I have a few suggestions. Maybe it could solve a few of the problems you mentioned. It's not particularly "implementation-accurate" and I most likely have missed a few things, but it's a start. I'm looking for feedback. I think stability is a serious issue that warrants consideration. My proposal could address that.

https://bitcointalk.org/index.php?topic=58102.msg709070#msg709070

To be crystal clear again, I have no bias towards early adopters or free markets. I personally believe you can do anything you like as long as those who you deal with, agree to the terms (uncoerced). Some ideas work well, some work really well. Nothing is perfect. Nearly everything can be improved upon. My whole point was that you want to placate your merchants (who you want and even perhaps need), not chase them off by hourly and dayly yo-yo price gyrations. Was bitcoin designed or intended for speculators and manipulators only?

The way bitcoin operates is a form of participatory "regulation". To wit, everybody decides to regulate the production of bitcoin thru their participation in a crypto-mathematical "creation" process. So what? Nothing wrong with that. I don't care one way or the other, any more than I do any of the other alt-currencies that come along.

I was merely suggesting that by initially pegging your newbie currency to a quasi-stable fiat currency you can gain quicker adoption rates with less price fluctuation and market manipulation. Again speculators are great to have, just maybe not when you're just out the starting gate. My idea is as equally a free market as the bitcoin market is, and you can't say otherwise. I prefer decentralizaion and federated trust servers to central point-of-failure designs too. Am I explaining myself clear enough for you yet?

By the way, I own several hundred bitcoin and run a 3 Ghash/s miner, so I do have skin in the game.

It's actually market makers that tend to smooth price fluctuations (just a guess). Nevertheless, without somebody to take the other side of the trade, your BTC isn't worth anything. In fact, that's true of anything. You're always trading something for something else you value more. Money material is merely a midway point for easy accounting purposes since barter is less convenient.

Nobody has to use other fiat currencies, of course, but that isn't the point. We could all decide to use BTC for our monetary system today... thing is, why isn't everybody doing it? Most don't understand it, or don't care. Perhaps they need a reason to care. I'm merely piggy-backing on an already quasi-stable currency.

If prices were stable and transacting were cheap you'd probably get more followers, hence my proposal. And that doesn't include the more esoteric issues of more anonymity, no charge-backs, and flexibility etc.

Really? How so? We are all pretty certain that his cryptographic skills are stellar bar none, but his economic sense... that's a matter of contention I'd say.

Again, I'm not suggesting a different cryptography protocol per se, just a different way to jump-start a nacent digital money economy. Perhaps one that doesn't have to be so volatile. My suggestion was merely one of how to use a boot-strap technique which segways into a global exchange environment with the possible effect of reduced manipulation and speculation. It's only the transition and stability I'm interested in.

To be clear, I have nothing against speculators, they will always exist and they probably serve a purpose; namely, liquidity and money velocity, but for start-up purposes, they can make for a very difficult exchange situation. Why would merchants want to have to worry about that? Every merchant/business person I've spoken to, who wheels and deals in physical goods, mentions that as their biggest fear/issue. They won't stake much of their business on it until the price spikes calm down, and yet you need them to soften the blows. You have a chicken and egg problem.

I can't tell if your kidding, but what I meant to infer was the USD/BTC or fiat/BTC stability issue. We all know a nearly exact number of coins are "minted" per unit of time. The issue at hand is convincing merchants and others to hold the coin when the price is all over the place. I'm not suggesting a different protocol, just a different starting point for the economy.

Stability is valuable to some extent I'd think. Obtaining financial gain merely because your USD/BTC changed is not particularly "productive".

It is possible to use cryptography to create a federated network of "trusted" market makers or exchangers to peg the price to a known fiat currency. It would work similarly to the way the bitcoin network already functions. If you think about it, you have to trust the top 4-5 exchangers to handle your BTC/fiat exchange anyway. How is this that any different than what I've proposed?

Were the bitcoin economy to even remotely resemble the amount of market capitalization of even a small country, the first group of "miners" could be a serious "force" to be dealt with. To be clear, I have nothing against the "first adopter" advantage, but somebody who has a few $100 billion equivalent USD in BTC purchasing power to throw around makes me a bit nervous as a merchant, speculator, or just your regular "anybody" for that matter.

I withdraw the "wasted" comment since it isn't really what I intended to express. I understand that a certain amount of resources will always be required to secure the network (the more computation effort, the stronger the network). I was just suggesting that resource allocation could be spread out and smoothed, hence less asset risk exposure if the price were pegged over a longer term. You would more easily be able to allocate your resources and anticipate the market if it was a steady growth to a $21 trillion market, instead of a fluctuating market which has seen as little as $30,000,000 USD and as high as $100,000,000 USD in the last 6 months (and almost zero if you look at the pre-2010 era). A lot of miners and merchants tend to get burned in those kinds of markets.

A proposal to consider...

A different approach for a nacent digital currency (NDC), or possibly even "Bitcoin 2.0":

1) Pre-mine all the coins (i.e. 21 trillion NDC).

2) Immediately initiate an exchange (i.e. Mt. Gox 2.0).

3) Make the exchange decentralizable. Distribute coins from the 21 trillion NDC to the exchangers in proportion to their ability to handle transaction volume.

4) Peg the NDC to a known "stable" currency (i.e. USD, EURO, Pound).

5) Using USD as the start point, permanently set the NDC buy orders at $1.01 and the sell orders at $1.00. This bid/ask wall cannot be moved or it all falls apart. A federated group of "trusted" market-makers/exchangers joined at the "crypto-hip" could prevent collusion (i.e. A & B or C cryptographic type of arrangements). We want to reduce NDC price fluctuation. This helps the merchants gain stability and virtually removes the speculator/manipulator angle for a longer period of time. BTW, I have nothing against speculators per se.

6) Take the spread and/or fees and pay the "miners" and "transaction handlers" to secure the network. This will be net settled in NDC unless converted (minus fees). Hopefully this prevents the dreaded 51% attacks.

7) When the 21 trillion coins are spent into the "economy" the fiat currency peg becomes detached (because the author can no longer keep the price fixed) and it starts to float against all other currency/commodity money equivalents.

What you gain: Instant stability, long-term growth, fewer manipulative events, no first-mover advantage, fewer early adopter issues; at least not any more than the national fiat currencies would induce, in which case you could peg to a "commodity money" such as gold, silver, oil, etc.

Hopefully the transaction fee issue to secure the network will be solved after the NDC currency float event.

I have an idea/proposition - although it may be a little late for bitcoin. I think Deepceleron and ElectricMucus are on to a really good idea, or at least generally speaking, on the right path. Given that the network needs to be secured and that means that "transaction handlers" or "miners" need to be incentivized, what if a decentralized digital currency were to arise wherein all of the coins were pre-mined (say 21 trillion) and simultaneously a decentralized exchange was created (initially central as are all start-ups)? Then set the buy order at $1.00 and the a sell order at $1.01. The buy/sell order wall cannot change until all 21 trillion are spent into existence, after which, it begins to float.

All of the coins are pegged at these values until the entire total is bought up. You gain long-term and instant stability, or at least until USD or some other fiat currency-peg inflates beyond the $21 trillion. The money produced from the fixed/pegged value market-makers would be distributed amongst the security providers (miners and transaction-handlers), the exchangers and the currency author. This .01 coin spread is given to the security providers of the network and the exchanges. The author could retain the first 10,000,000 coins as his incentive to start (this is an abitrary value as is the 21 trillion coins).

Nobody, including the author/originator of the currency, gains a significant "first mover" advantage. The "manipulator" is a known quantity and the market isn't abritrarily swung in any direction by a few people with large resources. Once the 21 trillion coins are spent into the economy it would be hoped no one individual or group of colluding individuals can manipulate the market. The market is stable and money which already exists, grows the market externally. It would also seem that you waste fewer resources (GPU's, FPGA'S and their attendant electricity and hardware costs and externalities.)

Why does the Amazon Payments option take 5-7 days? I'm beginning to believe there really is a conspiracy by the fiat currency banking cartel to limit the uptake of bitcoin related businesses.

Don't we live in the 21st century and have computers that can move quadrillions of bits of data around the globe in an instant. Annoying.

I'm renting personal advertising space (my face). The contract is measured in BTC/week (Minimum contract length one week. *See contingencies below).

Description:

I have a full beard and have shaved things into it in the past just for kicks. Last year I carved "BYTE ME" onto my face on a dare (I'm an EE/CS and a bit of a joker). I did it mostly for fun, but also to see what reaction I'd get. I work at a company numbering approximately 2500 employees, so my face will be seen by all types of people. Apparently you can meet a lot of interesting people this way because they notice your face looks a bit odd (Walmart was interesting) and they start asking questions. Anyway, I thought it would be fun to try an entreprenurial approach. The following are 2 approaches I'd consider unless someone comes up with a more creative way.

Community Contract Option (crowd sourced):

1) Shave "Ron Paul" into my face. Political I know, but who isn't. It would surely make a splash,
    or alternatively, shave Bitcoin and/or a Bitcoin logo onto my face. Or we could vote on one in a poll.
2) Provide bitcoin media and/or product for demo-ing. (i.e. Bitbills, Casascius coins, etc.). Will return if you provide paid postage.
3) Short 30 second message. We could have a poll for what you'd like me to say.
4) Community contributes to the "cause".
5) Provide a "face" stencil. (optional)
6) Optional but very helpful -- A T-shirt with a related message. Obviously there's more space to work with too.

Private Contract Option:

1) Your business logo.
   1.1 Provide a less than 30 second scripted message that I can use to verbally describe your product if I get questioned.
   1.2 Provide me any business cards to hand out.
   1.3 If you have a product I can demo (i.e. Bitbills, Casascius coins, Android apps, Bitcoin cheques etc.)
2) Provide a "face" stencil. (optional)
3) Optional but very helpful --  A t-shirt with a related message. Obviously there's more space to work with too.

Logistics: It would be convenient, perhaps necessary, for the winning bid group or individual to provide a stencil so as to make my face appear just right. I will probably have to provide my facial dimensions to assist in making this work. Any demo product you want returned you must provide paid postage.

Contingencies: If I take too much heat (i.e. potential work issues) and have to terminate before a full week, I will reimburse everyone on a pro rata basis. If there are too many contributors for me to keep track of, I can donate a portion to a good cause. Again, we can have a poll for such a thing. Or, finally if you want to just not worry about it, we could call it even.

Let the bidding begin. Have fun.

This is the reason we should all want to invest in, or attempt to design, an open source completely information-transparent exchange. If a buyer has large enough funds and buys/sells enough to push the price above or below the spread cost to net a profit, then he/she will do so. This is a runaway scenario because they profit at the expense of others everytime (no negative feedback) to greater excess than the average trader. They could potentially propagate this strategy essentially ad-infinitum.

The other scenario is the "exchange" trades his/her own account and spoofs trades or doesn't pay the spread or has relatively larger working capital than the aggregate buy/sell trades to push the price in the direction desired, in addition to avoiding the spread or other associated fees. The only other option is to be the bigger player in the market, but that technique is still flawed.

Openness is key. That's why the bitcoin protocol works in the first place (the blockchain is public and so are all the defining algorithms and source code). Any degree of clandestine trading of bitcoin (centralized authority) for other fiat currencies (or any commodity really) that doesn't play by the same rules can be easily gamed given enough relative capital.

If the market weren't so small...

EDIT: Of course, it's hard to tell if there is one participant pretending to act like a "multi-participant" thus acting "in concert" to influence/manipulate price direction due to the psuedo-anonymous nature of bitcoin. What do you do?

I would suggest that if (big if), everyone here constitutes the largest investment in bitscalper, and we sum our total investment (hoping to approximate the purported 1000 BTC received thus far), then decide on a chronologically near date to minimize risk exposure and execute a test. That test would be to all simultaneously withdraw the entire investment on a specific date to see if bitscalper can comply with the request.

The nearby date should be such that it exceeds the withdrawal fee by a large multiple... say 5 times, and see if you get your money back. If everybody posts this withdrawal date so that a maximum of persons can see it, and a majority of investors withdraw on that date, you might be able to semi-verify the validity or legitimacy of their claims. This could prove that firstly they are using arbitrage, and second they are capable of paying.

They could get caught sideways in a trade (too long/short the commodity), but they shouldn't go bust. Call it crowd sourced participation.

The other option is to use an escrow service or trusted agent, give him the money then have him do the deposit and withdrawal (he could even withdraw on an unknown but proximal date to not "show his hand"). I'm sure we could find someone here we could trust. That way we can create one huge wave instead of in-the-noise random ripple effects.

Disconnect with what? Libertarians just want the least invasive and violent form of government possible. What's wrong with that? The fact that people just want to serve certain people under specific constraints may, in some cases, appear arbitrary.

But what's considered arbitrary if property ownership is already absolute? In fact, property ceases to be property when it's not exclusive anymore. Or more precisely, it merely comes into possession and control of the strongest most violent individual willing to take it from you for whatever reason they deem necessary.

Welcome to the animal kingdom and Darwinism. Let the strongest survive. Such a beautiful world we live in...

And you're deluded into believing your "benevolent" government has a better, friendlier, and less deadly solution. Who's more starry eyed and in love? Gag me with a politician.

Define "ruined" reputation. What kind of legal restitution would you want that would improve your reputation? People will think what they will think, and say what they will say. At what point do you get to point the proverbial gun in their face and say "or else"? Physically punishing someone because of the form of speech they use is violating that right to freedom of speech. What forms of speech should be regulated and punished, and why?

This is a speech issue were talking about here. When does one's ability to express himself fall into the category of violence, or theft?

I'm not necessarily suggesting a ruleset. I'm merely pointing out that responding with violence against a form of speech might be a bit excessive. Should we not concern ourselves with proportional punishment issues, say in a worse case scenario "eye for an eye" (i.e. you don't punish petty theft with death).

Counterfeiting should not be a crime (it is both non-violent and does not involve the physical property of others). However, if you promise -as in contract- to deliver a product originating from another manufacturer, and you deliver a "fake" or "copy", then you would be in breach of contract and could be "punished" (put in your flavor of restitution here).

Maybe we should all take a philosophy 101 class and then come back and have this discussion.

There was another thread equal to this one that's almost 100 pages long that already covers what we're just getting started into. I'm sure we can all dispense with the formalities, read that, and move on.

If you're going to have private property rights then they will conflict with the logic of intellectual property. They are incompatible concepts. Any amount of argumentation about the justification of the benefits to society don't make the idea any more logical, consistent or relevant, and they certainly don't level the playing field any. In fact, they do the opposite.

If it isn't logically consistent, somebody's going to get burned. It will always happen. History is riddled with people who can't seem to make the connection between the yours, mine and ours concept. You muddle that up, and society and your precious investments will all eventually go down the drain. The system has already been gamed. Special privileges given for special persons backed by a powerful political structure is always going to result in a mixed bag.

I just ask that everybody respect everybody else's person and property. Not real difficult to comprehend. Let's not turn it into rocket science.

So let's call it out for what it really is. It's primarily a legal censorship tool. It is a monopoly on specific production, distribution and sales; which when enforced against others, results in the expropriation of the property of the "infringer". IP isn't ownership of an idea since it is physically impossible to "own" due to it being a theoretical concept.

IP is indirect ownership of the property of legal infringers whose property composition resembles that of the monopoly holder. Crazy twisted in my opinion.

I don't think innovation would go away. People adjust their behavior and their tactics based on the prevailing market in which their environed. If everybody was free to emulate their neighbor, a lot more people would be trying things and spending a lot less time trying to set traps for the competition to fall into.

There would likely be more tinkering, adjusting, inventing and incremental innovation as opposed to worrying about being sued because some yahoo half a continent away who happenstanced upon a concept before you and decided to get governments "blessing" to prevent and exclude all others from it's use now has you dead to rights. Now you're in violation with the law, and you may not even know it.

The same IP laws can be used to "harm" others too. What if I invented a cancer cure pill and I were able to patent it (legal exclusion and proscription)? Let's also suppose that it's relatively easy to replicate. I just happened to figure it out and you didn't. So I decide instead of making a bazillion dollars once, I decide I enjoy watching people suffering and dying before their time. There's always a flipside to every coin.