I'm thinking that the protocol would adjust interest rates to target (actually, place an upper limit on) the overall inflation rate of something pretty small, like 0.1%, so as to cause minimal damage to Satoshi's original vision of a limited supply. (Perhaps we should estimate the % of coins that get lost / burned per year and set the inflation rate to counterbalance that exactly?? just an idea.) That means that if, under steady state conditions, only 1% of coins were invested in bonds at any given point in time, the system could offer an average 10% rate of return, producing 0.1% rate of inflation. If sum total of invested coins goes higher than 1%, then the targeted interest rate would have to decrease below 10%, and vice versa.
Interest rates should be able to drop quickly (if there is a sudden huge influx of bond investors) but rise slowly.
Topic: Idea: BondCoin (Read 450 times)
I don't understand exactly why the bond issuer is going to pay interest in your scenario. Usually the bond issuer issues the bond because they want to raise money to use not have to have the money already and locked in the blockchain.
The bond issuer is the bitcoin (or bondcoin) protocol itself; new coins are generated by the protocol to pay the interest, just like new coins are generated by the protocol to pay block rewards.
I don't understand exactly why the bond issuer is going to pay interest in your scenario. Usually the bond issuer issues the bond because they want to raise money to use not have to have the money already and locked in the blockchain.
this is a nice idea wish i could create shit like this
No, not James Bond.
This is an idea for a new coin that issues bonds.
I got the idea when I read this:
and I thought: what if bitcoin (or an alt coin, i.e. "BondCoin") could issue bonds?
It would work like this: The core client would issue bonds for 24 hour, one week, 1 month, 4 month, 1 year, 3 year, 10 year, and 30 year Notes. (The time frames would actually be denominated in blocks; for a 10 minute block generation time, a 24 hour bond would mature 144 blocks in the future.) Each time frame would have its own interest rate which gets periodically readjusted according to some algorithm -- for example, it would increase or decrease the rate of return depending on what percentage of bitcoin is tied up in bonds at that instant in time. Longer term bonds would give higher rates of return than shorter term bonds.
The mechanics might work something like this: for each bond, there would be a corresponding address (or maybe a large block of addresses; for example, an address starting with B). If a user sends 1 bitcoin from address X to an address corresponding to a 24 hour bond, and the current yield is 0.01% per day, then the transaction, in order to be considered valid, would include:
1 btc from address X to address B (now)
1.01 btc from address B to address X, set up so that the outputs could not be used until ~ 144 blocks in the future. (I'm not sure how this would work from a technical standpoint. Is it possible to create an output that is "frozen" until a given block?)
Why would this be useful to the community at large?
1. People are often wondering to what degree people are using bitcoin as a store of value versus using it as a currency. This would give us one tool for addressing that question, because it would be public knowledge what % of bitcoin is tied up in bonds (broken down into time frames) at any given point in time.
2. It would stabilize the value of a bitcoin by providing a market mechanism to increase and decrease the available "money supply" (the amount of coin not currently tied up in a bond).
It would be inflationary but could be designed to have only a small amount of inflation.
Comments? Has anyone worked on anything like this before?
This is an idea for a new coin that issues bonds.
I got the idea when I read this:
Quote from: http://www.technologyreview.com/news/534301/price-slump-tests-bitcoins-self-correcting-economics/
unlike Bitcoin, it [the US Dollar] has the backing of the U.S. government and Federal Reserve. You need dollars to pay U.S. taxes or buy government bonds, for example.
and I thought: what if bitcoin (or an alt coin, i.e. "BondCoin") could issue bonds?
It would work like this: The core client would issue bonds for 24 hour, one week, 1 month, 4 month, 1 year, 3 year, 10 year, and 30 year Notes. (The time frames would actually be denominated in blocks; for a 10 minute block generation time, a 24 hour bond would mature 144 blocks in the future.) Each time frame would have its own interest rate which gets periodically readjusted according to some algorithm -- for example, it would increase or decrease the rate of return depending on what percentage of bitcoin is tied up in bonds at that instant in time. Longer term bonds would give higher rates of return than shorter term bonds.
The mechanics might work something like this: for each bond, there would be a corresponding address (or maybe a large block of addresses; for example, an address starting with B). If a user sends 1 bitcoin from address X to an address corresponding to a 24 hour bond, and the current yield is 0.01% per day, then the transaction, in order to be considered valid, would include:
1 btc from address X to address B (now)
1.01 btc from address B to address X, set up so that the outputs could not be used until ~ 144 blocks in the future. (I'm not sure how this would work from a technical standpoint. Is it possible to create an output that is "frozen" until a given block?)
Why would this be useful to the community at large?
1. People are often wondering to what degree people are using bitcoin as a store of value versus using it as a currency. This would give us one tool for addressing that question, because it would be public knowledge what % of bitcoin is tied up in bonds (broken down into time frames) at any given point in time.
2. It would stabilize the value of a bitcoin by providing a market mechanism to increase and decrease the available "money supply" (the amount of coin not currently tied up in a bond).
It would be inflationary but could be designed to have only a small amount of inflation.
Comments? Has anyone worked on anything like this before?
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