If I were you, I'd charge a bit more for this service until demand calms down.

Good gravy. This thread will be gone very soon when mods come online.

Still, while it is here, I will comment that after seeing a story on TV about an 11-year-old girl who was kidnapped and kept as a sex-slave for 18 years by a convicted pedophile in his back yard, I got angry to the point of contemplating something like this. (http://en.wikipedia.org/wiki/Kidnapping_of_Jaycee_Lee_Dugard)

I pondered whether I could make an anonymous offer to pay bitcoins to anyone who killed a known high-risk (unrepentant, unreformed, likely to re-offend) convicted pedophile out on probation after his wrist-slap sentence was served.

I eventually calmed down enough to see that it wouldn't be a good idea, for a number of reasons, but I'm very sympathetic to anyone who has inclinations in that direction.

I'd be interested in buying legos in bulk if the prices were competitive.

I've been thinking about buying a gift code for minecraft, but I see one on Ebay for $8.99 USD (0.66 BTC), so I would probably not pay more than that.

I believe there may be a solution to bitcoin inflation/deflation/volatility by building onto the existing bitcoin protocol to create a pegged-value bitcoin-backed currency: http://forum.bitcoin.org/index.php?topic=30741.0

So far, nobody has given me a serious critique of why it wouldn't work. Maybe it is too verbose for anybody to bother reading all the way through . . .

Well, since you've done a lot of coding using the protocol, you would know whether it is possible as well as anybody.

It just drives me crazy that there are so many people who would rather use a stable bitcoin, and there are so many people who want to bet big on bitcoin's success, and there's a very simple arrangement that would allow each of them to give the other what they want! If it only there was a way we could bring those people together in a simple, easy-to-use way, bitcoins would become much more valuable and usable.

Anybody have any other ideas on how to accomplish this? It will probably make bitcoin values go up at least tenfold if we figure out a way to do it.

I really hope not, because anything involving a new blockchain would be pretty worthless, IMHO.

The only way it would be valuable (I think) is to build on the existing block chain, continuing to accept and process standard bitcoin transactions in the usual way while adding new transaction types and rules for the new bitcoin-backed value stores.

Starting separate block-chains threatens the value of everyone's existing bitcoins, so I can't imagine that very many bitcoin people would want to use something new. I'd rather build on the existing bitcoin network and existing coins, and add value to them.

If a miner tries to put the wrong exchange rate in a block, the block would not be accepted by the rest of the network. The same logic would apply to a miner that tried to put a timestamp on a block that was 5 years in the future. Other nodes would reject that block.

Anyway, I'm trying to get back to my central question. My question assumes that it is possible through some protocol changes. I don't really care what protocol changes.

Assuming it is possible in some way, is this worth doing? Will it massively improve bitcoin utility and value as I imagine it will? Or do you guys think it is just another silly idea that probably can't gain traction?

How much demand would there be for a value-pegged bitcoin-backed currency? How much demand would there be for the leveraged hyperbitcoins absorbing the volatility? Would they balance each other out as I imagine they would?

Challenge accepted. I'm not a cryptography expert, but I am a software engineer, and I think I can come up with a straw man idea at least for you guys to knock down.

The first thing needed would be a decentralized agreed-upon exchange rate between bitcoins and 1971 US dollars. I don't know how the bitcoin protocol currently does the distributed timestamps, but I'm guessing that something similar could be done for the exchange rate number. For the sake of argument I'm going to assume that having miners encode the exchange rate in their generated blocks would work, requiring a heavy moving average to prevent the exchange rate from moving drastically over a short time. The miners would probably calculate the exchange rate based on the current exchange rates on the biggest bitcoin exchanges, combined with U.S. inflation data since 1971.

Assuming I now have a distributed exchange rate, I proceed to the problem of producing two new bitcoin-backed currencies: 1971coins and hyperbitcoins.

A normal user downloads the shiny new 1971coin/hyperbitcoin client, and wants to convert some of their bitcoins to 1971coins. They see that that the client has a new feature; it says "value stored in: bitcoins change this". They click the "change this" button, and select "1971USD". Their client now says "value stored in: 1971USD change this". Simple.

Behind the scenes, the client sends out a new kind of transaction, paying the client's bitcoins from their bitcoin address (19hMEAaRMbEhfSkeU4GT8mgSuyR4t4M6TH) to their new 1971coin address (45VjRaDX9zpbA8LVnbrCAFzrVzN7ixHNsC). Note that the latter address starts with "4", clearly distinguishing it from all regular bitcoin addresses which start with "1". The bitcoins are not actually transferred - they are held by the network, and can only be retrieved when someone converts 1971coins or hyperbitcoins back to bitcoins.

Eventually, a miner running updated code picks up the transaction and encodes for posterity that this user has surrendered their bitcoins to hold 1971coins instead.

The user then uses those 1971coins like they would normal bitcoins, or stores them in a hole in the ground. No matter where they go, how they are subdivided/combined, they can always be converted back into bitcoins by the inverse transaction, and they will get a different amount of bitcoins from the network at that time (equal to the face value of the 1971coins at the current exchange rate). The bitcoins they receive will be the ones surrendered by other people who converted bitcoins to 1971coins or hyperbitcoins.

Another user converts his bitcoins into hyperbitcoins, using a similar transaction, except he sends them to an address starting with "h" (hFNTpsLm8Mitdd99YC1tHSyN2dVMdQiWYo). His bitcoins are also held by the network. His new hyperbitcoins CANNOT be transferred, spent, etc. They can only be held or converted back to bitcoins. This is because all hyperbitcoins are not of equal value. When hyperbitcoins are created from bitcoins, they get a leverage value based on the current number of 1971coins and hyperbitcoins in circulation. When they are converted back to bitcoins, the miner processing the block looks at the change in the bitcoin exchange rate from the time they were created, and pays out bitcoins according to the leverage of these particular hyperbitcoins times the change in the exchange rate.

In this way, bitcoin speculators (who don't want a stable currency) play the counter-party to people who want a stable currency.

There. That's a shot at how it could work. What I am more interested in, however, is your collective comments on whether this is worth doing.

If enough people think that this is a good idea, I plan to pester the bitcoin developers to look at this thread and comment as to whether there are changes that could be made to the protocol to make this possible.

Is this a good idea? What potential problems might come out of a change like this?

I should add that the effective leverage experienced by those holding HyperBitcoins would be variable, dependent on how many people are holding them. If very few people held HyperBitcoins, they would be highly leveraged, but if tons of people held them, they would have only very mild leverage.

A big price increase for regular bitcoins would probably cause a lot of people to get out of HyperBitcoins (to lock in their gains), and a big price drop for regular bitcoins would give people an incentive to switch to holding HyperBitcoins (to profit when the price comes back up), which would ensure that there were always enough people holding hyperbitcoins to keep the 1971USD people stable in a declining bitcoin market.

Similarly, if lots of people wanted to hold HyperBitcoins, that would decrease their leverage, reducing the incentive to hold them, and lots of people getting out of HyperBitcoins would increase their leverage, making them more attractive to speculators, and providing incentive to hold them. This would reach a natural equilibrium leverage which would be determined by supply and demand.

Unlike other *Coin proposals, this idea would not devalue today's bitcoins which so many in this community are already heavily invested in. It would in fact (I believe) drive the bitcoin price much higher as people not interested in bitcoin speculation suddenly have a useful stable currency backed by bitcoins that never inflates or deflates at all. The demand for these 1971USD flavor bitcoins would drive up regular bitcoin prices, and the hyperbitcoin profits would be INSANE.

I believe this proposal effectively addresses the following bitcoin problems:

• Merchants unable to set prices because bitcoin values are always changing
• Complaints about built-in bitcoin deflation
• Users who don't want to speculate on bitcoin prices, but want to be able to send/receive a stable decentralized currency
• Users who want to store lots of money in bitcoins and know that it will still be worth the same in 10 years
• Speculators who want leverage, but have no easy way to get it

I really don't see a downside here (assuming it can be done at all). Any comments?

I've always used TaxAct software, so I thought I would see what they say about bitcoins:


Here is the response I got:

I'm blatantly stealing an idea from Bitcoin Morpheus, who came up with the idea for 1971Coins:


I think I have an interesting way to implement that, backed by the current bitcoin protocol, hashing, and stored value, which I summarized in his thread:


I wanted my own thread to discuss this further, so I created this one.

Maybe this idea is too simplistic or impossible, but I'm imagining an interface that looks like this for an average joe who just wants a stable store of value:


A bitcoin speculator holding HyperBitcoins might see this:

Now imagine that the value of bitcoins drops 10%

The user storing value in 1971USD would then see this:

The user storing value in HyperBitcoins would see this:

The contract(s) in the protocol automatically transfered 0.11 bitcoins from the hyperbitcoin holder to the 1971USD holder to make up for the change in the exchange rate.

Now imagine that instead of a bitcoin price drop, we had a 10% bitcoin price increase from where they started.

The user storing value in 1971USD would then see this:

The user storing value in HyperBitcoins would see this:

In this case, contract(s) in the protocol automatically transfered 0.09 bitcoins from the 1971coin holder to the hyperbitcoin holder to make up for the change in the exchange rate.

I'm a big fan of the "stablecoin" idea, in fact I even used that name earlier in one of my own posts suggesting something similar: http://forum.bitcoin.org/index.php?topic=7945.msg119375#msg119375

I like the concept of pegging to the 1971 dollar value. A central server that took deposits and withdrawals in bitcoins and issued a stable currency for commerce usage would be one way to do it, but then you have all the issues with central control that bitcoins circumvent (one server for the government to shut down, for instance.

A well-used and highly liquid bitcoin futures market would also go a long way toward solving this problem for big players, but wouldn't help much for your average joe.

What would be REALLY cool would be if some sort of automatic behind-the-scenes "stabilization option" could be built right into the bitcoin client. Imagine a radio button selection where I could choose to store my value in "1971 USD", "bitcoins", or "HyperBitcoins". The 1971 folks would be paired with the HyperBitcoin folks using contracts in the block chain. The contract allows the 1971 user to spend their bitcoins as if they have a set value in 1971 USD, and the hyperbitcoin contract holder is obligated to add bitcoins to the transaction if bitcoins are worth less, or pockets the extra bitcoins if bitcoins are worth more.

Edit: I created a separate thread for the HyperBitcoin idea above: http://forum.bitcoin.org/index.php?topic=30741.0

Yup. That is me.

I make almost no money from doing that, but I really like TradeHill and it is fun to help them out.

I think it is good to have a link to someplace you can actually buy bitcoins for the person just finding out about them in a news article, so I don't feel that it is completely out of place.

I got mine a couple days ago. I love it!

OP (me) is too lazy/busy to organize. Anyone feel free to take the reigns.

This thread is now in the Newbies section, so it is open to our newest Seattle bitcoiners to post in.

One of the most important uses of this forum is "product pimping". That's the biggest reason I follow this forum is to see what new products are being released.

Generally, you want to create a single thread for your product, and try to keep discussion of your product within that thread. This allows anyone interested in your product to subscribe to your thread to get updates.

It's often ok to post a link to your thread in related threads as long as you aren't annoying people.

Forum convention is that the first post (and first post title) always provide a concise summary of your product and its current status.

All of you should check out the bitcoin software developer resume trove: http://forum.bitcoin.org/index.php?topic=10878.0

If you are interested in bitcoin-related work, you should have a post there!