I already consider NXT and Ether narrowly distributed. One indication is limited time of IPO distribution. Ether can still fix it because not all coins are distributed yet. NXT can fix it too if big holders make that choice.
I suggested to keep distributing at IPO price for long term, what is wrong with my suggestion ?
I did not suggest to give it to people for free.
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There are are a few ramifications:
1. The value of the currency is never more than the underlying asset because you can always get it at the pegged rate.
2. In order to maintain the value at the peg, the currency has to be at least as useful as the underlying asset, or the issuer must promise to also buy it at the peg, no matter what.
3. If the value of the underlying asset goes down, so does the value of the currency.
In effect, you are suggesting a currency that acts as a substitute for the underlying asset.
About ramifications:
1. I disagree. The value of crypto coins can be more, but people can still buy it for the same low price from issuer or distributor. They will buy like crazy, knowing that value of what they buy is more. They will even borrow fiat to buy more of it. They will stop buying when they got nothing to pay with. When people buy like crazy distribution becomes wide. Example - when people bought cheap gold for dollars before gold standard peg ended, gold achieved wide distribution, so wide that govts had to confiscate it and start world war 2 to reclaim monopoly on gold.
2. Yes, issuer can and will promise. After all, we trust big holders of NXT and BTC to not dump it on us, which serves as promise to be able to redeem at reasonable price from somebody on the market.
3. To solve it we would have to trust issuer to adjust sell order price accordingly. Or we can just assume that assets that we accept in exchange for coins have stable value. We could accept very broad ETFs or stocks of big and stable companies. But that problem exists only if coin value is less than redeemable asset. Once coin takes off and it's value greatly exceeds value of redeemable asset, this problem will not exist. People will not redeem at loss, unless they urgently need that asset.
Once issuer sell order is completely purchased, people will be able to sell at higher prices. Until then they are locked in their investment even if it has super high ROI.
Long term locking will also help to deter borrowing making sure people invest only what they own - their savings.
That will help to prevent premature exhaustion of issuer sell order and subsequent bubbles and contractions.
But if we accept PoHW (proof of human work) in exchange for tokens then problem of trust to issuer does not exist because there is nothing valuable to redeem. Image recognition can be successfully used as PoHW.
We could also give 2 options - to buy with fiat or give PoHW.
Those from poor countries will get coins with PoHW. Those from rich would buy with fiat.
In this case only those who paid in fiat will be able to redeem. Or we will not provide redemption option at all and spend collected fiat on development and marketing.
Amount of fiat should be comparable to average labor cost on the planet to get a coin with PoHW.
We could also give people opportunity to pick middle ground multiplying fiat amount by PoHW amount so that lower income people would choose to work more, but spend less fiat, and higher income people would choose to spend more fiat and work less.