Topic: Has anyone proposed a coin that adjusts its supply to stabilize prices? (Read 2388 times)

Assuming you want to target parity with the USD cant an exchange rate be observed from an exchange like gox and used to formulate coin creation policy in a decentralised manner?

this one is based on supply and demand through integrated decentralized exchange system:
https://bitcointalksearch.org/topic/emunie-latest-update-lots-of-new-features-and-improvements-246463

Take a look at http://qubic.boards.net/index.cgi?board=theconcept&action=display&thread=1. In Qubic the supply is controlled by participants.

Tee Hee Hee!


Etlase2, where have you heard comments like that before! 

timhuge, that was exactly why I wrote the GEM proposal. It was just a thought experiment to concentrate on stabilization while changing BitCoin as little as possible (mostly to avoid tangential arguments).

In the spirit of changing as little as possible. Here's how my conclusions in GEM differ slightly from Etlase2.

It is getting to the point where my time would be a lot more productive just writing the code instead. But I will probably make one more proposal before that point.

Some of these are actually interesting ideas, but unnecessary in the long run. The stability that we are seeing in price now is the result of more day trading across (the remaining) exchanges. The more traders attempting to run waves, the smaller those price fluctuations will become. However because we are dealing with a relatively small marketplace atm, there are and will be some attractive fluctuations and instability for months to come to bring in more daytraders.

It would be helpful for me if you could write an updated post on Decrits that no longer describes the things as tentative that are not tentative and that includes the refinements you've made. But I understand if you are not interested in doing that.

From my initial work, I see the difficulty that you are addressing in Steps 1-3. Step 4, however, and maybe the "billion other things" seem like improvements on Bitcoin that are relatively unrelated to issue of stabilizing the value. Do you think they might be an obstacle to increasing understanding of the StableCoin idea? My thought was to keep my proposal as close to Bitcoin as possible, making only the changes necessary to stabilize the value, as a kind of proof of concept. Then other improvements to Bitcoin could be debated separately.

I am very interested in your Decrits proposal, which I just learned of yesterday, but I'm thinking of finishing outlining my own initial proposal before diving into the details. Before releasing my proposal, though, I intend to look more carefully at yours to make sure I'm not just duplicating it.

Step 1: separate currency creation from securing the network. This is a huge task and one that has been solved in the Decrits proposal.
Step 2: find a way to force miners to compete against each other in who can create coins faster by offering incentives. In addition to this, difficulty must only increase, not decrease (this can only happen if step 1 is in place). See the Decrits proposal.
Step 3: while the technical supply of coins must be unlimited, the realistic amount of coins that can be created in a certain time frame needs to be tied to network activity. To make network activity "honest", a percentage of each transaction must be taken as a fee (Decrits proposes 0.01%).
Step 4: defensive measures must be in place to protect against attacks on the difficulty via ASICs or pooled power. See deeper in the Decrits thread.
Step 4a: make mining create only a portion of new coins with the rest being given away in a lottery to reduce the "hardware tax" as I call it, so that you don't need to be a miner to make a profit using the network. This reduces the power that, for example, a region with cheap electricity would have over one with expensive electricity. It also means that few coins actually need to be paid for in hardware/electricity/time, which as we all know is a complete waste.

And billion other things that would make the network better and more efficient for fun.


I would suggest checking out Decrits before potentially reinventing the wheel. Although I mention several times in that thread that many ideas are tentative, they are not so tentative in the 6+ months of delving down and refining since.

Folks may be interested in this related, current thread: https://bitcointalksearch.org/topic/stablecoin-178140

If the majority approve this level of volatility, it is perfectly fine. Everybody should be able to set this limit in client settings.

Yes, this is pretty much my point. And this can be done by voting. Whole order book for every currency in the world could be kept in the blockchain (from bitcoin wiki I understand that you don't need any changes in protocol for this). This book would be updated every 10 minutes. Every peer could explore this book and instruct his/her client on how bad disbalance between bids and asks he/she is going to tolerate, and confirm or reject orders based on this decision. If the community vote for crazy volatility, fine, let it be. If crazy conservatives win, slow down the horses. You would still need central exchanges. If all of them use same order book, approved by BTC community, they will not be able to affect exchange rates.

Surely "adjusting supply" can be done by BTC holders themselves. Isn't that the whole point?

I'll put it more directly - it would be a good idea if we all played at being "central bankers", from time to time.

There will other speculative periods, with booms and busts. It's in all our interests to get as many people as possible involved in Bitcoin. When the price is rising "too fast" - there are more people wanting to buy into bitcoin than there are those willing to give up a bit of ownership. So, if "we" attempted to balance demand and supply at these critical moments we might succeed in bringing BTC price swings down below bthe critical threshold where a speculative frenzy ensues, thus ensuring a more smooth rate of appreciation - and hence BTC adoption.

In this respect "selling high, then buying low" is just a method of stabilising the currency's value.

Or, to put it another way, strict hoarders may benefit by strategic selling. Would it be possible to coordinate this? Or have some method of knowing how much is going on? No - any such information would act against the market-makers. But we could have an indication of how much market manipulation might be appropriate. Then each of us decide how much to act based on our oown holdings. Most bitcoins are, apparently, held by accounts with less than 500BTC in them, so if a lot of us acted in this way, it would have a noticable effect...

Earlier in this topic someone suggested an appreciation of less "than 5% per annum against another major currency" (basket) would be desirable. Now that seems to me to be trying to make Bitcoin like any other currency.... I would have thought that appreciation of 3 times per annum would be quite acceptable - giving appreciation of an order of magnitude (ie x10) every two years. That seems to me to be quite reasonable with a growing BTC-based economy.

Sure you can do this, but this will not make your rate mainstream. To establish it, other peers will need to vote for it. You can skip a forum post and place any crazy order into blockchain. If everybody else accept it, fine, let the rate be screwed up.

Ah, that's what you meant.  Was gonna say, if it isn't in the block chain, it didn't happen!  (lol)

But still it was fun to consider - thanks for that.  Love good ideas - even if in the end I end up doubtful.  ;-)

You can send your BTC from your address to your friends address, and this will be recorded in blockchain. This will not affect the exchange rate if you do not place a sell order.

what if i write a forum post saying that i will pay 5 times the amount that the blockchain say i should, and just buy all?

this is not a Bitcoin thread, its a though experiment.

It takes trust that the other wont screw you, but physical exchange of printed (or otherwise made physical) private and public keys, to a wallet with the funds in it, can happen. Mostly for gifts, but there are physical bitcoins you can buy with tamper-evident seals over the private key.

How do you trade BTC without going through the block-chain?  Did I miss the first day of school?