Topic: Separating stable Bitcoin-currency from Bitcoin-stock, using 2 block chains (Read 966 times)

Thank you for the feedback!
I agree that it is a nice feature to be so protected.  
But I'm thinking that actual Bitcoin block chain wouldn't be the currency but the stock anyway.
Maybe we could leave Bitcoin as it is, as people want it, with non-fixed supply and without taking shares after bankruptcy, then try the currency block chain aside, if we can fork Bitcoin. It'd be flawed but harmless experiment.

Even if it's an added vulnerability, I still think that a stable currency can't be a closed system which doesn't evolve according to demand. We're all pulling on the network's value, it needs to stretch. Price is easiest way to gauge demand.  

To input the price, it would be done when miners are solving a block. They put transactions in the block already, so if they manage to solve it, they send a query to price trackers, then put a special transaction in the block to let the network know.
Then other nodes check that it is indeed correct before accepting the block. Also price trackers don't have to be such a centralized weakness.
It could be 10 or more different servers specified in the client, using weighted averages of average price on all exchanges by volume, ect... Or forget the tracker idea, miners do it themselves maybe.
If something is wrong or strange, then don't change the number of coins until it's solved.
It is true we can never trust it 100% and it approximates, but maybe it is still worth it?

I think people should consider this problem because volatility is the strongest reason why many people are not interested in Bitcoin or crypto in general; there needs to be a solution, even if it's not this one.

I didn't read much about Colored Coins yet, but they seemed interesting. I'll take a look when I have the time to understand that idea, thanks!

I think you could implement this as a colored coin concept running on top of the bitcoin block chain. You could have several layers of volatility/stability trade offs. 

 
The concept is interesting but not implementable or at least in a decentralized manner like Bitcoin.  What makes Bitcoin special is that it does not require any specific party to keep it alive or be trusted.  Even the simple concept of imputing the exchange rate in your system would not be possible to implement.  Who do we trust to put the price data into the system?   What is the price?  As this weeks events have shown we can't trust any one specific entity for the price and yet BITCOIN GOES ON. 

(Bitcoin does not give a sh*t about its price, nor does it need to.)

Well it's true I should have posted in "Alternative Cryptocurrency" maybe, it's just that I was thinking that it's better if it's done through a currency which is already widespread.

But yes I guess it'd have to be experimented with first. I'll delete shortly if I can and adapt for the other board I guess, when I'll have time!

edit: Well nevermind, I can't delete my own thread it seems. If a mod could move it that'd be nice. Thank you. I have to go, goodbye!

Feel free to implement your own currency that includes this feature and leave Bitcoin alone.

Hello everyone!  

First, I love English but I'm not English; so forgive my messy sentences.
Second, sorry if this is too long... But I made images and a tl;dr below!
And third, sorry if this is no white paper but I am not Satoshi or a PhD.
I am an ex-hikikomori who can only loosely hand-wave my way around.  
Take this with a grain of salt. It's surely stupid nonsense, inapplicable.

Especially since I know little of the tech. Please ignore once that is settled.

You know I have to share just in case. Alright! It is an idea in 2 or 3 parts.

The first part I'd like people to consider is about stabilizing price per coin:

If demand (~price) changes by X% beyond volatility, we change the number of coins (~supply) by X%.
And we do that directly in the wallets, through the ledger.

This stabilizes price per coin.

(Just knowing it can happen, greed acts as a stabilizer!)

I think it can be done as wallets hold keys to access coins from the network, not the coins themselves.
Number of coins is in the ledger, it is distributed, so we have control of supply as long as nodes agree. Don't we?

Imagine there were only 3 gold nuggets in the world, worth $100 each.
If you destroy one then they'd be around ~$150 each, as it becomes more rare for the same demand.
And if you create gold, then value decreases. Except we can't create gold as it has intrinsic value (it'd be creating value out of thin air).

But the value of Bitcoin is not in the coins, it's in the block chain and the nodes supporting it. We can create and remove coins as we please, and we can do it fairly.

It does mean removing the 21M supply cap; the elephant in the room holding Bitcoin back.
As there is more stuff to buy, we need more currency... For a stable price. It can't be helped!
Bitcoin can be volatile and scarce virtual gold, or the stable currency of the world; not both.
Even the Nobel Prize says so. Bitcoin is valuable as it is, but it could be even more valuable.

Well, it can have fixed supply, if it's not the currency but the 2nd block chain of what I'll explain.
Because we need a fixed supply for the 2nd block chain, as we'll see. But not for the currency.

So the first point was turning price volatility into supply volatility... But there's a second point!

Don't do this for all wallets, as non-investing people would get upset when coins are removed, and there'd still be global hoarding.

We need the number of coins to add/remove to be proportional to your share of another block chain, and not proportional to the amount of currency you own; this kills hoarding.

Also, it makes sense that if the whole currency loses value, someone has to take some loss.
But we can give liquidity to that risk... Through the owning of shares of that 2nd block chain.

By owning X% of it, X% of the generation/destruction required to stabilize goes through your wallet.
The money of normal people is then beyond a safety buffer: the money of investors.
They feel better about buying coins, or accepting it as payment.

Because as the 2nd ledger is public, and links stock-wallet to currency-wallet, they can know exactly by how much value they are protected.

Here are three use cases to explain my view, and for people to discuss and surely disagree:

A) Current Crypto system:
"I want to buy X, but if coin value increases by 2%, I could buy more later..."
I may buy but the probability I do is lowered by greed --slow economy.

B) Hypothetical supply-adjusting currency without the 2nd network:  
"If I have 1000 and I expect a 2% increase in value, I should postpone buying til I get 20 generated currency. "  
Not good --currency stagnates uselessly. This is not saving to afford X. This is waiting for others to buy coins before using yours.

C) Now with this dual system:
"If I expect a 2% value increase, I buy shares if the price is worth the generated coins, or too bad / too late, I buy other stuff instead."
You see how that person decided to use currency even though he knew people will be buying coins soon... This is added value.
It happens because a rise of currency value is transferred to the stock coin's value, you don't benefit from owning the currency.
If you buy shares, then the person you traded with needed currency, unless trader; normal circulating money; it is not hoarding.

In the end: "How much currency I have, had or will have is irrelevant... Might as well buy right now if I want to."  

Basically, we split value in two parts: crypto-currency and "crypto-stock".

There is a lower bound of value at which investors go bankrupt and the currency loses stabilization mechanism.
But this can't be helped! There is no magic. I still think a currency with this stabilization would be very valuable. Don't you agree?

The core of the idea is: We have 2 block chains. We transfer value of one into the other.
We can because enough people own both. Total amount of value is the same.
But one part is stable, and the other acts like a stock with dividends.

We can imagine multiple coins linked to the stock thing one day, as something expensive is resilient to stabilizing something cheap.

The weak point is whether reducing supply would have a strong enough impact to raise the price properly. I don't know.
We will need owners of stock to correlate strongly with people selling currency on exchange.
But I think they would, as they are the source of supply.

Also the amount of value lost/created with coins has to be equal to the amount of value actually entering/leaving the market, to limit manipulation. It wouldn't be just about price but volume and all, or decided by economists maybe one day.

[Suggestions for the dry technical part: I wonder if we could fork the current block chain, give it a new name; it'd have same wallet addresses and keys but different client, and it'd evolve or be traded separately.
Then the nodes of the currency block chain would use price trackers, bitcoin-stock, and some smoothing formula to update currency wallets every X block appropriately.
At first, everyone would have as much share in both network, so they'd gain/lose value as usual. But then, they'd start trading their shares.  
If an investor goes bankrupt (lacking the appropriate currency to destroy), he'd have to sell his shares, or he starts losing %.  
Also a wallet created in one fork has to be created with the same address in the other, or it would be a mess.
Either that or we need to be able to store data in both ledger (address of corresponding wallet).
If we can do this fork thing, then current Bitcoin block chain would be bitcoin-stock.
Ideally we make a new client so there's no more mining Bitcoins, it's all fees.
If I own X%, it stays the same %... So I get back my loss if it rises from a dip.
And we multiply wallets to be at 21M already or a factor of 10 for easy math.
Multiplying would be a kind of transaction with no input/output, just amount.
While nodes verify the block is correct, they check transactions --this one too.]


Here are two pictures I made to better understand the general idea:

https://i.imgur.com/aC0u6xn.png


But it is not enough to do that, you can't just give the option to be an investor freely, or they'd all flee when the price falls.
Being an investor has to be a real investment, which comes at a price. A price on the free market... Through a second coin.


https://i.imgur.com/IerJvk0.png


tl;dr:
Merchants and cautious people buy the currency not the share.
Investors/owners of shares win or lose currency appropriately.
But hoarding of the currency is useless, and the price is stable.
Well, stable as long as the investors can support it... No magic!

That's it. I'm guessing this is flawed, as there are many intelligent people/professional developers in the BTC community, I'm unlikely to be first to propose a good idea.

Sorry to be so lame, but as a lower class, lifelong social recluse, BTC donations are appreciated if (and only) this turns out to be more than nonsense and help crypto:
1thxd4KJLhBMcfCYaVKYMA8Atv3Dfx9hb

But I have a feeling it's a stupid idea and doesn't work, or it'd have already been done... I felt *eureka* when I had the idea but it'd be too simple if it was just that.  

Sorry if I waste people's time... I'll delete and take the shame, but I have to share. I'm hoping that at least there are interesting bits to inspire more polished ideas.

There must be ways to work on the idea where we don't get value proportionally to the amount of current currency... It'd help, I think. Or maybe not, I don't know.

In any case, I encourage people to think about improvements!

Because we are all the engineers of the future... Haha

Well... We try!

So please don't be mockful of my efforts... It's surely ridiculously wrong to some, but to me, it is the best of me. Took me loads of time, and I should be sleeping.

But what's important is that we beat on, boats against the current...  And try as we can (yes I did read it in English! Haha).

Thank you for your time, attention and consideration.

Goodbye!