Topic: What do you think? Bitcoin's RGB network and national currencies (Read 400 times)

It appears that this technical challenge is being overcome by the development of RGB.

I have also learned that many countries are trying to figure out how to have their own crypto currencies based on Bitcoin becoming a bit more mainstream. I do not doubt that within the next 4-5 years there will be some nation in the world that adopts a cryptocurrency or allows it for payments of government services.

This strategy would give the nation a transitional period while also providing them the huge benefits of a currency with DEX, smart contracts and fast low fee transactions.

I have spoken to some people here in Panama that are open to the idea (Panama uses a national currency pegged to the US dollar). The government started working on a cryptocurrency during the pandemic when they were giving out food vouchers to people, they wanted to have the cryptocurrency used for the vouchers accepted at all of the grocery stores.

We already have stablecoins in Tether, DAI, USDC and others so the idea is not too foreign. Having a stablecoin using the Bitcoin Lightning Network that eventually transitions into the nation using bitcoin as their currency would be even better.

It looks like they plan on inflating the dollar to trash status, in so doing they would eventually lose Panama as a nation using their currency. And Panama would then prosper with a currency that doesn't purposefully lose value over time (they really get screwed by using the dollar, the US prints the money and spends it while Panama's currency loses value).

Yep, it was back in 2010 or so. The guy who built the seastead went there to encourage them to integrate Bitcoin as their currency.

Of course, several people go there to try to influence them on many things. He said that there were people there from the Phillipines asking for fishing rights. In exchange they got the president(?) a brand new mercedes to drive around. On an island with about 5 miles of road. He said the guy there who is in charge of the FIFA vote has a lot of power as his one vote is equal to that of other powerful nations. He was there at the same time as congressman Alan Grayson but he did not know what he was there for.

Sorry to sort of hijack this thread but welcome back Elwar, and we're so happy to see you! And really, that's all. Hopefully, the last few months of Bitcoin price developments will be some comfort to what transpired, but onwards and upwards right?

On coloured coins: you guys heard about Spectrum?

Speaking of Tuvalu: I asked someone from there and they never heard about the Bitcoin attempts. Strange for such a small place I thought. I wonder how many people bought their passports.

The only thing buying all of the colored coins would do is stall the conversion to bitcoin at a price of 100 times the bitcoin price. They still have fiat until that fiat is no longer necessary.

The key hurdle here, I believe, is technical as opposed to economical.

Having a country using colored coins in such small denominations as their cash requires a lot of tiny transactions. This cannot be done on the blockchain as the minimum transaction needs to be around 1k satoshis. It would need to be lightning network based. You would likely need some centralized lightning nodes to handle the transactions because on the Lightning Network you cannot see the source address. So you could send some non-colored coins (bought cheap) to the colored coin network.

I have not figured out this technical challenge.

So you're basically saying that a country can also destroy Bitcoin, because they can buy all the bitcoins, right?
A country could simply set some fake shops subsidized by them that only sell in Bitcoins, some exchanges with insane low fees and simply get bitcoin after bitcoin without putting buy orders drive price ups and burn them all once they get them.

Why would this strategy work with a small country with a few tens of billions in monetary mass and no with Bitcoin (remember that those 200b include all the lost coins also),

Anyhow, the solution would be pretty simple.
The small country could issue a rainbow coin for every coin that has not moved for x period or for every coin that has been detected as "burned". Just as they do with banknotes that get trashed.

The problem I see with this is as follows. Imagine a scenario where a economical strong country wants to destroy an economy of a bunch of smaller countries, so they buy the colored coins of that country and deposit it into a "Burn" address and effectively destroy the currency of that country.  

We do not use colored coins because colored coins can be targeted for whatever reason, so each Bitcoin is the same and no individual or group or country can be exploited or manipulated by actions like this.  

In any way, governments want currencies that they can manipulate, so they would rather opt for a option to create their own "GovCoin" that cannot be manipulated or exploited like this. 

This idea was pitched to Tuvalu with a new coin.

That new coin was called Bitcoin.

They had a fair shot.

If this were to happen a new crypto would have to be created to give everyone a fair shot at the launch.  Bitcoin is already massively skewed towards the whales with very few people in the world even own 1/10th of a coin.  Barely anyone knew about BTC at the start, may as well call it a premine.

Yes, the likelihood is certainly low. But just having one small country try it and become successful leads to a domino affect among all other nations.
I just think it would be good to hash out a sound strategy that could be executed if the right government gets put into a position of power that supports crypto.

There would really be no way to "issue" stable colored coins. You are issuing 1 satoshi per "coin". That one satoshi may start out with a price of .001 cents, and fluctuate based on the bitcoin value over time. But people will still have satoshis. When the time comes that one satoshi equals one cent...then you can't dictate what the value is. People can now use that one satoshi as a cent anywhere in the world.

You're essentially putting bitcoins into the hands of the people. Initially a tiny percentage of your overall money supply. Not enough for anyone to really notice. But as the price rises that percentage becomes larger and eventually dwarfs the value of the fiat in the money supply. Such that the fiat currency becomes irrelevant. This will happen globally but on a longer timeframe. Focusing on one forward thinking nation would boost their economy to the moon. All it takes is one intelligent politician in power (I know, not a likely scenario).

You do not really need to do all of that to make a nations money tied to bitcoin that way. All you have to do is to go back on gold standard but instead have bitcoin standard. So, you can still have banknotes and changes and what not but whatever the federal reserves printed they just have to follow that up with having as much in bitcoin as the amount they printed. So lets say all printed money equals to 100 billion dollars, they have to have 100 billion worth of bitcoins on their wallets as well.

Hence, that way the nations money will be pegged to bitcoin as well. It is still not possible considering bitcoin is a global thing and any increase or decrease would make insanely bad changes in nations economy, like if bitcoin drops too much than nations money all goes down in value as well.

Know that in this world, we have many great intelligent thinkers like you, and I am sure there would have been someone also close to government and financial institutions who would have also thought of this great idea, especially the ones that are believers of bitcoin, but with your idea, we still need the involvement and support of government to make it happen, and this has to be anonymously agreed on by all government through a treaty to make this happen.

Nevertheless, the reason why some government jettison the idea of using cryptocurrency, especially that of bitcoin as global currency or would allow it to see the light of the day as global currency is because of its decentralized technology which makes the transactions within it invisible to the government, and this is the big issue with crypto and government.

Glad to hear that, stay out of trouble


Yeah, there was a little or a medium size misunderstanding.

I thought that the currency switch will be done at an x moment, well before the rate would arrive at the 1 sat /cent moment and this is why I assumed that people will try to speculate on the price.
As you say when it will hit such huge value probably there will be no more such dramatic swing as we experience unless we have a war or economic crisis that would affect the economy anyway, so people won't be tempted to try to outsmart the bank when the conversion is done.


Sounds logical but I'm not sure any country would embark on such a project anytime soon.
Probably even if they would be half convinced this is a good thing they will hold a referendum for this and I'm willing to bet that not only now, even if we talk 4-5 years from now people would vote against this.

And now that I think about, I believe a lot of governments would only complete half of the plan, issue the stable colored coins, print as many as they can and use them to cover up government expenses forgetting about the second stage and so the value of 1sat/cent would be achieved by the cent being worthless not the other way around.

Thanks for the informed response. And for welcoming me back...I am finally in a safe location and feel a bit more comfortable being on the Internet again.

I am not sure if we are understanding each other on this. The colored coin would originally be pegged to the national currency.

So in your example, the colored coin would be pegged to the Bulgarian leva (which is pegged to the euro). You are correct in assuming that the price of bitcoin would rise quickly once it is announced. So, say the bitcoin price jumps 30% on day one. If it is pegged then the rate will be the same. Nobody will notice the change in the underlying bitcoin. The value of a colored coin is determined by consensus. If the colored coin value is established to be the rate of some national exchange or some combinations of euro exchanges, then it will maintain the peg until 1 satoshi equals a set amount (ie .01 leva). When BTC is worth close to $1 million each then it is very likely that there will be no huge swings anymore.

Having competing currencies may work too.

I just think it would be wise to strategize how it could possibly done in case some bitcoin friendly government is ever elected somewhere.

My friend went to Tuvalu when the price was around $2 encouraging them to switch over to bitcoin as their national currency.

They could be richer than the US right now if they had.

As for having the money up front to do it...I think if there is a list of addresses used as gateways into the colored coin addresses then one or two exchanges in the country could be used. Instead of having all of the money up front, as people start converting their fiat into the pegged coin it goes to that address. Leva exchanged for euros which are exchanged for bitcoins which are then filtered through that address to become colored coins (colored leva). The key being that over time, it won't matter if they are colored or not anymore as the values would match and the peg would be lifted.

First, welcome back! I'm not lurking in the WOT anymore so I wasn't aware you're back:P

Now, the first problem with this theoretical approach is the need for such an amount of for collateral coins.
Let's talk about a real-life scenario of a pegged currency, Bulgaria, which uses the leva but it's pegged to a value of 1.95583 leva = 1 euro,  without the Bulgarian central bank reserve having enough euros to cover all the monetary mass, in their case it's about 1/2 if we consider only m1.

Second, it would be that the mere gossip of a country embracing bitcoin would make the price skyrocket and thus dropping the requiring coins for collateral.

But, there is a problem with both your scenario and mine.
The rate of fiat vs bitcoins or colored satoshi in your case.

Once any nations go and plan to do this, the soaring price of Bitcoins will make the transitions very dangerous for the economy, since the growth of 30% of the price in one day since the start of the campaign will make people want to convert their assets first and some will try to avoid the mess and use a different fiat currency for a while, hedging their valuable in euros, usd or something else , exporters avoiding shipping and both employees and employers wondering what to use.

In both cases, the bank will have to set a standard value for their fiat against bitcoin, and some will try to avoid this rate as most likely it won't be advantageous for everyone.

No matter how many steps you put between btc and fiat, at once a point when you will do the transitions you will have to use a value for BTC for a while, and BTC is not known for keeping value for too much, a 20% swing might either make one's economy rich or send it back to the stone age.

So, the use of an intermediary won't solve the problem, it would rather be far more important for bitcoin to achieve itself the goal of a worldwide currency and stabilize on its own due to economic limitations before being adopted for real by countries as their main currency.


It doesn't sound nice but in BD and Economics section, it's better to use self-moderated topics to prevent two lines of spams.

This is both hard to understand and implement too. Colored satoshi idea is just not suited for a currency which is not physical. The best idea can be to allow and legalize bitcoin in your country and use them as a means of payment. Although government will lose control over the currency, but this is the only way we can shift to bitcoins and digital currency.

      It could be very complicated to replace the national currency by bitcoin since not all people and also government officials are not interested in bitcoin but gradually people using BTC especially in gambling and this the only thing that makes sense for bitcoin as of now .

I think it's impossible that national currency will be converted to bitcoins but it could happen but not gradually convert national currency to bitcoins instead they'll create a blockchain based platform that the currency is backed by the national currency or in short creating a digital national currency which the value is the same as the fiat currency but faster in transaction and more.

It would change every moment and then when you go and buy some stuff you will have to change the value if you are well informed and if not then the shopkeepers might make a good use of it .
Kids and old people will be duped for sure , this isn't something that will work until and unless there is some price telling thing with everyone at every moment and that is not something everyone can afford, thus I don't think it can ever replace fiat , in places where everyone is above the poverty line and infact well above the poverty line they could afford that thing but I don't think there is any nation like that.

I don't think that we need colored coins in order to convert any national currency into bitcoins.
If bitcoin really gets mass adopted and used on a daily basis by millions of people,the btc price volatility will become way lower,thus it will be way easier to buy btc without any future losses.

Oops...ventured into the dirty part of bitcointalk...forgot how it was out here.

NVM