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I believe there is an elegant way for regulation. Regulation authorities just have to "taint" the coins according to some rules and publish the result. For exa

I believe there is an elegant way for regulation. Regulation authorities just have to "taint" the coins according to some rules and publish the result. For example they say which coins are clean and which are dirty and define a rule that upon a transaction you must first spend away your clean coins (the clean and dirty coins sets are updated by watching the blockchain). By creating such an overlay currency over an exiting one they can provide incentive for actors to self regulate (i.e. you won't be willing to accept coins which you know are dirty if it means you won't be able to cash them out). Anyone can create such an overlay coin (I call them rainbow coins). For example you can define a rule which will add a stamp to coins which go through a specific address (The idea being that people then send coins to this address, you send them back a fraction but this fraction is now "stamped"). What is great about this solution is that it can be applied to all public ledgers. It doesn't work for the crypto currencies which don't have a public ledger (like Monero, Zcash, ...) but those are more risky per nature, as any implementation bug could mean that all the money can be diluted away and nobody would know.

IncRnd 9y ago
Other than people not being able to use all coins in their possession, how does tainting coins achieve "an elegant way for regulation"?
- GistNoesis 9y ago
  It is elegant because you don't need to force people to switch to another complex crypto-blockchain that no-one will adopt. But there is more depth to it : As an authority, you express your policy goals via a set of rules which grants you a fine policy-making abilities, and then either the market takes you into account and self-regulate to respect your policy or they give you ground for a global ban (but most likely some people will endorse it through fear and the others will have no other choice than to follow or be the one with the "hot potato" (divide&conquer) ). But as every good tool/technology there are always multiple facets, and it can also be used to create value : The beauty of decorating the ledger is that it allows to tie ethic to money. For example you can define some decoration rules, which can help promote environmental practices. For example you receive green coins when you donate to wwf, or when you interact with an eco-friendly business. (green token aren't new but the fact of it being public info is) The great strength of this is that you are no longer bounded to be a summing to zero ledger for your decorated coins. It can also helps people to cluster and transact only with people which shares some common values. For example if you want to avoid touching drug related money, then you can choose not to. You can also reward with some coins certain behavior, like transactions between different communities which create out of thin-air coins received by both parties. It gives you fine knobs to adjust your economy. You can build an e-reputation system upon these. It probably can be exploited but it's not so easy as because all the books are public it removes incentives to cheat as you risk being marked. You can create "coins that can't be bought". It is kind of fingerprinting your economic behavior to tell society what you want it to become. If you can convince some people to share some set of values these rainbow coins can help you smoothly go from "ignored by society" values to values which can bring you new customers.

IncRnd 9y ago

Other than people not being able to use all coins in their possession, how does tainting coins achieve "an elegant way for regulation"?

GistNoesis 9y ago
It is elegant because you don't need to force people to switch to another complex crypto-blockchain that no-one will adopt. But there is more depth to it : As an authority, you express your policy goals via a set of rules which grants you a fine policy-making abilities, and then either the market takes you into account and self-regulate to respect your policy or they give you ground for a global ban (but most likely some people will endorse it through fear and the others will have no other choice than to follow or be the one with the "hot potato" (divide&conquer) ). But as every good tool/technology there are always multiple facets, and it can also be used to create value : The beauty of decorating the ledger is that it allows to tie ethic to money. For example you can define some decoration rules, which can help promote environmental practices. For example you receive green coins when you donate to wwf, or when you interact with an eco-friendly business. (green token aren't new but the fact of it being public info is) The great strength of this is that you are no longer bounded to be a summing to zero ledger for your decorated coins. It can also helps people to cluster and transact only with people which shares some common values. For example if you want to avoid touching drug related money, then you can choose not to. You can also reward with some coins certain behavior, like transactions between different communities which create out of thin-air coins received by both parties. It gives you fine knobs to adjust your economy. You can build an e-reputation system upon these. It probably can be exploited but it's not so easy as because all the books are public it removes incentives to cheat as you risk being marked. You can create "coins that can't be bought". It is kind of fingerprinting your economic behavior to tell society what you want it to become. If you can convince some people to share some set of values these rainbow coins can help you smoothly go from "ignored by society" values to values which can bring you new customers.