Topic: The RealCoin Idea - page 3. (Read 5900 times)

How does anyone know if there is "fiat" in reserve? Why would the operators not just run away with the money?

Suppose there are honest operators who won't do that. What stops dishonest operators from setting up shop next door?

How do consumers tell the difference between honest and dishonest operators if they can't check how much money is on reserve in the operator's bank account?

What happens when the gov't freezes the operator's bank account? What is there to prevent this from happening?

What is the mechanism governing how the operator makes decisions? Is there just one dude controlling everything?

There are just too many problems with this. My idea is clearly much better. You probably know that.

This is why I liked the "Freeciv Nations' National Currencies" concept.

We could back DigILire with real Lire, Canadian Digital Notes with CAD, United Kingdom Britcoin with GBP and so on for every national fiat currency.

No more need to worry about selling some of your only one type of coin for CAD, some for USD, some for GBP and so on then have a "run on the bank" in which everyone demans CAD or everyone demands GBP or whatever. Having one type of coin for each type of fiat means you can always have exactly the right kind of fiat in reserve to exactly back each coin regardless of what kind of fiat someone chooses to buy cryptocurrency with. You give each customer cryptocurrency that explicitly specifies which type of fiat they bought it with aka provided the reserves to back it with.

-MarkM-

Ah, ok, so I was misunderstanding.

Well, best of luck with your endeavor.  Maybe you can find a way to work it out. 

To peg the value to one dollar in a way that is verifiable to third parties. Otherwise it will just look like a scam coin as in "Realcoin".

Cunicula is the one who keeps wanting to back the hypothetical stable cryptocurrency with bitcoins, and even he sees that bitcoin's instability of price causes problems with that idea.

I have problems with the idea of backing them with anything other than what you sell them for, since anything else might well fluctuate in value compared to what you actually sold them for.

Thus my bots were designed to stash anything anyone bought one type of currency from them with in that specific currency's reserves, not to be used to back (aka buy) any other currency with.

Even that could have problems, since any "run on the bank-aka-reserves" might pick any of the things in your reserves as what everyone suddenly wants. For example if I sell ten CDN for some UKB and another ten CDN for some BTC and another ten CDN for some UNS, what happens if all those customers all turn up wanting to turn the CDN I sold them into UKB? Sorry, I only sold ten for UKB, I can only buy back at most ten with UKB, the rest you'll have to accept BTC or UNS for as that is all I have to back them with once my UKB reserves are expended...

Tracking customers suddenly starts to seem tempting, as I can look you up in my records and find out what exactly you paid me, and if you never bought the things yourself I could then even say sorry, I did not sell you those, here is my list of people I sold to, go find which of them bought these ones you want to sell and have *them* buy them back from you, its not my problem as you were not my customer...

(Bye bye fungibility...)

-MarkM-

*shrug*

All I am saying is that I have not seen a law that would require person-to-person transactions to be tracked.  You can be suspicious of the government and speculate what they might want to do all you want, but until something happens, I don't think it's fair to make predictions as fact.

Also, and tell me if I am misunderstanding, but you want to back your version with Bitcoin?  What's the point of that?

It will bug the heck out of "them" that all transactions *are* tracked but conspicuously fail to tie identities to the tracking.

Bills have serial numbers, main reason cash registers don't track them individually yet is probably because they don't, economically/feasibly, *yet*.

The way the U.S. has been "lately" it gets harder and harder to believe they won't force tracking at cash registers pretty much as soon as they can.

Probably the only reason they let citizens own gold again lately is so they can sell it to them, having completed the process of first confiscating it from them. Once they sell it all they'll likely make it illegal to own again so they can confiscate it all back.

Can credit card operators and banks get away with only reporting deposits and withdrawals not account to account transfers?

-MarkM-

I don't see any proof that all transactions would need to be tracked.  When you hand out cash, you don't have to keep track of who that cash goes to afterword.  If a company hands out gift certificates or cards, they don't have to track who that gift card might be given to.  All that needs to be tracked is who bought it and who used it - same as with RealPay.  They won't be tracking anyone except the people who buy the RealPay coins from the central entity, and those who sell to the central entity.

There is no legal precedent to back up your theory that all transactions will need to be tracked.

I agree with you about trusting a large company vs. the crooks who populate the forum.

However, there is no way that a company could operate legally. With anonymization, the currency would be a vehicle for money laundering and drug sales. This would bring gov't intervention quickly. Realcoin will never work for this reason. On the other hand, if the company complies with regulation they will need to link every single txn to physical identities like in credit cards. The company would likely be liable for fraud committed by users to some extent. They would probably need to spend just as much as paypal to support their operation and would thus charge similar fees. What is the point of a company and currency like this? Why not just stick with paypal?

You need a solution that allows for decentralized or semi-decentralized and anonymous operation. Otherwise, all the other advantages of the currency will be lost. In order to get this, you will need to put the crooks in charge. These are the guys who are willing to operate a system which is a vehicle for money laundering and drug sales.
If you set up a system where the most profitable option is too comply with the rules, then even crooks will comply. You would do this by allowing the trustees to earn an income stream from the currency operation.

By the way I was still editting my previous post, a bad habit I know.

Would it do any good to use force of law in lieu of trust, such as by making an IOU coin, which like a cheque the giving of it into another's custody constitutes a commitment/debt to them?

This would bring us back to the often mentioned ripple concept, but as legally binding tokens of indebtedness...

(Mining would itself be contractual, IF you choose to have the coinbase of a block you mine include coins, THEN you are by the act of mining them commiting to redeem them...)

-MarkM-

The point isn't the $1, the point is, the people who initially bought the theoreticalcoins will get at least what they paid for them back, if they are used for a good/service it would be the same value in usd, if they hold on to them until all of the theocoins have been sold and the price goes free market, they might make a profit, they will not make a loss, so it would be good for a business to adopt and sell things for the same value usd/theocoin - IF we can remove trust from the equation

They can start of with 21,000,000,000,000,000 of the new coins if this is really a concern. The starting number is completely arbitrary. The important thing is that the number of new coins and bitcoins on reserve and the number of new coins in circulation are publicly observable. As far as them purchasing up all the bitcoin, this does not seem likely. Eventually, there would be very few of the 21,000,000 bitcoin left and the price for these remaining coins would be astronomic.

Seems like forum members could just as easily collude to run off with the backing funds as a company.  And I'd trust a legitimate company that complies with regulations with millions of dollars a heck of a lot more than a handful of forum members.

Just my opinion though.  I know the folks here love decentralization and complete transparency. 

I meant Drakahn's not actually visually bulleted in the markup "bullet points".

But once the issuers have sold all 21,000,000 coins and their price keeps going up, they might not be able to afford enough of a stockpile of the actual coins they propose to back to be able to throw enough on the market to keep their price from going "too high".

Thus the introduction of a new, "only a puny fiat dollar per coin" chain at such a time, relegating the old "only a puny fiat dollar per coin" chain to "oops, valuable blockchain coins, hoard them along with your bitcoins to back these new ones with".

(Using identical APIs for them all should keep it pretty trivial for commerce software to use the new coins, possibly just needing to know port number change and coin-name / symbol change.)

Re Edit Two, I have never seen any nation issue anything other than multiple pegged currencies. For example, pennies, nickels, dimes, quarters, dollars, fives, tens, twenties, etcetera, all pegged if only to each other...

RPG players seem to expect currencies to be pegged, like ten silver to the gold, five gold to the platinum etcetera. They actually find it kind of weird to think the number of one coin type you get for another coin type might change from shop to shop or time to time.

They actually seem to find the idea that a groupcoin is worth a thousand devcoins quite reasonable for example, being as how both produce the same number of coins per block forever but one produces a thousand times as many per block as the other.

-MarkM-

Are you responding to me? I don't understand what you are saying. Perhaps this is the source of confusion:

The trust can keep the price at a $1 just by committing to buy and sell for that price as denominated in bitcoin. Just because the trust's assets exceed $1 per coin does not mean it needs to let price rise.

Edit: I see you mean that something always worth at least $1 is not an improvement over bitcoin. It needs to be worth exactly $1. I agree completely.

Edit 2: I would like to re-emphasize my position that the pursuit of multiple pegged currencies is exceedingly foolish.
Network effects and trust are at the center of a currency's function. Trying to make many currencies simultaneously is just pissing network effects and trust away. It is doomed to failure.

I think we might already have a lot of those bullet-points with Bitcoin.

What we don't have though with bitcoin is the price not going way up above $1 *then coming back down*.

It almost seems as if with Bitcoin our main method of ensuring it never goes below a dollar is to keep it far far above a dollar so that even when it makes huge shifts in value those shifts happen way up in the $2 to $30 range, or like more recently, in the $3 to $8 range.

I think if we are merely wanting to trust they will be worth at least a dollar we have already had that for quite some time now. (Past performance, future performance gotchas of course might well apply...)

The plans my "national and multigalactic currencies" folk have been thinking of never planned to keep their currencies from going higher in value than the value they initially back them at at startup. Their idea had been that once all coins are sold the value could or should or would continue on up by market forces, eventually making their puny initial backing of only one fiat dollar - a value that grows smaller all the time - per coin become more and more irrelevant... Or they could then start to be thought of more like non-voting shares maybe, and be backed by 1/21000000 of the actual assets, including the cash reserve warchest of hopefully umpteen other currencies by then.

We have not yet tested how many blockchains one can "reasonably" merged-mine at once, so it is not yet clear when they would hit a limit of number of coin types if every time they ran out of one type, resulting in its value going over $1 per coin, they simply start a new chain they will back at $1 while continuiing to let the older ones grow in value, strengthening their reserves if they start using the older types as reserves.

In such a scheme your suggestion of using bitcoin as reserves is simply an example of using a/the older type as reserves for the new cheaper type.

-MarkM-

You are overlooking the central problems. If the currency is backed by US dollars, then how do we know that the public trustees haven't run off with the warchest. If we can't verify this, then why should we trust the trustees.

If the currency is backed by bitcoin, we can verify the size of the warchest in the blockchain. However, bitcoin could decline in value. If this occurs, then the face value of the backed currency would be greater than the value of the warchest. A factional reserve. This could cause a bank-run. To avoid this scenario, the warchest needs to have a $US value much larger than the value of the underlying currency it is backing. Otherwise, the moment bitcoin falls in value you will have a bankrun.

indeed, what i was looking for was a way to make the 'warchest' at least emulate decentralisation, and be the backing to a completely decentralised coin

Also to avoid taxes and fee's that would limit the ability to pay back at the same price.
Maybe have fee's for coins sold when they are less than a year old.

In the end i want to eliminate trust, there should be no need for anyone to trust:
that the coin they paid $1 will always be worth (at least) $1.
that no one will run off or gamble with the warchest.
that the law, government, bank or anyone else won't do anything.
That the money won't be stolen through fraud or other means

I do not understand this fixation on size of warchest.

2.1 million currencies each of which only ever sold ten coins at $1 each thus resulting in $10 warchest is still 100% backing, how does it matter how large your warchest is other than in proportion to your outstanding (not bought back yet) coins???

If you only ever sell zero coins, then a warchest of zero dollars should suffice. If you only ever sell 100 coins, a warchest of $100 should suffice AND need not exist until the coins are sold.

-MarkM-

Refer to the post which starts out earlier which starts out as...

"A feasible way of setting this up might be as follows:

1) Create an m-of-n multisig bitcoin account to serve as the trust. Find n trusted forum members to serve as signatories on txns. Any txn with m>n/2 signatures is approved. "

Hopefully, you will understand why the proposed solution is:

1) more transparent and thus more trustworthy than realcoin  (the size of the warchest relative to outstanding currency commitments is public knowledge via data in the two blockchains)

2) more robust to government interference than realcoin. (either bitcoin or n/2 trustees must be compromised for the system to fail.)