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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 c

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.

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.