Bitcoin Forum

Because the authorities like to stick their noses everywhere, they are looking into ways to regulate any institution that acts as an exchange.  At least that's what I got from this article (http://arstechnica.com/tech-policy/2012/02/major-bitcoin-exchange-shuts-down-blaming-regulation-and-loss-of-funds/).  I perceive every effort to regulate something I use as a threat. As long as there's only one exchange, all the people relying on it are vulnerable to its demise.  I have not relied on MtGox to trade BTC, but only to get an idea of the exchange rate and to look at the trading history.  So why not embed the "exchange" into the transactions themselves?  The transaction record is already public domain.

If I remember correctly, a Satoshi is .00000001 BTC.  Suppose that one of the inputs to a transaction is for exactly one Satoshi.  At today's exchange rates, that means just about nothing.  I propose that we add meaning to it:  If such an input exists, it means that the BTC was used to purchase $US (because that's the world's reserve currency). The smallest input besides that one would then indicate, in Satoshi, the number of US cents it purchased.

I propose this use of tiny inputs in order to embed the exchange rate into (some) transactions that enter the public domain, which would allow BTC clients to have an indicator of the current exchange rate (to $US).  Perhaps, to handle up to 99 currencies, amounts from 1 to 99 Satoshi could be assigned to them.

Obviously, anyone transacting could then claim to be buying $US when they aren't.  Could this be used to manipulate the exchange rate?  It would be the same as someone opening two accounts at MtGox and then entering a lot of trades with themselves.  My proposal makes it easier, but there's still MtGox and, of course, personal research into the actual exchange rate through sites (http://www.tradeyourbitcoin.com) like (http://localbitcoins.com) these (http://btcnearme.com/) and bitcoin-otc.  It's not something that worries me.

If this seems like a good idea to enough people, maybe I'll work on a client that has a feature, "transaction value in fiat" that allows the user to register an amount and a currency.  Maybe ongoing donations to the effort will be forwarded to those who do actually register fiat-currency values for their transactions.  If it catches on, the client itself could provide a chart of the exchange rate.

I don't think we should even display the USD conversion rate in the client, unless it was a 3rd party speciality thing and non-standard, then it's alright. 

We should keep bitcoin and fiat as far away from each other as possible, and only refer to the value at the exchanges. 

& 1 satoshi isn't a lot of money today, but it could be 10 years from now. 

Very true, considering the sheer volume of currency in the wild. (fiat)

Imagine what the USD penny would be worth if we had the same volume as 1900.