes! Not good. One way of solving that problem would be to only allow people to unlock bitcoins THEY THEMSELVES previously have locked.

ene

newbie

Activity: 42

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Quote from: Anders on May 26, 2011, 08:12:45 AM

This is the really cool part. Described in this previous post: http://forum.bitcoin.org/index.php?topic=9923.msg143440#msg143440

It's just a recent idea I got. I don't know yet if it's possible to implement such peer-to-peer network in practice. Huh

It is possible, you might need some alterations to the BitCoin protocol, but it can be done.

Let's say I buy 100 NDC by locking 0.5 BTC. One week later, the price of big macs is the same, but the BTC/USD exchange rate has gone down. So a big mac which used to cost 0.5 BTC now costs 1 BTC.

Now I sell my 100 NDC by unlocking 1 BTC. But where did the extra 0.5 BTC come from? Also, everybody else who bought NDC at the same time as me will choose to sell as well, because they can now get more BTC. So the system runs out of BTC to unlock and people are left with loads of NDC which they can no longer exchange for BTC at all.

Edit: also this:

Quote

The person who has locked the bitcoin into the system will receive more new currency if the value of the bitcoin increases. Therefore the person who locks a bitcoin into the system is freed from the worry of the bitcoin increasing in value.

The worry of the bitcoin increasing in value? I'm pretty sure nobody who owns bitcoins is worried that they'll increase in value. "Oh no, I might become richer!" Roll Eyes

Anders

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Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 08:07:50 AM

Quote from: Anders on May 26, 2011, 07:58:30 AM

Oh, I forgot that part. You would have to convert the 100 NDC into bitcoins and then exchange the bitcoins for dollars and then use those dollars to buy a Big Mac at McDonald's.

How do you know somebody will give you enough bitcoins for your 100 NDC to exchange those bitcoins into dollars and then use those dollars to buy a Big Mac at McDonald's?

This is the really cool part. Described in this previous post: http://forum.bitcoin.org/index.php?topic=9923.msg143440#msg143440

It's just a recent idea I got. I don't know yet if it's possible to implement such peer-to-peer network in practice. Huh

ene

newbie

Activity: 42

Merit: 0

Quote from: Anders on May 26, 2011, 07:58:30 AM

Oh, I forgot that part. You would have to convert the 100 NDC into bitcoins and then exchange the bitcoins for dollars and then use those dollars to buy a Big Mac at McDonald's.

How do you know somebody will give you enough bitcoins for your 100 NDC to exchange those bitcoins into dollars and then use those dollars to buy a Big Mac at McDonald's?

Anders

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Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 07:55:48 AM

Quote from: Anders on May 26, 2011, 07:49:15 AM

Quote from: ene on May 26, 2011, 07:42:42 AM

How do you know that 100 NDC equals one big mac? Is there somebody you can go to with your NDC to get Big Macs?

The price of a Big Mac is used to determine how much one NDC is worth. This can be set arbitrarily, but the rate must be fixed before the new currency starts to be used. It can be set to 20 NDC = 1 Big Mac, or 1,000,000 NDC = 1 Big Mac, or 0.0001 NDC = 1 Big Mac. It's important to choose a rate that is practical however, and one such rate could be 100 NDC = 1 Big Mac.

You didn't answer the question... suppose I have 100 NDC. Suppose the rate was set as "100 NDC = 1 Big Mac". Suppose I want to buy a big mac, and I don't want to hold NDC any more. What do I do?

Oh, I forgot that part. You would have to convert the 100 NDC into bitcoins and then exchange the bitcoins for dollars and then use those dollars to buy a Big Mac at McDonald's.

ene

newbie

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Quote from: Anders on May 26, 2011, 07:49:15 AM

Quote from: ene on May 26, 2011, 07:42:42 AM

How do you know that 100 NDC equals one big mac? Is there somebody you can go to with your NDC to get Big Macs?

The price of a Big Mac is used to determine how much one NDC is worth. This can be set arbitrarily, but the rate must be fixed before the new currency starts to be used. It can be set to 20 NDC = 1 Big Mac, or 1,000,000 NDC = 1 Big Mac, or 0.0001 NDC = 1 Big Mac. It's important to choose a rate that is practical however, and one such rate could be 100 NDC = 1 Big Mac.

You didn't answer the question... suppose I have 100 NDC. Suppose the rate was set as "100 NDC = 1 Big Mac". Suppose I want to buy a big mac, and I don't want to hold NDC any more. What do I do?

Anders

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Activity: 126

Merit: 100

Quote from: ene on May 26, 2011, 07:42:42 AM

How do you know that 100 NDC equals one big mac? Is there somebody you can go to with your NDC to get Big Macs?

The price of a Big Mac is used to determine how much one NDC is worth. This can be set arbitrarily, but the rate must be fixed before the new currency starts to be used. It can be set to 20 NDC = 1 Big Mac, or 1,000,000 NDC = 1 Big Mac, or 0.0001 NDC = 1 Big Mac. It's important to choose a rate that is practical however, and one such rate could be 100 NDC = 1 Big Mac.

ene

newbie

Activity: 42

Merit: 0

How do you know that 100 NDC equals one big mac? Is there somebody you can go to with your NDC to get Big Macs?

Topic: Digital currency backed by Bitcoin - page 3. (Read 11153 times)