Bitcoin Forum

Fellow Bitcoiners,

   All of us are in the prisoner's dilemma. What I mean is that we would all be better off if the price is stable and held our bitcoins (this rule does not apply to purchase of G&S) rather than selling them. Stability would result in more merchant acceptance, and the price would go up, while instability may result in failure of the bitcoin and adoption of another P2P decentralized system. Furthermore knowing that a sell off is not going to occur would result in added confidence and more people buying in to the BTC economy.
  
   However because we believe that most others will sell first, the value of our bitcoins will go down anyways, therefore we might as well sell and beat others in the race to the bottom, basically it is profitable to betray the bitcoin community. In the Prisoners dilemma, the reason the logical result is betrayal is because the prisoners were isolated and could not communicate, however with bitcoin not only can we trust each other, but we can verify what we are saying. If we were to form a union, a pseudonymous system, members could pledge not to sell off their bitcoin. A score of some sort, based on parameters that will be defined by the community, can credit a members contribution (amount of btc) and loyalty (odds he will follow through with his pledge) to the  union. The union could act as an escrow. For example the union could provide proof that 40% of the BTC that is in the "cash flow" has been locked away, release will occur in 1 year or if BTC goes below 100, whichever comes first (Timelock can be done in the protocol and the union would not have to be trusted with a potentially large sum of BTC).
  
   Simultaneously action must be taken to avoid price inflation due to a liquidity squeeze, and deflation due to a sudden abundance of liquidity when the funds are redistributed. A combination of a system mandated function, that distributes amounts of time and money available into different pools based on an algorithm, along with rational human intelligence and cooperation are necessary to minimize "price bumps" that such a scheme would produce.
  
   I feel like its in everyones best interest to see something like this happen. Most people hoarding would be willing to lock away their bitcoins to see them rise in value. Stabilizing and having an index is something necessary to reduce speculation and see bitcoin really take off.

If you believe in this project feel free to start developing, or adding more BTC on top of my bounty.

PS My bounty goes to the person I deem has created the system for the "successful union" after the time that it has seen reasonable adoption of 10,000 members or 1,000,000 BTC whichever comes first.

Thank you for posting this, I really think it has a lot of merit and you've raised some excellent points!   I particularly find the points about locking up liquidity helping stabilize the currency along with likely increasing prices to be powerful. 

My concern would be specifically around constructing the environment to facilitate this type of transaction.  The tighter the controls on such a system, the more trust required.  For instance if we had a single lock fund that was centralized, potentially it's a huge target from a legal perspective if the identity of the person who maintains it is known, and then if they are not known (or even if they are) there's a tremendous potential for funds to be walked off with.   So I think this would be out.   A "gentlemen's agreement" provides too easy an incentive to break it, even if there was some form of penalty tied to activity coming from an account (not sure what penalty would be best to employ?).   

So as trust is key, let's start off with creating an open source application that will generate a public address, but will split a private key into two parts, the first is given to you via email upon the deposit to the "lock box" address that was generated.  The second half of the private key would be stored in a centralized database, which would maintain the user login, email address, and public key address.  After an agreed upon time-frame the users would receive back the second half of the private key so they could redeem the funds stored.

Now, outside of the rise in prices associated with the liquidity being tied up, I'm thinking like you noted we'd need to address emergency needs users would have...so maybe address it like a 401k does, there being an early withdrawal fee...which then gets redistributed back to all users who have maintained their balances in their accounts.  The potential gains by keeping your funds in over the time frame, along with a stiff fee for an early withdrawal should serve as enough incentive.

My only other concern on such a system would be that the centralized database that stores the second half of the private keys would be a big target by many for attacks if it is known that such a large number of bitcoins could be permanently wiped out.   So there may need to be some creative problem solving around that, maybe use replicated servers that would serve as deadman switches and would trigger emails after the original time frame if a disconnect occurs with the original central server. 

Anyway, figured I'd just get the ball rolling with some ideas, would love to see this get some traction as well!   It's interesting because using such a system it would potentially be feasible to actually create a "savings" account where "interest" would be generated by those withdrawing early.   

Hi thanks for the appreciation.

The system would not be centralized. It would be decentralized and use the blockchain as an escrow. There are ways to create wallets that act as escrows...it requires technical knowledge, but that doesn't mean you need the technical knowledge to do it, its sufficient that whoever sets up the escrow knows what he is doing, and the tech members of the comment confirm that it is legit, and viola you have an open source escrow system based on the blockchain.

I feel that people wouldn't put any money they could need in an emergency in the system....people would put money that they know they won't need, and in the rare case they do I do not think that someone would use this system if a penalty is induced upon his exit. This sounds a lot like banking and although I agree financial incentive is necessary, I am not sure wether this is the way to go about it, I do agree that an additional incentive model should be produced.
We see an epidemic of bitcoin millionaires reinvesting in bitcoin, to make there remaining BTC more valuable, a great example of this is Roger Ver. This is the kind of ideology to push this model ahead. The ability to stabilize BTC is very important and people would realize that participation in this system could lead to amazing results

I have developed a system and it is 100% ready to start running.

I was hired by an OutSourcing company to do Funcional Testing for a Bank :(   ugly ugly job

By the third date at the office, I showed my Boss and the person behind me what I develop in just three days at work.

The person behind me made manual credit card transfers. 200 daily Maximum
By the third date, in a matter of minutes this application automatically made 5000 successful transfers.
Means all of the accounts the company had in Queue.
By the fourth date we took care of Credit Card automation testing, previously in charge by Offshore in India.

I already transffered my knowledge into Bitcoin
and it is working,
using blockchain.info API   has been useful, and will continue to be
but certainly we or I could make this work far better with json or mainframe like system.

I have already been answered from a btc-expert
that I can start my own system with similar traits to the project you describe.
I want to start very very soon.

I already have purchase the domain name we will use.
and it is currently held at other domain name.
But I can not show at this moment for matter of "Security"?

I don't know but I feel I could be very welcome in your "idea" ?

Watching this interesting topic. If you guys need funding for this, drop me a PM and I will hook you up with the founders members of bitangels.co

You discussed a project where you "transfered you knowledge into bitcoin and it is working". May I ask which project this is? Are you a programmer?
Either way it seems you are quite intelligent and I would love to have you on the team for this project.
Also depending on your set of skills (credit card processing and money flow operations is what I need ATM) I would be happy to talk to you about other projects I am working on

Thanks for the appreciation. I dont think money should be a problem here but you could definitely contribute in getting some of the more reputable bitcoiners to publicly support the project and give it legitimacy, I dont think such a proposition could be successful (even tho the money cant be stolen from the tech POV) without some of the Devs saying it is legit.

Yes, yes you can ask, and I can reply later today.

I worked as a programmer right from and after University.  But I do not consider myself a programmer, programmers love to program.
I did like it very much for some years. And still do program, but only work on this application and for couple specific paid projects I had the skills and was available,  because I have no job no more.

1 year and almost half ago, crisis happened when I had an idea of earning a living a different way.
I quit my job the next day.

@the banking institution
I did work on those old legacy systems, mainframe, cobol, dba...
regarding,
Money-flow:  my service for the bank was limited to the handling and registering  of testing charges and-or deposits, deducting/adding to/from accounts, and validating(matching cvv and cvv2)
matching Excel with DBA
plus other Excel Macros that did the job for us all, and we crashed the starbucks cross the street those 20+ minutes while computers were processing :)


I am interested in the conversation and in any project that means a better world.

Not gonna work. Just setting BTC up for a bigger fall.