Bitcoin Forum

A Santa Monica-based startup says it has produced the first dollar-backed digital currency. If successful, this new currency could exploit bitcoin’s inexpensive and direct payments network, while avoiding its volatility.
The startup, Realcoin, is set to announce that its digital currency, dubbed realcoins, will be backed one-to-one by a fully auditable reserve of dollars.
The bearer of these realcoins will have the right to redeem them for U.S. currency. That should make realcoin much more stable than bitcoin, which saw an 86-fold increase over the first 11 months of last year only to succumb to a 70% decline in the following four months. Such volatility has detracted from bitcoin’s appeal as a payments mechanism.


Founded by Brock Pierce, a former Disney child actor who is now a prolific bitcoin investor, along with ad industry entrepreneur Reeve Collins and software engineer Craig Sellars, Realcoin is the latest in a wave of so-called Bitcoin 2.0 ventures, which use bitcoin’s computer infrastructure to exchange property and execute contracts without third-party intermediaries. These projects open up bitcoin’s decentralized, peer-to-peer network to a variety of commercial uses beyond just transactions denominated in bitcoins.
“Unfortunately, there has been confusion for people between the currency called bitcoin and the technology called bitcoin, when they are distinctly different things,” said Mr. Collins, Realcoin’s Chief Executive Officer. In effect “we are digitizing the dollar and giving that digital dollar access to the bitcoin blockchain.”
The blockchain is a publicly shared ledger of transactions maintained by a decentralized network of computer owners known as miners, whose machines keep it updated in return for periodic rewards in bitcoin. The system was initially designed to protect the integrity of the currency, ensuring bitcoins couldn’t be double-spent, or counterfeited, thus obviating the need for transactions to pass through banks and other trusted third-party intermediaries.
A few years after bitcoin’s 2009 launch, however, Bitcoin 2.0 developers are creating programs that used the blockchain’s method of validating transactions for different legal arrangements. Thus digitized property could be exchanged, commercial deals could be struck and contracts could be executed, all without engaging fee-charging middlemen.
Realcoin will use a Bitcoin 2.0 software protocol known as Mastercoin, which takes digitized information about particular assets or contracts and embeds it into bitcoin transactions. In this case, that data will define the rights attached to realcoins. Realcoin founder Mr. Sellars is the chief technology officer of the Mastercoin Foundation.
To ensure realcoins retain their value at one dollar, the firm will maintain a real-time record of its dollar-based reserves, all held in conservative investments, and will subject that record to the blockchain’s authenticating system, Mr. Collins said. Realcoins will be introduced or removed from circulation depending on whether dollars are being added or redeemed.
Mr. Collins said Realcoin has signed with a major banking partner and is seeking deals with other banks, digital-currency exchanges and ATM providers to become “gateways” for buying, trading or redeeming realcoins around the world. In creating a global network for people to cheaply and quickly exchange claims on the world’s main reserve currency, it could boost worldwide demand for dollars, he says.
Mr. Collins said Realcoin’s lawyers are working to obtain U.S. money transmitter licenses from those states that require them and that it also plans to issue digital currencies backed by euros and yen.
It’s unclear how realcoin will be received in countries with capital controls such as China and Argentina, whose citizens could use it to circumvent limits on foreign currency.
Realcoin might also attract scorn from bitcoin’s libertarian supporters, who see the independent digital currency as a successor to, not a facilitator of, government-controlled currencies.
Asked about such a reaction, Realcoin founder Mr. Pierce said, “I’m not selling any of my bitcoins. I’m trying to build a host of businesses that are taking advantage of this new emerging payments protocol as well as the currency

Source http://m.us.wsj.com/articles/BL-MBB-23780

So it's going to be PayPal on the blockchain?

Sounds interesting. The realcoins will be easy to use in practice (if used in a lot of places). But will the transaction times be around 10 minutes? A credit/debit card transaction only takes a few seconds.

Well.... thanks for the laugh. I think many people fail to understand why BTC and it's plethora of (functional) babies exist. People are trying to leave the fiat system behind, to actually back one with fiat (IMO) actually increases the DCs' volatility and opens new avenues of exploitation. For a currency to have value, it usually needs to be backed by finite resources and in it's self be finite.

To back with  fiat currency means to value it at the entire fiats' value. Which is diluted everyday as the printing presses never stop running.

Unless they introduce some radical means of limiting this, this will be a flash in the pan and doomed to fail. The evry idea of backing with fiat means opening yourself to national regulation, banking regulation and you can be accused of subversion of bankjing systems , so much can go wrong.

Is Bitcoin volatile? It all depends on your frame of reference. One could just as easily define bitcoin as the reference standard and talk about how volatile fiat currencies are compared to nice, stable bitcoin.

If folks like me are correct, and government overspending eventually leads to a hyperinflationary episode for major fiat currencies, then tying a cryptocurrency to fiat "for stability" will turn out to have been rather counter-productive.

I guess this explains the interest in RealCoinWallet.com  :P :P :P

This currency will be pumped hard and dumped even harder by the real players. Everyone else who buys a piece of it will get played.

Remember, I warned you.

Exactly how do you pump or dump a coin pegged to a fiat currency? You'd either have to manipulate the entire fiat currency or break the tie between the two. Do you understand that?

Looks like Andreas is done with the Bitcoin Foundation. Good. Screw the Bitcoin Foundation.

"I can no longer have even the smallest association with the Bitcoin Foundation, because of the complete lack of transparency" https://twitter.com/aantonop/status/486926129409052672

Any and all competition is good. The best will win.

This isn't really competition, though.  Call me a cynic, but it doesn't even sound like a currency, as such.  More like a centralised derivative.  If they can add and remove coins at will, it means they're in control of it.  They can set all the rules.  That's not a cryptocurrency and we shouldn't refer to it as one.  If the banks seem keen to get involved, then you know it's a system designed to benefit banks and not one we should give an ounce of trust to.  I hope it crashes and burns before anyone falls for it.

another attempt to make some quick bucks. sad, that it is lead by some frontman of The Bitcoin Foundation.

Agree with most of the sentiment expressed above. This is a totally misguided idea.

Cross-posting from: https://bitcointalk.org/index.php?topic=628000.msg7758201#msg7758201

worst. idea. ever.

Yes, let's take out the principle of being "Trustless" Now we have to trust that somebody is actually backing it with dollars.. Because - you know, Trust - has proven so reliable with the national currencies. (Sarcastic).
And let's take out the part of crypto currencies that requires centralization - and tie it to the centralized Federal Reserve, because who needs all the "Peer to peer" prinicple about no centralization that can go corrupt.?
And let's forget about the principle of limited quantity that won't be hyper-inflated? Because we all have so much faith in the dollar not being over printed and tens off billions of new dollars just appearing each month. This is just the start. Why did people even bother shifting to a currencies with true principles if they are just going to reintroduce the same crap people don't want to use the dollar anymore?

Sounds like somebody is having a hard time shifting their paradigm.

You know what would be great? Let's get horses to pull our cars? YES! *sarcastic again*.

Sort of like Wall Street did in 2008 when they systematically destroyed 40% of the wealth of the nation? Yeah, that's what I'm talking about. They can and will manipulate the dollar - they're doing it every day! In fact, that's the only reason that dead currency walking has any value at all!

1. Realcoin is tied to the dollar, absolutely no profit can be made by investing in it.
2. It is 100% vulnerable because it can be attacked by the government anytime in which case it will drop to zero. This also means that it will be very tightly regulated.
3. Is it a good onramp and offramp? Maybe, but holding Realcoins is a no-go when there is a potential 0% profit vs 100% loss

Or indeed running it.  How do I in the UK get in or out of this coin, presumably i have to pay fees.  Like i would with my bank to hold $.  I'm really not seeing the point of this, unless they make their fees less than the established money transfer businesses.

Had a feeling something like this will emerge eventually.

The question is, how much is it going to cost them to operate in the US and worldwide in term of licensing fee?

reminds me of DigiCash.

Similar to bitcoin in the 90's. Was centralized and went bankrupt.

Hell, no.

who the hell needs this...i can aswell just use the dollar. Brock Pierce involved doesnt make it more trustworthy either  :(

Brock Pierce is a homo pedophile that boasts about raping 13 year old boys in Thailand, has a criminal case opened against him in the U.S. for children and he ran away, fuck him and his shitty currency.

Volatility? The volatility in Bitcoin is apparent and visible to everyone who uses Bitcoin. The volatility of the Dollar is a one-direction volatility. It is a gigantic devaluation volatility. It is cause by things like Quantum Easing.

Common Americans don't see/feel this volatility, because the cash money in QE hasn't been dumped onto the market... yet. It IS, however, making itself felt slightly, in the fact of the recent food price increases.

Regarding the Dollar... continue to use and continue to lose. Wake up to how many ways you are being screwed by the bankers and the whole financial regulatory system. Get up and get out while you can.

The disadvantage in Bitcoin is that the Internet system may collapse along with the coming collapse of the Dollar. So, be smart, and put some of your money into silver - bags of old silver coins (pre-1984 dimes, quarters and halves) along with bars and Silver Eagles. Also, keep a box full of $ones, because they will be handy immediately following the crash, simply for living on.

GET YOUR FUNDS OUT OF THE BANKS!

:)

What a pointless coin?

The only advantage it has is transaction fees over the dollar - Other than that its only disadvantages.

It makes no logical sense to create a coin backed by the very system that encouraged cryptocurrencies introduction to economics.

If this project comes to fruition in the form described in the WSJ post, it could be a very good thing for bitcoin.  It will be the first serious decentralized asset traded on the Blockchain.  The asset will of course be "IOUs for US dollars".  Read the post:


This is an application of the colored coin idea that most people here were excited about.  Realcoins are bitcoin tokens encoded in such a way that each token represents an IOU for a certain number of dollars.  The blockchain technology and digital signatures allows users to split up and re-assign these IOUs in a decentralized and trustless way (without the assistance of the issuer of the IOUs).  


Apparently they are using the Mastercoin protocol as opposed to Open-Assets (colored coins); but regardless, Realcoins are Blockchain assets.  Blockchain assets are only secure if the Blockchain is secure.  The Blockchain is only secure if Bitcoin is valuable.  


Since digitized claims for these dollars will exist on the blockchain, then it will be very efficient to trade bitcoins for these dollar IOUs¹.  Imagine that you just sold 10 BTC and have a USD balance sitting at Bitfinex.  Wouldn't it be nice to withdraw this balance over the blockchain?  If you trusted the issuer of Realcoins more than Bitfinex, wouldn't this also be preferable, as it would reduce your counterparty risk?

Here's a cool app that might be possible with a little creativity and carefully execution:

1.  Create a wallet that stores bitcoins AND real coins.

2.  Add a "slider bar" in the app that allows the user to select anywhere between 0% and 100% bitcoin exposure.  With the slider at 0%, your wealth is correlated with the $; with the slider at 100%, your wealth is correlated with BTC.  At points in between, your wealth is correlated to each in proportion to your exposure.  Your wallet automatically initiates the required realcoin/bitcoin swaps each time you adjust the slider.  Feeling a bit bearish?  Just slide the bar from 80% to 60%.  Feeling bullish?  Crank it to 100%.

Just imagine 1,000,000 people moving there sliders up by 10% all at the same time lol.  


Seriously though, the biggest obstacle here is regulation.  Since Realcoins would actually be IOUs traded on the blockchain, it seems they would fall under the jurisdiction of the SEC.  But the WSJ post doesn't really discuss this important aspect in any real detail…


Remember: there's only one Blockchain asset with zero counterparty risk.   http://en.wikipedia.org/wiki/Attractor

¹If the Open-Assets protocol was used, then it would be possible to trade BTC for $-IOUs in a trustless manner using a single coinjoin TX.  I'm not sure if this is possible using the Mastercoin protocol, but perhaps someone else knows.

The problem with this is that the incentives for miners to secure the blockchain would be missing. Even if miners earned a TX fee, they would almost certainly not earn any kind of block subsidy; since TX volume would be very low at first, there would be little reward for mining, making it very easy to attack the blockchain.

The blockchain is the Blockchain.

This is not an alt-coin.  Refer to my post three above.    

All you've pointed out was the IOUs can be secured (by blockchain) and traded without the issuer's intervention.

But that still doesnt explain how to redeem those IOUs truslessly to actually fiat for normal transactions. Do you really trust the USD reserve? or human?

Heck i can beat Brock by saying i have a gold reserve and issue IOUs for 1 oz of gold on blockchain.

What a failed idea.

all this is just degrading the value of BTC!!!! altcoins should be banned!

Spot on.

The idea of using the blockchain as a register for digitally tradeable financial assets (whether dollar IOUs or anything else) is very exciting but the more the idiot regulators get in the way, the more obstacles there will be to innovation.

I don't know if people are seeing the real problem.

"The bitcoin community, represented by Brock Pierce, the billionaire president of the Bitcoin Foundation, recommends the use of RealCoin for e-commerce, rather than bitcoin -- since RealCoin is a new-generation cryptocoin that fixes an incurable flaw of the latter, its volatility.  People should pay no attention to a few fringe bitcoiners who may whine about some irrelevant philosophical quibbles."

It's only as "dollar-backed" as the backers have dollars. Basically these will be blockchain transferable dollar IOUs.

But I wonder why they are using mastercoin rather than open assets? The advantage of the latter as I see it is that it benefits the Bitcoin ecosystem. Transactions will take place within the blockchain thus producing a future source of transaction volume and fees.

I don't think the same is true of mastercoin transactions, though happy to be corrected.

It is really hard to peg some form of money to another exactly. Some reasons are that the two have slighly different characteristics, there will be variable demand, and there is some cost in transacting. Therefore you see that the only realistic way is to let it vary in a band around the peg. Interventions then come when the spread comes near the edges of the band. To avoid speculation, the exact band can be made secret. To make the peg trustworthy, the backing organization has to have some reserves. See Singapore dollar
http://www.investopedia.com/terms/s/sgd-singapore-dollar.asp (http://www.investopedia.com/terms/s/sgd-singapore-dollar.asp)

tl;dr I do not think he can do it, but the fed can.

Imagine if the headlines related to Realcoin were instead things like:

"Bitcoin Foundation paves the way for decentralized bitcoin exchanges with the launch of blockchain-tradeable $-IOUs."

or

"Brock Pierce set to battle SEC regarding rules for Blockchain-based asset transfers."

I think most people would be pleased. But this is what Realcoin is.  How else do you think you create a decentralized exchange if you don't have blockchain-tradeable dollar IOUs?  And the cool thing is that Realcoin is just the first.  This would open the door to other companies launching blockchain-tradeable IOU products, or stocks and bonds too. 

The question I want an answer to is: what does the SEC have to say about this?

Lastly, one aspect of this proposal that does seem questionable to me is the use of Mastercoin.  Is there a reason that the Open-Assets protocol (colored-coins) wasn't used instead?

For more info:  https://bitcointalk.org/index.php?topic=683675.msg7761651#msg7761651

I think you may change your mind.  For example, Realcoin could be structured similarly to the Winklevoss ETF.  The difference is that the ETF-tokens represent bitcoin-IOUs whereas the Realcoin-tokens represent dollar IOUs.  The peg, in both cases, is maintained by arbitragers (e.g., the Authorized Participants) swapping baskets of the underlying.  

TL/DR: Winklevoss ETF   --->  bitcoin IOUs that exist in the legacy financial system
          Realcoin             --->  dollar IOUs that exist in the Blockchain financial system
 

Peter R, that is a nice tl;dr!

I have not read much of this thread or the article. But does realcoin allow any named thing to be in IOU form on the block chain? If so that would be huge.

OT: Has anybody implemented a real world proof of burn, where notes are destroyed in return for crypto currency, perhaps using the serial numbers as a proof?

No.  Realcoin is a product that uses an existing protocol for blockchain-tradeable IOUs.  It is a proposed realization of the concept that you just mentioned.  

You can not expect the WV ETF to have the exact price of bitcoin either.

So, if realcoin moves above the peg, he can of course offer to sell more realcoin for dollars an pocet the difference. But what if realcoin goes lower? He has to buy realcoins for dollar, possibly all of them. A buffer is needed to temporarily drive them above dollar again to quiesce the traders.

"Backed" by the dollar. What a joke.

The persons doing this are either entirely clueless about bitcoin or plain scammers. Oh just wait - one of them is actually a member of The Bitcoin Foundation, that thingy that is somehow "Freeing people to transact on THEIR OWN TERMS".

God, please donate a neuron!

Yes it is inaccurate. It is redeemable for a fixed amount of dollars, backed by an organization, with the dollars that that organization has in reserve.

These problems were all resolved with SPDRs Gold Trust (ticker symbol GLD).  Greg Mulhauser is probably the most authoritative contributor here on the topic of exchange-traded products, and I recommend reviewing this thread:

https://bitcointalk.org/index.php?topic=252330.0

Yes, the market value of Realcoin may deviate from its net-asset value (NAV), but this is the mechanism that is used to either grow or shrink the trust (assuming it's modelled after GLD).  Any deviation from NAV is a risk-free arbitrage opportunity for the authorized participants, and so will be closed very quickly.  

Here's how it works in the case of the Winklevoss ETF:  

Ok, I am convinced, cautiously.

Edit: I think the important part is that realcoin has full backing, which national currencies usually do not have.

I already knew this before posting. It doesn't matter if it's build on top of a blockchain-using protocol like Mastercoin. The simple fact is that nobody needs a fiat currency traded on top of a cryptocurrency that is superior in all aspects. It's idiocy.

The name "Realcoin" implies that bitcoin is not real currency, but the dollar (backed by thin air and the despotism of a central bank) is. It is fundamentally retarded to use fiat currencies as "backing" for anything, because they can be inflated at will.

In addition to the counterparty risk of using the dollar you will have an additional counterparty risk that the "Realcoin"-gang actually has the dollars it claims to have.

What is being proposed here is to issue a centralized virtual currency not unlike PayPal, e-Gold or LibertyReserve where USD, gold etc., are held in trust by the issuer to back a series of a digital IOUs. The digital IOUs instead of being represented on the issuer's servers are represented as bearer instruments on the blockchain via Mastercoin.

My take is that this will suffer from the same regulatory issues as other centralized digital currencies and payment methods with one of the following outcomes:

1) Remain limited to a small number of jurisdictions and be useless for international money transfer. Examples: Interac (Canada), M-Pesa (Kenya), Dwolla (United States) etc. (Low number of regulators).
2) Become expensive (high fees) and very bureaucratic VISA, MasterCard, PayPal, Western Union, Wire Transfers (Large number of regulators all with different sometimes conflicting requirements).
3) Get shut down e-Gold, LibertyReserve etc. (No regulators)

The key advantage that Bitcoin has is that the on-ramp providers and the off-ramp providers do not need to be related in any way and can be regulated in their respective jurisdictions independently of each other. Realcoin does not have this advantage.

It's the same problem with having a dollar balance sitting at an exchange.  Does Exchange X really have the dollars it claims to?  But with the Realcoin proposal, these dollar IOUs are now tokens on the highly-visible and public blockchain that can be traded in a decentralized manner.  This seems to improve transparency.

Imagine that all the exchanges follow step (assuming this is actually approved by the regulators), allowing dollar balances to be withdrawn as colored coins.  We'd have:

- Realcoins
- Stamp-dollars
- Bitfinex-bucks
- Cryptsy-cash

Assuming all the issuers are trustworthy and solvent, the tokens should all trade near par value.  But if "something fishy" starts to happen, then we'll see one of the tokens drop in relation to the rest.  This would be a market signal that something is wrong with that particular issuer.  This will improve market efficiency, because everyone will be able to see how much trust everyone else places on the various counterparties.  

For example, right now, $1 at Bitfinex is probably not worth the same as $1 at BitStamp, but we currently have no market-driven method of measuring this.  

You argue about a problem that is only valid for fiat currencies. That problem doesn't exist with bitcoin. So why would anyone want to use a less-secure fiat currency on top of a fully-secure cryptocurrency in the first place?

Trading various dollar-tokens on top of bitcoin is like riding a horse buggy that is mounted on top of a car. The reason to do this? Some crazy art performance maybe...

(However it would make sense to trade commodities using Mastercoin.)

That's right. If you zoom out on the time scale to see beyond the coming fiat crash, Bitcoin is (will become) the only truly stable store of value.

It's only the current myopic view people have that makes them think the dollar is stable and Bitcion is not.

Bitcoin's value is in reality extremely predictable, long term. It increases step-wise in a logarithmic fashion as seen here:

https://i.imgur.com/Ac3rRXH.png

This actually happened for a while in 2012 with BitInstant being the market maker where one could trade MTGox USD codes for BTC-E USD codes etc. The regulators killed it.

Realcoin could be a great on- and offramp because it is like a digital USD that can be exchanged for other coins at exchanges

As opposed to real USD which require a lot more paperwork

...of course the paperwork will then come into play when fiat is exchanged for Realcoins...

Did Silk Road damage the value of BTC? Not much. If Realcoins had been used on SR this would have been very dangerous; indeed the feds would probably have seized Realcoins USD assets, taking RCs value near Zero.

Liberty Dollar or E-Gold reloaded.

They wouldn't.  They just don't know it yet.  

Both the Winklevoss ETF and the Realcoin product are gateways.  

Yes they are gateways but there is a crucial difference with Realcoin when it comes to regulation. In the Realcoin case they have to be both the on-ramp and the off-ramp and this is a serious limitation when it comes to international transactions. Consider first a pure Bitcoin example using existing providers:

A person (say myself) in Canada purchases BTC for CAD using CaVirtex. This same person then uses the BTC to purchase goods or services from a US based merchant that uses Conbase (I have done this). Now CaVirtex only needs to concern it self with Canadian regulations since they only provide exchange services in Canada while Coinbase only needs to concern itself with US regulations since they only provide exchange services in the United States. This makes the regulatory process affordable for both companies.

Now the same transaction using an unrelated on-ramp and off-ramp would not be possible with Realcoin since Realcoin has to be compliant with regulations at both ends. This is the same limitation faced by PayPal, VISA etc.

I completely agree that the obstacle for ideas like Realcoin are regulatory as opposed to technical.  It would be hard to argue that Realcoins are not securities, and thus Realcoins would almost certainly fall under SEC jurisdiction.  

But I don't know if I'm following what you are saying in your post.  Let's say CaVirtex received regulatory approval to issue dollar-IOUs using the Open-Assets protocol (colored coins).  It seems to me that once the product was approved, all CaVirtex needs to concern itself with is redemption of those dollar-IOUs back into account balances.  CaVirtex doesn't need to care whether those particular dollar-IOUs went through 10 sets of anonymous hands prior to making their way back to CaVirtex for redemption.  And if this is the case, someone from China might happily accept a CaVirtex dollar-IOU at face value, even though they have no plans to redeem it.  They just trust that the IOUs will always trade near face value as long as someone is able to redeem the IOUs at CaVirtex.  

In any case, as much as I'd like to see it, I really can't imagine the SEC allowing companies to issue "bearer"-IOUs using the blockchain at this point in time.  I think these types of products are at least half a decade away...

In the above example the CaVirtex dollar-IOUs would only be redeemable in Canada by Canadians. So they would would likely be accepted at face value in Canada but would likely trade at below face value in China since someone in China would eventually need to find someone in Canada to redeem the IOU for them. The discount could easily be 5% or more. The net effect of this discount is to create an effective transaction fee and we are back to the VISA, PayPal, Western Union etc. costs. Of course if they were redeemable in China then they would also trade at par there but then CaVirtex would have to also be regulated in China increasing their costs and again we are back to to the VISA, PayPal, Western Union etc. fees costs.

By the way I do agree that these IOUs are securities but unlike the United States where there is one securities regulator there are 13 separate securities regulators in Canada one for each province and territory, further adding to the compliance costs. By the way the Canadian government is trying to create a national securities regulator to simplify the compliance burden but has met with stiff opposition from Quebec and Alberta. The problem here is not dealing with one regulator, that is easy. The problem with international money transfer using IOUs is dealing with literally hundreds of different national and sub national regulators all with different and sometimes conflicting requirements, and with each regulator acting like its own little fiefdom. Ever wonder why we see so many innovative payments systems using IOUs that only work in one jurisdiction but hardly any that work internationally?

The beauty of Bitcoin is that it allows one company in Canada say CaVirtex to be the on ramp and another unrelated company in the United States (Coinbase) or in China (BTC China) etc. to be the off-ramp and vice versa. This is not possible with IOUs.

As described that has absolutely zero chance of being approved by the SEC.  Bearer shares and notes are explicitly unlawful under federal law.  They are unlawful for expressly that reason.  It isn't just a US thing, bearer shares have been outlawed most places on the planet.   Sure maybe you be able to issue bearer shares in Somolia but then again the coins are backed by dollars they are backed by the promise to rpeay dollars.  Any doubt on the legality of the entity casts doubt on the promise to repay.

In case someone has not seen it, this article gives some background on Brock Pierce's  experience as the "king of virtual game money":

Wired Magazine, 2008-12-04
A Drive Through Laurel Canyon With Brock Pierce
http://archive.wired.com/gaming/virtualworlds/magazine/16-12/ff_ige_pierce (http://archive.wired.com/gaming/virtualworlds/magazine/16-12/ff_ige_pierce)

He does not seem to be just another bitcoin enthusiast/entrepreneur.

seems like a conflict of interest considering he is one of the newest members of the Bitcoin Foundation. 

this idea sounds just about as good as one for a "pedocoin." maybe they can use sandusky, brock's personal hero, as the logo.

Perhaps, but he is on the Board of Directors.

(BTW, I haven't been able to find a list of the directors in the Foundation's site, only a list of members and founding directors.  Also the minutes of the Board meetings seem to be open to members only, and the last one posted is 17/Mar/2014.)

i'd call brock pierce a dicksucker, but i don't want him to take it as a compliment.

Problem here is what if the dollar becomes worthless?

They are printing them to infinity. Not a good currency model that holds value.

Really dumb idea in my view.

it would be better to back it with something like gold.. back a commodity with a commodity. not with an unlimited currency.

If the Realcoins aren't approved securities, then--as much as I like the idea of dollar-backed colored coins--they are worthless to me.  

But this brings up another point that's been bugging me.  All the talk about the "2.0 coins" and "decentralized asset exchanges" is really just that--talk.  We are not going to see serious money put into products that are in blatant violation of SEC regulations.  I might go as far as to say that even "IPOing" a pre-mined PoS coin could be considered soliciting investment in a security, in which case this would require SEC approval too.  

IMO, if we want to migrate assets to the blockchain, the place to start is to consider using colored coins as endorsable share certificates.  The ownership of the shares would be recorded in the company's register by legal name and address (the shares are not anonymous), but the shares are endorsable by digital signature and the Open-assets protocol.  The endorsee has to register his name and address with the company to complete the transfer of ownership.  I've begun analyzing the legality of this here: https://bitcointalk.org/index.php?topic=653257.msg7368255#msg7368255

Are you sure that bearer bonds is the right comparison?  The article says that they are seeking "money transmitting licenses in states that require them", so in practice RealCoin may be more a competitor to PayPal, not a security; and in that case it may not fall under the SECś  jurisdiction, but of some other regulating agency (the Fed?).

The problem is not what Realcoin is backed with. There is market here for backing with USD, other fiat currencies, gold, silver etc., as both e-Gold and Liberty Reserve proved. The problem is dealing with literally hunderds of different regulators of over the world each producing thier own special variant of red tape.


This could work possibly in the UK where as far as I can see it is legal to issue bearer securites. My take however is that Realcoin will drown is a sea of red tape and in the process further prove the value of Bitcoin.

I think he was referring to the example being discussed earlier where colored coins are explicit bearer IOUs for dollars.  It's not 100% clear yet what Realcoins are, but the WSJ post makes it sound like bearer IOUs for dollars: (http://blogs.wsj.com/moneybeat/2014/07/08/dollar-backed-digital-currency-aims-to-fix-bitcoins-volatility-dilemma/)

way to take a great idea and shit on it thanks cock pierce!

I read this far and stopped reading.
Why would I want an alt coin that was backed by dollars? Dollars - really?!

Realcoin a.k.a Pedocoin

I made it only to the first sentence before guffawing. Isn't the dollar the first dollar-backed digital currency?

The dollar already is digital. And if you want it on a block chain just use NXT or BitSharesX.

Wait a minute, a prominent member of the BITCOIN Foundation said Bitcoin has a lot of problems but that's ok because I fixed them in my new coin. I bet TBF is so proud. lol

Don't think the director is on salary. Correct me if I am wrong.

Sometime in the 1980s I was a student intern at the Xerox Palo Alto Research Center (PARC).  Some years before they had developed the Alto, the first usable personal workstation with an ethernet interface, bit-mapped display (instead of the then-standard 25x80 character display), a three-button mouse, and the basic ideas of a GUI -- menus, buttons, sliders, etc.

With much effort, the PARC researchers had managed to convince the upper Xerox management that those weird things could be marketed.  So Xerox started developing commercial versions of the Alto, that were planned to cost 80'000$ or more.

But, before those machines were ready, Apple unexpectedly launched the first Macintosh, which cost only a few thousand dollars and also had a bitmapped display, mouse, and a GUI with buttons, menus etc.  In fact Jobs had seen the Alto and copied those features from it.

As soon as the Macintosh was announced, someone at PARC collected all its TV ads and showed them in the lab's auditorium.  While most of the audience was a bit stunned and worried, there was a small group who laughed at every "weakness" of the Mac: its tiny screen, the mouse with just one button, the lack of a network interface, the floppy disk, and so on.

Needless to say the Xerox workstations were a complete flop, and Xerox had to pull out of the computer market.  And you all know what happened to the Mac.

So, perhaps it is not yet the time to laugh at RealCoin just because it is technically garbage.

Brock Pierce does not need a salary, in fact he paid dearly to get there.

Neither NXT or BitShares is using the bitcoin blockchain.
Mastercoin is and that's where they're planning to launch realcoin.
FYI the other 2.0 protocol that's using the bitcoin blockchain is called counterparty

The fed does not have authority over any entity that does not accept deposits for account holders. This kind of setup would likely be very similar to bitcoin except the underlying coins would be backed by physical assets (dollars).

Huh?
So you think realcoin is fine because it's backed up by something that is not?

I don't understand the logic in what you said.....

Exactly. Stop holding on to the dollar already.
Such currency will fail and die a horrible death.

I don't think realcoin is ok, I do not think it will be relevant in two years.

There were some arguments thown back and forth. Compared to a currency like Singapore dollar, that tries to follow a bunch of other currencies in a band, it seems that realcoin in fact can be pegged exactly to the dollar, since it is fully backed. You could also say it is a dollar extension, a warehouse receipt for a dollar stored. So I think it is possible that it can follew the dollar in value closely.

It may work. There is a lot of benefit having dollar version of crypto coin. If they can convince merchant to accept it, and make it easy and secure for smart phone users to buy, the potential is higher than bitcoin as most bitcoin users are hoarding it hoping for higher price rather than using it.

I don't like the name "Realcoin". It kind of implies that Bitcoin is "Fakecoin".

Or laugh louder so that we draw attention to the fact that it's technically garbage.  Perhaps if the internet had been a thing in 1980, the word would have spread more easily that the mac was the inferior product and Xerox wouldn't have been relegated to photocopiers, printers and fax machines.  If there's a marketing battle to be won, then we should point out the flaws in our competition where we see them.  And realcoin is definitely flawed.

I failed to get the point across, sorry.  The comparison with Apple x Xerox only goes so far.

(Actually Xerox was much bigger than Apple at that time, they had the largest marketing firepower, and they were experts on networking.  (The Ethernet LAN had been invented there, they created the first internet-wide forum, and my boss's boss Bob Taylor at the time had been the director of DARPA in the 1970s when DARPA invented the internet.) And the Xerox workstations were better than the first Macintosh in many respects.  But the Mac was 1/20 of the price, and had Jobs and Wozniak.)

My point is that Brock Pierce is not the typical bitcoin enthusiast or bitcoin entrepreneur or even bitcoin VC investor.  He not only has experience in playing the industry takeover game, but is the kind of guy who changes the rules of the game to suit him.  The mere fact that he bought his way from being an unknown outsider with no businesses in bitcoinland to the helm of the Bitcoin Foundation in a few months should get people on alert.

An inflationary dollar. Good luck with that!
Also, Bitcoin foundation... Do you want to start a war with your community? because this is how you start a war with your community.

How would the network be secured? Would it be done by a central authority or would it somehow be decentralized?

"It may work"...until people wise up.

Background Refresher: Electronic money needs a way to keep track of who has spent what. We've had (technically) decent ways to do that using authoritative/centralized entities (PayPal, Square, Banks, etc) for a while. And since 2009, we've had a *decentralized* way to do that: blockchain-based crypto-coins.

RealCoin's Problem: If there's a central organization fixing the value of a crypto-coin, it is by definition NOT decentralized, but the whole point of blockchain-style crypto-coins is still to get *decentralized* global consensus. Thus, the entire concept of a a dollar-backed blockchain makes no sense.

So, the people behind realcoin are one or more of the following:
1) Stupid
2) Exploiting other people's stupidity for profit.

Why, (2) of course.  How is that saying, "no one has ever gone broke by underestimating ..."

Bitcoin’s does not have a Volatility Dilemma

rather most human don't like the uptake curve of btc because it doesn't match their time scale of $10 more each day.

"Volatility" it is actually one of BTC's most powerful bootstrapping features that attracts traders and entrepreneurs, media, and gets it used faster.


the 'volatitliy' myth belongs in the same bin as the LTC on GOX and BTC on AMAZON.

Perhaps you don't know what "volatility" means?

It means that the price of something can change a lot, up or down, unpredictably.  In the case of Bitcoin, sometimes 10% in a matter of hours.

The volatility of bitcoin is a measurable fact, not a myth. It is much larger than that of dollars and euros, or stocks of established companies.  While volatility attracts day traders, it is terrible for its use as currency, or for storing money that you may need some day, or for moving money across national borders.

Realcoin may be a joke technically, not even a true cryptocoin; but if it promises stability, it will have a powerful advantage over bitcoin for use in e-commerce, or for moving money across borders.  (For liquid value storage, neither is any good.) 

Bitcoin would remain the choice for long-term investors who believe that it will appreciate 10x or more eventually. But since its value resides entirely in its demand for e-commerce and such...

It would not have a fixed value, but rather it would have a fixed amount of hard assets (dollars) that back each "coin"

In theory the price of the coins could trade above or below one dollar and would be set by the market

So when the usd collapses so will realcoin? Why not just invest in usd and cut out the middleman (realcoin)?

Probably.


I think it is to take advantage of the features of the blockchain. The blockchain removes the need for fee-charging middlemen such as banks, credit card companies (Visa/MasterCard), and payment processors (PayPal). Think of it as USD with a blockchain.

I have no interest in it, but I don't see it as being a terrible idea.

If you have physical dollars then you would not even need the blockchain (nor would you need to pay miner fees) as you can simply use your dollars to pay for your goods/services in cash.

This is true, but what if you wanted to buy something from another country? Or from an online merchant? Using cash would be impossible in such circumstances. You would have no other choice but to use the banks, credit card companies, and PayPal - and you will get hit with fees along the way.

This is technically true, however there is a much higher percentage of transactions that are done in ways that cash could be used verses transactions in which it would be impossible for cash to be used (all of your examples)

LOL

This sounds like another ABOMINABLE idea from venture-capital darling Brock Pierce.

Seems like Silicon Valley cash is raining on this kid .. I wish he would come up with some better ideas!

If the price of this so-called 'realcoin' is pegged to the dollar, and the 'realcoin company' issues and redeems them, how can there be any mining reward? If there is no mining reward, what would be the motivation to maintain the blockchain? If the blockchain is not being maintained, how will transactions be validated?

I'm not seeing any mechanism by which 'realcoin' can take advantage of blockchain technology.

What if realcoin issues dollars via blockchain rewards? This would still replace irrefutable math/algorithms with the bitch ass Brock Pierce that could get a period tomorrow and decide he's cutting the rewards in half, would lead to low blockchain security since no reasonable person would be willing to make a serious MHs investment due to the unpredictable nature of the environment/pedophiles.

Doesn't make any sense. The blockchain exists because decentralized consent is needed for a decentralized currency, i.e. there's no one deciding in the case of an argument. In a centralized environment it would still make transactions public, yeah, but that doesn't have to be specifically a 'blockchain'. If there's a company doing the thing, all the advantages of decentralization are out the window, they also can't do this cheaper than BTC's transaction fees. It's a no-incentive, we could stick to PayPal and Western Union...

Then they could not 'regulate the supply', which is one of the things they claim is superior about their crap coin.

Edit: fix broken quote markers

It has to be a central authorithy, but many mining centers around the world could still be employed to secure the payment system from technical problems.