Bitcoin Forum

Hi, i'm here to talk about an "idea" that poped in my mind just when i wanted to sleep last night (that's always like that ... can't sleep after ...)

What money/currency has not instead of a lot of "measures", the unit :

When you use any unit of distance, you can express it in meters.
When you use any unit of time, you can express it in seconds.

When you use money, everyone use something different. Most of the world express it in Dollar or Euro.

But it's not units, it's currencies, that fluctuate all the time.

Sometimes sellers have to change their prices in "real" money because of the fluctuations, but with digital currencies, the prices are never the same.

Example of a sandwich sold by a baker

Let's say that a baker that sell is sandwich at 3$ want to use digital currencies. So he will try to use BitCoin and use the equivalent in bitcoin to the price in $.

But because of the fluctuation he will have to change the price everyday or so, not to sell it too cheap or too expansive

http://www.universalcurrencyunit.org/img/withoutunic-small.png

Like i've read in a french article (http://www.francetvinfo.fr/economie/votre-argent/j-ai-essaye-de-payer-mon-sandwich-en-bitcoins_504713.html), a journalist tried to buy something in a bakery "accepting Bitecoins". But the baker had stopped to took Bitcoins, because he thought he couldn't keep with the pace of this currency.

Why not use a fixed unit ?

So i thought, if we could use a international/universal unit, like any measures, could it make things easier ? (Like gold was used before i think ?)

That's what i mean by 'universal currency unit' (or 'unic' / Uc)

If you set a FIXED unit, and put currencies value with it, you can express every currency in this unit, exchange what you want of this unit using many currencies.

For digital currencies which have a very fluctuating value, maybe a short life, would it be really useful ?

And you can set something that is not related to any country (because even real money can be expressed in it)

So for the case of our baker, he could give the price of his sandwich in Unic and his country money (like we had for euro when it came)

He will just have to say what currencies he accept

http://www.universalcurrencyunit.org/img/withunic-small.png

So i think this would help to make seller accept better the digital currencies

Or maybe i'm just a fool, and for sure i forgot a lot of parameters ^^


What's next ?

if you think it's an interesting idea, vote for it.

If you would want to create something on that, or discuss more about it, i'm about to make a forum (http://www.universalcurrencyunit.org/).

If you think it's really stupid, say it too  :-X

(ps : i will rewrite this post, it's a little messy ...)

Could only think of this

https://i.imgur.com/MHKgqrp.png

The dollar is about as close as you will get to a universal unit of value. Units of gold used to be the universal units of value. That system didn't work very well (or it worked too well, depending on who you talk to).

The euro is a modern example of a universal currency, so if you want to know how well or how badly a universal currency works, take a look at the euro.

Finally, having a universal unit of value doesn't prevent prices from changing.

What you've done here is reinvent money. It's not actually necessary as money was already invented quite a while ago. Let me explain what I mean:

Money was invented because the barter economies that existed before money weren't scalable. If I grow tomatoes, and I want to go to the market and buy cucumbers, oranges and apples, I need to decide how many tomatoes I'm going to pay per cucumber, how many per orange and how many per apple (assuming the cucumber-grower, the orange-grower and the apple-grower actually want tomatoes to begin with). Therefore, the market has to undergo price discovery based on supply and demand, for every pair of tradable goods. There needs to be a tomato-cucumber exchange rate, a tomato-orange exchange rate, a cucumber-orange exchange rate, and so on.
That works out to be n(n-1)/2 exchange rates, for n tradable goods. In other words, the number of exchange rates in the market grows exponentially with the number of goods.

If all goods are traded against one standard, say gold for example, you only need n exchange rates for n tradable goods - gold-tomato, gold-cucumber, and so on. I will exchange my tomatoes for gold, and then exchange that gold for cucumbers, oranges and apples. This has another big advantage - expanding the market range and increasing tradability. I don't have to find someone who wants tomatoes AND is willing to sell cucumbers - I can sell tomatoes to anyone who wants them, and use the gold I receive to buy cucumbers from anyone selling them. I can exchange tomatoes for cucumbers even if there isn't a single counterparty in the entire world interested in exchanging cucumbers for tomatoes. That's why money is so useful.

Today we've come full circle: there are so many currencies in the world, both crypto and fiat, that we've returned to the original problem of multiple exchange rates and limited trading opportunities. The universal standard you're suggesting aims to solve this problem, but it really doesn't. What is a Uc worth? You seem to want it to have a constant economic value vs. certain goods, such as a sandwich. But the value of a sandwich is also variable, depending on multiple economic parameters, and the values of different goods vary in different ways. In the end of the day, you'd have no choice but to peg the value of a Uc to something. What will you peg it to? The only viable answer is an existing standard.

This is exactly the solution that currency markets have already found. Most currencies are not regularly traded against each other, but rather against one (or a few) standard currencies. In the legacy financial system, the US dollar is the main standard against which other currencies are traded. In the crypto world, it's Bitcoin. I think most of us here hope that one day, Bitcoin will be the main accepted standard throughout the world.

So you can peg your Uc to an accepted standard which allows for the quantification of value. But then what's the point of having a Uc? How is Uc any different than just using one currency to trade against all others? Unless you can find a more objective way to quantify the "real" economic value of a sandwich, a new universal unit of account is useless.   

Why not just make a system that still has a dollar value tied to it, and it just calculates that price in bitcoins and charges that. Like baker wants 3$ for a loaf of bread, but in order to charge it he has a QR code (or something) that has automatically calculates what 3$ is in bictoins and charges that, then he can convert that to dollars or keep the bitcoins. I think that is better then creating a new currency.  

Isn't that exactly what Bitpay does?

This is a good idea and inevitable if you ask me. The only question is how to keep the unit price stable.

Why dont we just assign bitcoin a solid value? Say 1000 each? then there would be a value to base the standard against.

each country has what is known as living costs. basically the costs of average rent, food, and essentials.

so if you declare this as a unit. and say 1 bitcoin is worth 2LC (2 weeks of living costs) that would be easily able to convert independantly to each persons country value. without having to be a dollar to X exchange rate.

OP all you've done is make another faux-currency.  In your scenario, you could just as easily use dollars instead of your new one, and then everything converts to dollars.

I agree with the idea you're going for though, and in fact, when I open my bitcoin business I will use fixed bitcoin prices, and never "cash out" into fiat.  My determination of the value of a bitcoin will the basis for my price model, and I will be using long term contracts with my suppliers to ensure I don't get hit too hard with arbitrage, although I'm perfectly willing to take somewhat of a hit, if that's what it takes.  What I-- and you, without realizing it-- am going for, is closing the loop on a bitcoin-only economy.  Bitcoiners can scoff at fiat all they want, but when they still perceive their value in terms of fiat, they are still caught in the "system" and the banksters still control them.

The reason you can used fixed bitcoin prices is because bitcoin is limited, so if you assume a certain percentage of the population adopting it, and average out the costs of living and adjust, you can get a base value for what bitcoin has to be worth in order to transact with in a closed economy of X% adoption.  Of course, in order to not seem ridiculously expensive by everybody else, my model will have to take into account the current economy size, and be adjusted a few times per year, but oh well, such is life.

Are you sure that your potential customer base will be happy with huge price volatility?

I would have thought that even most of the people currently possessing btc and actively using it for purchasing would want the prices to be pegged to their local currency. Let alone all the other people who don't yet understand bitcoin.

We had this discussion in 2011 https://bitcointalk.org/index.php?topic=49163.msg626993#msg626993

The proposed solution is not a solution.

I think a universal unit of measure for currencies should be based on something that is of universal value to all humans. Gold and dollars do not meet this requirement. Maybe we should use something based on human dietary needs, such as average daily required calories. Then we use a weighted price basket of the world's 5 or 10 most common staple foods (staple food index) to determine the value of these universal units. Let's say:

1 unit of universal value = market price of 2,000 calories of staple food index

Merchants could then choose to price their goods and services in this new unit of value. For example, a baker who currently sells a 2,000 calorie loaf of bread for 5 dollars (2 for 10) decides that he wants to price his goods in this new measure. The cost of the wheat to make the bread is only 1 dollar and staple food index is 2 dollars. If the baker would sell the bread at cost, the price would be 0.5 units of universal value. But obviously he takes into account fixed costs, labor, and profit, so he sets the price at 2.5 units, 400 percent higher than the cost of raw materials, just like 5 dollars was 400 percent higher than 1 dollar.

Obviously this idea needs a lot more development...

Why do people keep trying to reinvent bad ideas that were debunked a century ago?

https://mises.org/econcalc.asp

1 sandwich = 1 sandwich

problem solved

 8)

Au contraire! Sandwich, IL, ≠ Sandwich, Kent. One is far more superior, while the other is located in... (almost went there  ::))

Okay, look right here:-
1. To accept bitcoins, practically, you need a computer (else, lots and lots of maths that'll take days/weeks to do)
2. You need an internet connection (To check you actually got the coins)

So, why not just have the computer automagically get the current price in bitcoins per transaction? It's what I do for my services.

its worth a try

If bitcoin/usd rates were as stable as ltc/btc rates this problem would be a minor one, its just a matter of time for cryptos to achieve a balance.

https://en.wikipedia.org/wiki/Basket_of_goods

https://en.wikipedia.org/wiki/Big_mac_index

And yes, why not separating the "unit of account" from the "means of exchange"/"store of value" function of money. Once the dollar is history, prices in shops could be displayed in Big Macs, but payable in (fluctuating) bitcoins, litecoins, gold, silver, whatever, converted on the spot. We're living in the information age right now, so it's easily possible.

Perhaps this is what BitUSD will be used for. Bitshares seems to be developing some kind of currency which will precisely track the price of the dollar and provide a cryptocurrency which is free from volatility.

This is made possible by a technical form known as contract for difference. Alice and Bob both wager on the price in opposite directions up or down resulting in price stability.

I can imagine such a unit PEGGED to a basket of fiat currencies OR it can be valued by e.g. a food basket from all over the world.
Lets say in 2014 such a standardized basket would cost 1UNIT and the next year due to very low grain yield worldwide it would cost e.g. 1.2UNIT(inflation due to low grain yield)...

To conclude: I think assigning value to the UNIT should be based on some high utility real life object like a standardized food basket.
Or for simplicity it can just be hard pegged to an existing fiat or averaged bunch of fiat currencies.

Problems:

How would you issue such a crypto currency(if it was pegged to real life asset or fiat)? You wouldn't be able to conjure it like central banks do.

But how would one run the UNIT network/infrastructure? Without incentives like block reward and transfer fees?

The model of limited supply and gradual build up of the total supply could not be applied here. The UNIT total supply would have to be derived from the underlying asset supply.

p.s. sorry for using UNIT instead of Uc, just noticed ;)

will there be an exchange where i can speculate on each person's country values?   ;D

To conclude : It is impossible. Forget it.

It is bad. Forget it.