Topic: Multicoin, Namecoin, Goldcoin, Silvercoin, OilCoin, 1971coin, backed by bitcoin! (Read 12232 times)

I have decided that I like morpheus' idea better than my own, so I am locking my threads about this stuff, and I encourage anyone interested in concepts like this to check out his thread:

https://bitcointalksearch.org/topic/goldcoin-and-stablecoin-proposals-29135

For starters, my approach would probably be based on some metrics for the web of trust, and statistics to calculate risks based on these metrics. Then an interface as simple as eBay with its feedback system would already be possible. It could be simplified even more by having some reasonable bootstrap web of trust, and a hard-coded value for the acceptable risk (at this point, however, there is more centralization in place, but I believe decentralization is always slightly more complex).
I don't think this is much of a problem. With a new crypto-currency in place, either bitcoin is superior, or the new currency. If bitcoin is superior, there is no point in bloating bitcoin with the new currency. If the new currency is superior, people will wonder why they have to still run bitcoin.

With a new crypto-currency in place, bitcoin won't be affected for some time as people will still use bitcoin as they know it better. There will be early adopters, and maybe they will prove that the new currency is better. Then bitcoin would be superseded. The only scenario where the competition might be a problem is when both currencies have their uses where they are superior to the other one. In this case, automated trading will have to evolve. As of today, I also buy some things in EUR and some things in USD, and it is not a problem because CC companies will automatically exchange the currencies. With everyone being able to invent his own currency, more complex scenarios are possible, but I am confident that similar solutions can still be found.
I don't think it is very complex, but it is a resource issue. To peg the bitcoin currency to gold, you need a large supply of both bitcoins and gold so you can manipulate the markets according to the intended value. I think this is more expensive than it's worth.

Maybe what you're looking for is actually a distributed payment processing network to transfer gold. Individuals with a large supply of gold could create this, possibly using similar protocols as bitcoin uses. But it is still sufficiently different from bitcoin to justify separate development efforts. For example, mining is not required in the same sense as bitcoin uses it (by extension, this means that such a network may be interesting to explore the effectiveness of bitcoin's method of creating a transaction fee market), and a way to cancel transactions in case one of the participants lies about his existing gold supply is needed.

Merged mining seems promising, however to do it without messing with the existing bitcoin might or might not end up happening, as that would involve adding a new hash value into the bitcoin blocks.

A meta-chain though could maybe do it: a chain specifically for the purpose of being the most difficult chain of a potentially large number of merged chains, the place you go to when you want to be yet another merged mining chain.

Two of the currencies my IRC bots work with are at least somewhat commodity based: GMC and GRF (General Mining Corp and General Retirement Funds). They are not really directly a commodity peg though because the corporations promoting them have not really settled yet on whether to charge interest on loans of these currencies or to simply increase the amount of a commodity they will buy per unit of the currency.

For example instead of charging miners 1% per day interest when loaning them GMC and/or GRF as capital for setting up a mining operation they might simply keep increasing the quantity of mined commodities each unit of the currency will buy, so that the currency goes up in value 1% per day. Here I mean value as in how much of a commodity they will buy per unit and also how much of that commodity they will sell per unit.

Obviously the catch in such plans is who will "honour" coins minted by miners who are not part of the corporation; thus the interest in "licensed mining" and the current practice of having customers use "thin" clients such as the IRC bots instead of having "full clients" such as the corporations and their agents (such as IRC bots) use.

It will not be until the problems around these two currencies are adequately solved that these corporations will look seriously at per-commodity currencies; the GMC and GRF currencies are more like abstractions of baskets, or a kind of "share of the commodities the corporation has available for sale".

Part of their interest in interest is the thought that possibly some of the market demend for a currency might possibly be able to derive from interest denominated in that currency being offered on bonds/loans denominated in that currency. (As they are able to charge quite high interest on loans, they could offer somewhat less interest on bonds aka loans-made-to-them.)

-MarkM-

Unless you can provide some value in exchange, you cannot assume to be able to create value out of thin air. Therefore, when you create an oilcoin (which is supposed to be equivalent to some amount of oil), the corresponding anti-oilcoin will be negative in value. It is basically a debt in oil. So, the value of your oilcoins will depend on other people's willingness to believe that you can balance that debt at any time. Moreover, if you allow anti-oilcoins to be traded freely (as your proposal reads), these people will want to see guarantees that everyone who receives the anti-oilcoins will be equally trustworthy with respect to repaying their debt. You can find excellent real-life example data on the dangers stemming from freely trading debts when you analyze the recent banking crisis.

If you want to create btc denominated assets, why not just create investment funds on GBSLE. You can just issue shares in a gold fund and use the capital you raise to buy gold for example. These coins all require centralization anyway, so what is the difference? You can also set up a fund to short gold if that is important to you.

Abstracting away the complexity is exactly what I have in mind, but I'm not sure how that can be done for webs of trust.


I took a poll, and the consensus seems to be that changes of this sort should be experiments in new block chains rather than changes to the existing block chain. I'm concerned that new block chains could compete directly with bitcoin (and make bitcoins less valuable), but perhaps there is a way to tightly integrate them with bitcoins without messing with the existing bitcoin protocol.



I agree with all of this.

Trying to peg a distributed currency to an external value like gold or oil is complex, and leads to a lot of strange "what if" scenarios. I do believe it is possible, although a complete protocol description has so far eluded me.

It is also hard to explain bitcoin's technical details to grandma. Maybe even more than public key crypto and webs of trust. This is what the client software is supposed to abstract away, and this can also be done for out-of-chain contracts etc.

I think there is nothing wrong with creating distributed infrastructure to trade gold, oil, currencies etc., but I don't think it belongs into the block chain. The value of bitcoins can be verified by every peer in the network, and I think this is what makes bitcoin so powerful. Tradable values based on currencies or commodities can only be securely verified by a relatively small subset of the network, and therefore introduce security issues not otherwise present, while still requiring resources from the whole network.
New technology is always more volatile than established business tools. But I think there is a good chance for the current bitcoin implementation to fly for quite some time - sufficiently long to use it for business.

Moreover, I do not think your recommendations can prove stability, either. In fact, they take away a core characteristic of bitcoin that could be a base for its stability (once the business volume using bitcoin grows). No stable currency as of today is valuable simply because you can trade it to another currency, or a commodity. This kind of stability can only be backed by one or more individuals who can ensure the possibility to trade it for whatever they propose. Once the resources of these individuals are exhausted, you reach the limits of this kind of stability. True value of a currency comes from the vast range of goods or services that can be bought using that currency. So, every member of our community who starts doing business using bitcoin provides his share of the stability we all want.

I do think it is an interesting idea to have similar currencies with some other characteristics (for example a different algorithm to manage the amount of coins {which could, in theory, also be backed on commodities etc.}, or using different crypto algorithms), but I think they should have their own block chain and network so we have security through redundancy, rather than a single block chain that becomes so complex that no one can ensure it is robust enough to sustain attacks. Still, I assume the original bitcoin might still be the one that will turn out to be superior.

But I also think it is too early for this to be built. It will be interesting once there is enough freely available software to setup exchanges, do algorithmic trading etc., so users don't have to care about all the virtual currencies manually.
Well, the way I read your offer, I got the impression that just posting here might make me look like I just do that because of the offer. But I actually enjoy to discuss with people who wish to take bitcoin to its next level (as I do). Even if we have rather different ideas. I think we all can only learn from good discussions. If you wish to send coins, I'm also fine with that, but my primary goal is to be a responsible member of the bitcoin community who provides his thoughts for others to read them.

In the doomsday post I rejected printing new bitcoins to shore up the escrow fund, but not the hyperbitcoin idea. I probably wasn't very clear with that.


If there aren't enough speculators to offset a drop in bitcoin values, coin/anticoin holders would be exposed to bitcoin price fluctuations, but there wouldn't be an outright default


See this post in the sister thread for an example of how coins/anticoins would be issued: http://forum.bitcoin.org/index.php?topic=31645.msg400477#msg400477

antioilcoins would go up when oilcoins go down, so buying them is like shorting oil. I expect some rules would have to be in place to keep them balanced, which I'll admit I haven't given enough thought to yet (see below).

When coins and anticoins are created, they are sold for bitcoins which go into escrow. That last question (what happens if a commodity goes up by 10000x?) is a fantastic one. Let me take a shot at how that would work:

Let's say oil is rising rapidly. As the price of oilcoins starts to rise, the price of antioilcoins would fall at the same time. The bitcoins in escrow backing oil are now out of balance (more bitcoins backing oil coins than antioilcoins), so the protocol needs to either use escrow funds to buy oilcoins on the open market or it needs to mint new antioilcoins out of thin air and sell them on the open market (within the bitcoin network), or some combination of both until balance was restored. The balance of buying oilcoins and selling antioilcoins would be decided by what combination left the escrow fund the healthiest. The only risk of default I can see is the case of an instantaneous huge price move combined with everyone trying to sell their coins/anticoins all at once, which seems pretty unlikely.

I just made that up. Does anybody see a problem with that model?

I thought you rejected that idea with the doomsday post.
If all reserves are stored in coins, how it is possible that there's no default if the price of the coin gets too much reduced?
If you print more to pay people redeeming their commodity tokens and hypercoins, the value of your coin is going to fall even more.
I still don't know how this tokens are issued. I thought the chain issued them at the spot price known inside the chain thanks to the miners, but you say their price doesn't depend on the spot price.
If they are issued by finding a counter-party, what gets the counter-party exactly? How can you make money with antiOil-tokens?
Where the money both parties pay goes? What happens if the price of the commodity multiplies by 10000?

I still believe the hyperbitcoin model would allow investors to trade without default risk, and only some bitcoin price risk (if the escrow fund got too low).

But what is the other case?

Ah, got it. You're talking about your auto-dissolving contracts. Yes, that would be a problem in that case.

But when the contracts are redeemed automatically (before becoming "insolvent") and when is decided who was right in his bet and how much has to get from the other's party escrow is when the external spot price matters. If it didn't matter, we didn't had to input information from the markets.

Yes, that would be the external spot price which I keep insisting matters very little. The price of a sale is decided by the buyer and the seller of the contract. They have an incentive to meet at the external spot price, but the incentive is small.

I mean the spot price at the moment of redemption.

[POLL] Add ideas from second bitcoin whitepaper proposal to bitcoin?
http://forum.bitcoin.org/index.php?topic=32417.0

It doesn't matter what the next block reports for the spot price. The price executed would be decided by the buyer and the seller of the contract. The fee paid would be decided by the spot price immediately before their trade.

Maybe some later service or client bring it closer to grandma, but that can be outside the chain.


But when you send the sell order you don't know which miner is going to solve the next block nor what spot price he's going to report.


The problem could be the opposite, miners accepting the blocks even when they have wrong spot prices in the fear that everybody will accept it and he's still mining for the old block.

Yes, I agree that kind of contract would accomplish what I want. It would not be seemless and easy for Grandma to use, but a sophisticated trader could make it work just fine. Maybe that is really all we need to attract those trillions of dollars, since most of them are controlled by sophisticated traders.


The voting affects the external price which affects the fees, but nobody forces you to buy or sell at that price within the bitcoin network. If you're willing to pay slightly higher fees, you can trade as far from the external spot price as you want.

Also, voters don't get to vote what they think the price is, they can only vote yes/no on whether to accept the latest block from a miner with the external price embedded. There's not any advantage to voting no if nobody else does. Messing with the exchange rate requires massive collusion with 51% of bitcoin hashing power. That's for sure not the first thing I would do with all that hashing power!

When bitcoin prices are diving or when the prices of the commodities in the contract are.


Imagine you're a user that wants a stable value.
You hold some of the bitcoin from your sales (or wage or whatever) and invest some of them in a "1971 dollar vs bitcoin" contract.
The more bitbulls the more you will be able to gain if bitcoin falls. If bitcoin rises, you lose from the contract but gain from the bitcoins you hold, so with the right proportion you stay the same.


The result of the contract (who gains, who loses and how much) depends on the voting, on the real price of the commodities.
The price you mean may differ is the price specified in the contract as a "draw" where neither party gains or loses.