Bitcoin Forum

National banks destroy the value of their currencies by printing money recklessly, even as inflation climbs into double digits.  As the money becomes worth less and government contracts begin catching up with inflation, such national banks find that they must print even more money to cover their expenses.

Would it be possible to add an altcoin to the exchanges that maintained the value of, for example, the 2013 dollar indefinitely?  That is to say, rather than award coins continuously at a predetermined rate, the different exchanges would be watched daily to determine if this altcoin's price were rising faster than some set rate, say, 1% per month, or 0.03% in any given day.  If it does, new coins are minted and paid out for proof-of-stake work done on client systems.

If the exchange prices drop, the network "shuts off the presses" until demand catches up, minimizing the damage caused by inflation, rather than continuing to emit new coins.

After quite a bit of searching, I've found the video showing Milton Friedman from his 1980 documentary Free to Choose.  This is the scene where he simply turns off the printing press in Washington, DC, and also discusses examples where the Japanese were able to curb inflation.  The Yen has maintained its value pretty well since 1978, and the Japanese people have benefitted enormously from this monetary discipline.

http://youtu.be/9K6V_UXNtgc?t=4m28s

Monetary discipline in Japan? No other civilized nation has so much debt compared to GDP as Japan!

You could start by having one that isn't traded as a commodity....once you do well you gotta take the ups n downs  :P

The only currency that doesnt lose value is a currency with no value.

You system requires some authority to set the rate so you are talking for something other than decentralized cryptos.

One could have some system to read the current prices on different exchanges, like "Bitcoin Ticker" does.  Calculating by total volume of transactions above and below a median or average price.  If the peer-to-peer network requires supermajority agreement on rewards (much like Bitcoin's 80% rule for new block generation difficulty), a supermajority could allow the production of new coins only after it's shown that there is some demand for new ones.

Sorry that I haven't gotten back to you.  There are many non-volatile or less volatile investment options on the stock market right now.  In the free marketplace, prices of many commodities and storers of value remain constant from day to day.  Right now, one can use dollars, which are slightly inflationary.  There are, however, no deflationary, or interest bearing options.

Successful businesses make money by providing what their customers want, setting prices and service levels in accord with the market.

a coin that can't be sold, and is premined and divided between as many people as a possible

Many of these proposed features can be automated.  Some may be easy to implement--even retrofit into existing, ailing coins--while others may later prove impractical or impossible.

What if the Block Chain "owned" some IT assets, like domain names, websites, files, photos, creative content, digital copyrights, other altcoins, Bitcoins, rights to music, books, etc.  They wouldn't have to be worth much, but if they could be sold to recover tokens and take them out of circulation, then you'd have a stable value.  Detecting a surplus of coins and a decline in price, assets could be sold to buy back Tokens on the market, thereby matching supply and demand.  Better yet, the Token Block Chain's reserve could be used to buy shares in websites that agree to accept Tokens for online purchases.  When inflation hit, shares in those companies could be put up for sale to lock Tokens back into the Reserve, taking them out of circulation.  At the same time, offers to buy shares with Tokens in exchange for expanding people's options to spend Tokens increases the underlying value of them.  In any case, dividends from many different Bitcoin/Litecoin companies would provide the slow income that takes extra Tokens out of circulation over time.

More dubious and much more difficult to implement (similar to the Federal Reserve's prime rate), either the Block Chain or the Token Foundation (like the Bitcoin Foundation, but managing a 2-3% premine) could offer a variable-rate interest loans (Borrowed Tokens) to exchanges, ecommerce sites, and companies that agree to accept the new altcoin for purchases.  If the price of the Token declines, you raise the interest rate on each Token lent out, which is accomplished by reducing the value of each lent "Borrowed Token" inside the BlockChain itself to cover interest.  That is to say that a Borrowed Token (as opposed to a Purchased Token) might be lent out at 2-10 mil variable (0.2% to 1.0% per month).  When inflation picks up, so does the Interest Rate and the value of the Purchased Token declines, those with Borrowed Tokens then see an increase in the variable rate, losing 3 or 4 mils per month from their Borrowed Tokens until prices stabilize.  In that way, those needing loans to expand eCommerce and other activities can gain access to inexpensive credit, while the Purchased Tokens do not change in value. (Any part of the loan can be repaid at any time with one regular Token, plus the "Interest".)

InfiniteCoin has no limit to the number of blocks that could be added.  Others have a fixed limit.  Perhaps another solution to volatility could be found in raising/lowering the final production amount daily according to market demand.  If one is trying to set the Token's value at one 2013 dollar, if market capitalization shrinks from $12 million to $10 million (a $1 Token is now worth 83 cents), then the final limit on the number of coins mined shrinks from 12 million to 10 million, while mining rewards are suspended.  However, if there's a surge in demand, increasing market cap suddenly to 13 million, miners are given the go ahead to begin mining (minting) new coins, while the total limit is raised automatically to 13 million.  In addition to "stopping the printing presses" until current demand catches up, the total number of coins minted can never be allowed by the network to exceed either current or anticipated demand.

The software that runs on each client can just take in information as to whether or not the exchange prices are rising or falling.  If they fall, just shut off the printing presses until market value recovers.  If speculators are pushing the price up, just increase the reward for mining to match rising demand.  Early on, the price will either go up 1% or not at all.  As the altcoin matures, it will be allowed to go up 1% per month, or not at all.

This is a great idea. I imagine it would need 2 be fast on the tech side but also for it have that kind of mining/ market response would be a demand; maybe a algorithm aimed at stimulating the market in a controlled way.... Maybe some kind of payout distribution protocol which avoids rewarding the greedy whales.....

is this turning into some futuristic form of socialism?

Not socialism, but not the gold standard either. 

In paper fiat, the printing presses can be run faster on a whim.  When the presses run continuously with crypto-currency mining, you eventually have more sellers than buyers.  To avoid volatility, the mining pool needs to be able to respond quickly with a reserve.  If demand greatly outstrips supply, the pools need to be able to "print more."

The value of any altcoin is in the trust and rapport that you have with the people who are promoting it.

eMunie's supply model attempts to do exactly this, mediating the value of the currency over the long and short term to try and achieve a nice, steady, predictable trend (be it up or down).

It's not infallible, so it can't protect against HUGE up/down trends over time, but it can iron out the daily large swings by closing the taps on supply/selling some of its own reserve until it catches up.

So if someone its attempting a pump, the system will use some reserves of its own to try and hold the price lower.

Alternatively, if someone is dumping out eMu to $ then the system will buy with $ reserves.  Also EMU dumped to another asset type is destroyed (no longer eMu), so it becomes more rare which in turn helps to hold the price up while the dump is happening until the supply catches up from the usual supply create process.

Isn't this exactly what we have at the moment?

The gains go to the owners, while the loses are taken by everyone - that sux!

The whole point of a value is that its shorthand for the faith people have in the product.  If you think its worth what its priced at, you buy it, but if you don't you offer less.  If when you offer less, but its not available for less, nobody is going to buy it, and its price will be wrong.

What is being suggested is that a coin will have a value that is above its market value.  All this does is give owners the idea that they have a valuable product, but one they can't sell. That is more like a white elephant!

You are correct of course...but the problem with Crypto atm is that the market size/cap is small and the majority of supply is spread over only a few holders.

Those holders then have the power to manipulate a market greatly, which leads to large profits for them, which hardens their grip over the market, which in turn causes large value swings daily, which blurs the real long term value of the currency.   (lots of whichs)

When there is a large buy in, whether it be for pump&dump or a buy-hold position, the ideal altcoin would somehow build up its own reserves, perhaps holding a mix of bitcoins and altcoins in its own Block Chain.

I've proposed a small pre-mine AND a parallel mine of 5-10%, in which an altcoin holds a reserve of both itself and other crypto-currencies encrypted in its own Block Chain.  When there is a sudden sell off of FIXEDtoken's, a consensus would be built up in the peer-to-peer network, recording the sell off and authorizing the sale of some of the bitcoin/altcoin reserve to take FIXEDtoken's out of circulation.

The problem is that there is minute-by-minute volatility is not the same as day-by-day selloffs.  Long term depreciation/inflation needs to addressed with a different mechanism, like adjusting the total number of coins mined.  For daily volatility, the Reserve could put in place a set of buy orders 2% below a Price Target, with a series of sell orders placed 2-4% above that target.  For day-to-day volatility (which entails larger volumes of selloffs), the program tightens down on the reward chain for CPU-GPU miners, since that can be recalculated daily.

welcome to the real world.

In every market there are people with large shares and people with very little, and those with lots will always gain more from even the smallest manipulative movements.

You cannot change this.

The theoretical answer is to limit ownership of coins to one per person, but the practical answer will be the formations of cartels of unions to try and built some power of manipulation within an unnatural vacuum.

Everyone had a chance to get in on the bottom ladder and buy thousands of coins when they were a few cents each. The fact that now those investments are showing a return should not be used as a reason to fine risk takers.

nw, I feel like you're arguing something that I'm not discussing.

Someone has to break the cycle of unlimited volatility.  If it is possible to have an altcoin recalculate its relative price in terms of purchasing power each day and make adjustments to its own operation, then it makes sense to create such a coin.  Of course, it would grow in value less that the more volatile altcoins, but it would be safer over the long run.

The exchanges are centralized authorities. I don't think that 's a good idea to give them the power to halt or resume coining based only on a price index.

There are several large exchanges that handle bitcoin right now, and many smaller ones.  As long as there are several, all of the buy and sell orders for a day can be combined to get an idea of whether or not there is currently demand for more altcoins or not.  If the demand exceeds tomorrow's price target by more than 2%, then additional reward coins necessary to bring the price increase down to 2% are divided up evenly (per number of MH-hours) among those who've been performing proof-of-stake work since the last reward coins were issued.

The simplest way to break the cycle of volatility is to grow the market. The process we are going through at the moment is very dramatic due to almost each sale having a visible effect on the price - that doesn't happen with fiat because the market is massive.  You would need to sell a few billion units to move the exchange rate by a decimal. In altcoin world, the pump and dump process can be financed with only 10 to 15 bitcoins

There is no need to spend effort on yet another super coin, just spend your time developing ways to spend the altcoins, and get regular people using it.  That will have the long term of stability you are looking for.

I'll never get any altcoin up to the billions in market cap and hundreds of thousands of users needed to get even the relative stability of Bitcoin.  Of course, few people are willing to accept the volatility of this comparatively small market overloaded with short term speculators who create price spikes which make it difficult to buy in (and scary to own).

Using two different short-term mechanisms together with one or two long term mechanisms helps transform price spikes into reserves, which can then be used to support the altcoin itself.  This isn't rocket science.  This just requires that we use our heads and give the altcoin open source peer-to-peer mining/wallet client enough intelligence to know that it should never approve a big coin reward to the mining pools unless the demand for FIXEDtoken's is on the rise, among other mechanisms.

WDC is a great choice today.
It is developing fast track and it will go up.
It is backed by a stable foundation.
It has limitations in coins minted (which I love in this coin the most).
The security issues are being handled, this has the best potential to be the next Litecoin - if not more. Based on the limitations of issued WDCs, the expected rate is 0,1 BTC so why not to crab a few thousands today at these prices?

Does it have a mechanism to stabilize its value based on the current market price?

One of the biggest tasks for monetarists (those who believe that any fiat currency should keep a fixed value) is figuring out what the current inflation rate actually is.  In the United States, it is generally understood that the Consumer Price Index is an understated measure of inflation.  Many professional economists believe that it's understated by 1.0-2.0%, but many consumers and even some economists view inflation at about twice that predicted by CPI.

For an internationally used currency, governments should be attempting to keep inflation below 2.0%, but price changes vary widely.  The same volatility exists in the precious metals market, which gold, silver, platinum, and other currencies fluctuating by a factor of two or more in one year.

To more accurately fix the price of an altcoin, one might simply average the price indexes of several major world economies, then simply add 1.0% to get a conservative view of inflation, but this would put the altcoin at the mercy of the international financiers again, since they can always make slight adjustments to those market indexes.

Another technique is to use a basket of currencies, metals, bitcoins, etc.  One could even use the lowest/median/highest price of metals over the past year to minimize volatility.

Turning off the printing presses is easy.  Knowing when--and for how long--is another matter.

INFINITECOIN actually has a hard cap of 90.6 billion coins. Also if you are looking for stability IFC has it. Just look at its performance during the last few market slumps.

You know, no one has a greater interest in having an altcoin preserve its value than its own adopters.  The problem is that each one have objective and subjective criteria for measuring inflation.  Using a peer-to-peer system, each holder of these coins could run their own monitoring protocol in their wallet program (taking in input from precious metals prices, CPI, PPI, exchange rates, etc), then simply produce a real number: whether or not to pay out interest from the BlockChain and how much.

As time goes on, adopters have an incentive to download more reliable measures of actual inflation.  When a majority of clients (wallets) agree that prices are dropping relative to FIXEDtoken's, they send a number up through the network that relates to the interest to be paid out to everyone holding coins in a savings state (Time Deposit, Vault, Wallet, etc) in order to keep the value of each token fixed over time.

When a simple majority of adopters believe that the FIXEDtoken is beginning to lose value, the "printing presses" stop until demand catches up.

I looked over InfiniteCoin's price volatility, and it actually seems worse, to me, than either Bitcoin or Litecoin.  If there is no mechanism in place to retire (or prevent production of) supply when demand is going down, then the holders of the coin are forced to take the loss.  If there is no mechanism in place to discourage currency speculation, then most of the price of a crypto-currency becomes speculative, rather than actual.

I still don't have an answer to the question I posed months ago:

Dude. If you are looking for "security" in cryptocoins, particularly altcoins, someone has  seriously misled you. Any of them could be at zero tomorrow. They *are* all speculative, even including bitcoin. If you can't afford to lose money, why on earth are you talking about altcoins and how to assure they don't lose value. Completely bizarre ....

So let me ask the question this way:

Well, 65%, so far, have at least viewed a stable value coin as desirable, if it were possible.

How to implement it?  Target adopters who are the most risk-averse.  Miners and users can download different inflation profiles to their wallets.  Each profile may read different market indicators from across the Net, each with its own methodology.  Block rewards for proof-of-stake mining would remain at the minimal one coin per block, with a med-high difficulty that increases slowly. 

At some point, different clients begin to notice that the FIXEDtoken's purchasing power (compared to precious metals, CPI, various international currencies, other altcoins, land, etc) is beginning to increase by varying amounts.  Each client then transmits a double precision value to the rest of the network as a vote, of sorts.  When the majority of votes are for producing more tokens, reward coins are sent out to miners and wallet holders as a fraction of the number of tokens that they are holding or have mined.  Instead of producing the same number with each block found, the reward is the median of all of the votes cast.

In order to keep each token's value constant over time, these rewards are not generated unless the majority of clients and miners believe that it's value is increasing in real terms at the moment, and only as many reward coins sent out as there is demand at that time.  When the perceived value is going down, the "printing presses" stop, and the reward is reduced back down to the minimum on one token for proof-of-stake work.

Don't invest it in anything. No chance of loss.

Then you're holding on to Federal Reserve Notes, which lose value over time at unpredictable rates.

There's a market there for a less volatile altcoin.  The folks who are still here have just gotten accustomed to fluctuating prices.  There are investors who play the stock market, and then there are those who focus on other areas in the private sector.  At some point, there's a need for fixed storer of value that is, if anything, slightly deflationary.