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To the extent that blockchains have a killer app, it's going to be fungible contracts-for-difference. They make this sort of asset-backed cryptocurrency irrelev

by natrius 11y ago

To the extent that blockchains have a killer app, it's going to be fungible contracts-for-difference. They make this sort of asset-backed cryptocurrency irrelevant. Even while cryptocurrencies are unstable, you can build stable derivatives on top of them that track any price you choose. You can peg a cryptocurrency to gold without needing to hold gold, but more importantly, you can peg a cryptocurrency to anything. Instead of the oil-driven currency instability many countries are seeing today, their currencies would be pegged to their local prices indexes. Everyone will have stable money, not just people in the developed world.

wuliwong 11y ago
I haven't really thought about the idea of pegging crypto-currencies to something. I'm trying to think how this works and keep running into some walls. In the case of this article, my presumption is that basically this company is selling their gold to you and the cryptocurrency part serves like the contract. In general though, pegging a currency by any group other than a government seems to require that the "peggers" actually possess the asset. Maybe another way to pose the question would be, if I were to want to create a cryptocurrency pegged to the CPI in the US, how might I achieve that. How would the first units be issued, to whom and for how much? I've done some quick searching/reading about this topic but I figured I'd drop a line here before the discussion got too stale.
- natrius 11y ago
  The first units of such a currency are "issued" when someone takes the other side of the bet. If I think bitcoins are going to be worth more soon, I can offer to pay the system $100 worth of bitcoins to generate 100 cryptodollars. If the price goes up, I make a profit because the size of my debt shrank. If the price goes down, I lose money. These systems require the speculators to lock money in the system as collateral to handle price swings. Meanwhile, anyone who wants stable cryptodollars can use them without price fluctuations. There are several ways to peg a cryptocurrency to a price described here: https://blog.ethereum.org/2014/11/11/search-stable-cryptocurrency/ https://blog.ethereum.org/2014/11/11/search-stable-cryptocur... Here's a slightly different method built on top of Ethereum, a platform for defining transaction logic on a global database: https://www.reddit.com/r/ethereum/comments/30f98i/introducing_edollar_the_ultimate_stablecoin_built/ https://www.reddit.com/r/ethereum/comments/30f98i/introducin... We can create currencies based on any price, whether it's the price of an existing currency, gold, or an abstract price, like a price index. This ability will change the world. My email address is in my profile if you have more questions. There's some fascinating stuff going on out there.

by natrius 11y ago

wuliwong 11y ago

I haven't really thought about the idea of pegging crypto-currencies to something. I'm trying to think how this works and keep running into some walls. In the case of this article, my presumption is that basically this company is selling their gold to you and the cryptocurrency part serves like the contract. In general though, pegging a currency by any group other than a government seems to require that the "peggers" actually possess the asset. Maybe another way to pose the question would be, if I were to want to create a cryptocurrency pegged to the CPI in the US, how might I achieve that. How would the first units be issued, to whom and for how much? I've done some quick searching/reading about this topic but I figured I'd drop a line here before the discussion got too stale.

natrius 11y ago
The first units of such a currency are "issued" when someone takes the other side of the bet. If I think bitcoins are going to be worth more soon, I can offer to pay the system $100 worth of bitcoins to generate 100 cryptodollars. If the price goes up, I make a profit because the size of my debt shrank. If the price goes down, I lose money. These systems require the speculators to lock money in the system as collateral to handle price swings. Meanwhile, anyone who wants stable cryptodollars can use them without price fluctuations. There are several ways to peg a cryptocurrency to a price described here: https://blog.ethereum.org/2014/11/11/search-stable-cryptocurrency/ https://blog.ethereum.org/2014/11/11/search-stable-cryptocur... Here's a slightly different method built on top of Ethereum, a platform for defining transaction logic on a global database: https://www.reddit.com/r/ethereum/comments/30f98i/introducing_edollar_the_ultimate_stablecoin_built/ https://www.reddit.com/r/ethereum/comments/30f98i/introducin... We can create currencies based on any price, whether it's the price of an existing currency, gold, or an abstract price, like a price index. This ability will change the world. My email address is in my profile if you have more questions. There's some fascinating stuff going on out there.