Is there a way for two parties to agree on a fixed exchange rate for their transaction at a future date regardless of the actual bitcoin exchange rate? Does that capability exist?

As a newbie this is something I've always wondered about.

Somebody has to except an digital message that results in a deposit in their bank account. But couldn't anybody create an arbitrary crypto currency, assign an exchange rate to it and produce the same kind of API that results in a deposit in which cash appears in someones account? What differentiates this from counterfeiting money?

I understand that this happens in the Forex market, but at the end of the day somebody has to generate a dollar deposit out of thin air.

What am I missing?

My viewpoint is controversial.

Not everything should be tied to a profit motive, not every cost to a marketplace. I view  Socialism and Capitalism as carbon and iron. Two metals that by themselves are weak but when combined create a alloy called steel.

Volunteer work, modest safety nets are important. But the market place with the exception of life threatening illness is the best way to determine price and thus profit motive is needed. There is no clear answer as to how much carbon or iron should be used to create this form of steel. It changes day to day, week to week and month to month.

My solution to poverty is both. Provide a vibrant economy with a profit motive to  generate small business growth that creates jobs, provide some public services to allow individuals tor recover from catastrophic events.

Simple:

The wealthy derive their income from investments

The middle class from salary.

The wealthy can place enough of their money outside of currency to profit from the fall of central banker backed fiat money, we the citizens get paid in dollars and are wealth is linked to the fortunes of the currency.

There's your answer. 

They can't disengage from the markets and allow the markets to price risk into the bond market. Does anyone alive believe that yields on everything from junk to TBills reflect default risk? Can a government with a debt/GDP over 100% withstand a yield that would divert more sources to making the interest payment on the debt than paying for social security?

NO!

They know this is the end game.

Its negative interest rates next and stay the course until the barbarians (monomer they are the real barbarians) are at the gates. Then kick the can done the road have lots of technocratic meetings all the while flames consume the streets outside meeting halls.

How do I know this?

Because its happened before countless times over the 6 millennium history of man, and always the same outcome. With the same type of people, aristocrats who prancing around pretending to be noble who derive substance from the status quo.

  

If bitcoin is to be considered money it believe it must seek to be neither inflationary nor deflationary. Ideally money itself is not an investment but rather the machinery of commerce with its role as a medium of transfer of work done in an economic system. What I propose is an algorithm which attempts a partial implementation of the 1913 Federal Reserve act, focusing on it's key element and eliminating its other two flawed objectives.

http://www.law.cornell.edu/uscode/text/12/225a

This charter contains one meaningful statement: STABLE PRICES, the rest are crap.

Employment is, of course driven by highly complex socioeconomic factors other than monetary policy, this is at best a delusional objective for monetary policy. Likewise, moderate long-term interest rates are set by the markets who's purpose overall is to price risk into debt by using a yield as a measurement of risk. The key is the STABLE PRICES component of the Federal mandate that enables a sane business and social environment that will aid in employment, and as a by product, moderates long-term interest rates.


To achieve a stable commodity prices the value of money should strengthen with rising commodity inflation and weaken as inflation falls. During rising inflation a rising currency value will encourage savings and investment since it has a multiplier effect of dividends plus rising exchange rate. This would drain money from present economy reducing demand and invest it for the future. As commodities fall the exchange rate reverses and encourages spending over saving so if the economy fails and demands is reduced money is pulled from future growth to the present be decreased savings, this increases demand. The result is a system that seeks to keep prices as stable as monetary policy alone can do ... no guarantees because obviously its driven by other factors but it would be a force for stability.

 
Since all economic activity and services require energy the system should track energy usage in BTU's as a basis for the exchange rate. Energy costs are the key driver of inflation and are the usually the first place where central banker side affects show up: you can print all the money you want but you can't print oil. For starters a simple, perhaps overly simple, algorithm to determine the exchange rate could look like this:

Suppose you had an accurate real time measurement of worldwide energy demand. It would probably look like this:

http://en.wikipedia.org/wiki/Energy_in_the_United_States#mediaviewer/File:US_historical_energy_consumption.png

Take two moving 200 day averages separated by one year and take the difference to create a seasonly adjusted energy usage number. The percentage change between today's number and yesterday's number is the percent of change in the value of the currency.  

The devil of course is in the details: What to use for real time measurement energy consumption? There are real time ETNs/ETFs that track the price of sources of energy such as natural gas, coal and oil, but these are expressed in US dollars that are subject to the toxic fallout of Central Bank policy. Usage in BTUs is a purer measurement in my opinion because it reflects demand offset by energy cost. Sadly I don't know what that input would be.

Assuming an accurate real time measurement is found you would have a currency exchange rate that seeks to stabilize prices in the economy. It would be predictable since its based on long term moving averages both the trend should be clear and day to day price fluctuations small.

Bitcoin now is being used in part as an investment vehicle, but it produces no actual work in the economy other than draining energy resources for computation. To me this is flawed and the bitcoin exchange should be automated based on the principles above so that it can be used as sound money.

Thanks I did.

I think the best way to go, if the forum thinks this is a good idea worth pursuing, is to use the Linux from scratch distro and make a small virtual machine that boots in single user mode and runs headless with only a network interface for communication. The goal would be a tiny virtual box that can run on any host machine Windows/OSX/Linux and act like a distributed form of Trezor.

Not a trivial task by a long shot but I'd love to take a stab at it. But I would like to see how much interest there is for something like this.

I found this from the Bitcoin Weakness wiki:

https://en.bitcoin.it/wiki/Weaknesses

Hello,

  I have an idea I would to present, depending upon the feedback I will devote more time to it.


I propose that many of the basic problems with virtual currency stems  from the fact that they are stored on a general purpose file system. All file systems are built around the concept that beyond some basic I/O permissions a file is a block of data on a storage medium which can be easily copied, edited and moved. There is an embedded idea of trust in the end user behind this. While this is a highly desired design goal for 99.999% of all computer applications I would propose that it is not desirable for a crypto-currency.

I believe that the basic ethos of an ideal crypto-currency is nobody can be trusted, only machines can be trusted. The current file system is designed to provide open information and trusts the end user. In an ideal crypto-currency system when I transfer money from my bank account to create a virtual coin it is owned by system, while I can control how and what it is spent it on it is the property of the system until I spent it on a tangible good. I can’t be trusted beyond that, since I could be a malicious user. I can’t be trusted to know where it is, but only the guaranteed that it does exist and I can perform financial transactions with it.

I propose a file system that violates many of the current rules of software abstraction. A general purpose file system manages data on a hard drive as a utilitarian application that is a servant to other applications. This file system would be an embedded system that contains an application, networking and disk management all in one.
It could almost qualify as a mini-virtual machine.

This file system would offer a unique interface to the user, not a directory tree but a small menu of options to be manipulated by the bit coin client. The file system would be able to communicate with other file systems using virtual synchrony to safely transfer data, distribute computing and provide a backup in case of a hardware failure. The location of data would be hidden to the end user, the ability to copy a wallet at the user level would not exist. If a wallet was lost the user can request from the system a recovery wallet from stored fragments on the network, this process would of course be safe guarded to prevent a false claim. 

By creating a massive hidden distributed file system the need for intense encryption is rendered partially mute. The unorthodox and complex nature of such a system would be its own form of encryption on top of any traditional RSA encryption.

Any thoughts? (Other then I'm crazy )

Greetings,


  I was wandering if anyone has looked at using virtual synchrony in bitcoin?
This allows for multiple programs to sent multicast messages to one another with
order guaranteed so that every process receives the message at the same time.

I have been using an excellent message oriented middle-ware for some of my projects at work over the past 10 years called the spread toolkit. There may be others, but this is the one I am familiar with, here is a quick overview:

http://www.spread.org/SpreadOverview.html


Here is an example of the kind of messaging control it provides:

RELIABLE_MESS:
    The message will arrive once at all members of its destination group, it may be arbitrarily, but finitely delayed before arriving, and may arrive out of order with regards to other reliable messages.

FIFO_MESS:
    The message will be reliably delivered once to all members of its destination groups, and it will be ordered with all other FIFO messages from the same source. Nothing is guaranteed about the ordering of FIFO messages from different sources.
   
CAUSAL_MESS:
    These messages have all the properties of FIFO messages and in addition are causally ordered (as defined by Lamport) with regards to all sources.

AGREED_MESS:
    These messages have all the properties of FIFO messages but will be delivered in a causal ordering which will be the same at all recipients, i.e. all the recipients will 'agree' on the order of delivery.

SAFE_MESS:
    These messages have all the properties of AGREED messages, but are not delivered until all daemons have received it and are ready to deliver it to the application. This guarantees that if any one application receives a SAFE message then all the applications in that group will also receive it unless the machine or program crashes.



The library implements a publisher/subscriber model were an application can create
a message group that other applications join. It operates like chat room where each message sent by one application is received by any application joined to the spread group.


I was wandering if such a toolkit would be helpful to bitcoin?

Great job!

I have worked with allot of open source applications before like VLC and I can tell you this sort
of clear concise documentation without fluff is invaluable.

We newbies stand in debt to you.