DECENTRALIZED crypto currency (including Bitcoin) is a delusion (any solutions?)

[Fuserleer]

I have been following you for years with much interest, I post very little.  How to you plan to stablize the price of your coin?   I realize that the market will ultimatly decide the value of a coin but for mass adoption I believe you will need some measure of stability, even if it means a slow and steady increase in the value of your work.
  It seems most people will not 'mass adopt' unless there is some level of stability. If you look at the jump(pump) and fall of any coin it does not take much to realize that an astute individual would not accept the great variance in price without abandoning a coin.  Even for a smaller holder...having 50$ one day and only 30$ the next because of great swing in price and lack of trust in the whole system will not produce the mass adoption you are looking for.  I realize social media adoption may be a bit diffrent but I think the idea for stability in price still applies. I also realize a pegged price seems to be a failure at this point...

Your thoughts?

D

  

You cannot stabilize exchange rates during any exponential growth phase unless you having unlimit money to do narrow market making.

This guy knows what he's talking about and that is almost exactly what we are doing

Elastic supply gives the resources required to do said market making.

If you are wondering it works VERY well!

... Said the FED and Keynsyman.

I believe in open markets and selfregulation. The less but genius rules the better. Who are you try to get control over complex systems? God?

Just because one attempt failed spectacularly due to a number of issues such as a biased distribution, delay in economic information propagation, abuse of money creation, greed and corruption; doesn't mean it can't work if managed and regulated properly.

If an economic system is void of the above issues, which decentralized technology now allows us to do, then at the macro scale it simply comes down to https://en.wikipedia.org/wiki/Supply_and_demand.

Ok, I see we talk about sth very different. You talk about goods and services, I was about money.

Not at all, you can quantify money to fit the same simple parameters as supply and demand economics if you are smart about it.

If you manage to set money equal to work hours you would not want anybody doing some elastic to your work time, would you?

That's a different paradigm though as its the consumption of a resource you can not get more of easily (or at all) thus it is a scare commodity.  There is no way to regulate that and it has to operate under free-market principles.

Think of money akin to something that can be cheaply manufactured yet maybe worth more than the sum of its parts (demand).  The manufacturing process and assembly line for said money is the network itself with its consensus and economic rules.

If you manufacture too much of something, its perceived value drops, and vice versa if you don't create enough.  Same applies with money.

The whole philosophy of inflation, and the central banks informing us that inflation is good, is so that the newly "printed" money at the top of the pyramid is worth the same as the money at the bottom so they can extract more value from it before the currency devalues slightly due to over supply.  As the new money trickles down the broad economy starts to feel the effect of it and the value of each unit in circulation devalues, pushing the price of good and services up.

If you remove that abuse alone, then already we are on the way to a more stable and dependable currency.

Ultimately my point is, that just because you and a few of use here know how to use volatile money, the rest of the world does not and expects a currency to be stable from day to day.  Until that happens, crypto and alternative money systems will remain under adopted at large.

I see you try to do your last fight here and regulators like you need more and more words for that to tweek logic.

All what you do with your ellastic supply of money, work, store of value is taking the risk from the lemmings, keep them uneducated and get rich personally. I would recommend you have good disclaimers on that.

I try to,educate the lemmings. You judge what helps more to our world.

Huh??  How can I be a regulator and "get rich personally" if the system is decentralized and I have no control over the elasticity of the supply once the initial rules are set and are fair.

I think perhaps you are confusing me with someone else :-)

[hv_]

I have been following you for years with much interest, I post very little.  How to you plan to stablize the price of your coin?   I realize that the market will ultimatly decide the value of a coin but for mass adoption I believe you will need some measure of stability, even if it means a slow and steady increase in the value of your work.
  It seems most people will not 'mass adopt' unless there is some level of stability. If you look at the jump(pump) and fall of any coin it does not take much to realize that an astute individual would not accept the great variance in price without abandoning a coin.  Even for a smaller holder...having 50$ one day and only 30$ the next because of great swing in price and lack of trust in the whole system will not produce the mass adoption you are looking for.  I realize social media adoption may be a bit diffrent but I think the idea for stability in price still applies. I also realize a pegged price seems to be a failure at this point...

Your thoughts?

D

  

You cannot stabilize exchange rates during any exponential growth phase unless you having unlimit money to do narrow market making.

This guy knows what he's talking about and that is almost exactly what we are doing

Elastic supply gives the resources required to do said market making.

If you are wondering it works VERY well!

... Said the FED and Keynsyman.

I believe in open markets and selfregulation. The less but genius rules the better. Who are you try to get control over complex systems? God?

Just because one attempt failed spectacularly due to a number of issues such as a biased distribution, delay in economic information propagation, abuse of money creation, greed and corruption; doesn't mean it can't work if managed and regulated properly.

If an economic system is void of the above issues, which decentralized technology now allows us to do, then at the macro scale it simply comes down to https://en.wikipedia.org/wiki/Supply_and_demand.

Ok, I see we talk about sth very different. You talk about goods and services, I was about money.

Not at all, you can quantify money to fit the same simple parameters as supply and demand economics if you are smart about it.

If you manage to set money equal to work hours you would not want anybody doing some elastic to your work time, would you?

That's a different paradigm though as its the consumption of a resource you can not get more of easily (or at all) thus it is a scare commodity.  There is no way to regulate that and it has to operate under free-market principles.

Think of money akin to something that can be cheaply manufactured yet maybe worth more than the sum of its parts (demand).  The manufacturing process and assembly line for said money is the network itself with its consensus and economic rules.

If you manufacture too much of something, its perceived value drops, and vice versa if you don't create enough.  Same applies with money.

The whole philosophy of inflation, and the central banks informing us that inflation is good, is so that the newly "printed" money at the top of the pyramid is worth the same as the money at the bottom so they can extract more value from it before the currency devalues slightly due to over supply.  As the new money trickles down the broad economy starts to feel the effect of it and the value of each unit in circulation devalues, pushing the price of good and services up.

If you remove that abuse alone, then already we are on the way to a more stable and dependable currency.

Ultimately my point is, that just because you and a few of use here know how to use volatile money, the rest of the world does not and expects a currency to be stable from day to day.  Until that happens, crypto and alternative money systems will remain under adopted at large.

I see you try to do your last fight here and regulators like you need more and more words for that to tweek logic.

All what you do with your ellastic supply of money, work, store of value is taking the risk from the lemmings, keep them uneducated and get rich personally. I would recommend you have good disclaimers on that.

I try to,educate the lemmings. You judge what helps more to our world.

Huh??  How can I be a regulator and "get rich personally" if the system is decentralized and I have no control over the elasticity of the supply once the initial rules are set and are fair.

I think perhaps you are confusing me with someone else :-)

I m human, I might.
If you ARE god, you set the rules.
If not, decentralization is best approach also for defining the rules by evolution and selection of the strongest. So they must be simple and genius = from god.
I hope your stuff is better than ETH and you re not like VB try to play god.

Strongest money is just not elastic, cause money is base entity for valuation of all goods and services.
Compare to numbers in math.
Compare to work in pyhsics.
Not good to change basis of any metrics.

[Peachy]

I m human, I might.
If you ARE god, you set the rules.
If not, decentralization is best approach also for defining the rules by evolution and selection of the strongest. So they must be simple and genius = from god.
I hope your stuff is better than ETH and you re not like VB try to play god.

Strongest money is just not elastic, cause money is base entity for valuation of all goods and services.
Compare to numbers in math.
Compare to work in pyhsics.
Not good to change basis of any metrics.

Think of a simple example and it will help illustrate why the statment "strongest money is not elastic" is maybe not the right way to go.

A community of 10 people have 50 coins in circulation so they can use them as a medium of exchange between other members within the group for goods and services (i.e. closed economy).

These 50 coins have a perceived value as defined by the relative basket of goods and services each coin can procure.

The coins themselves are basically worthless intrinsically, but they have value in that they are mutually agreed to as a medium of exchange between the 10 citizens.

Over time the population of 10 people now grows to 50 (through normal birth and immigration activities).  At this point in time there are still 50 coins in circulation, but there are not enough of them to transact normal business activity and thus their percieved value increases as they are now a scarce resource.  This increase in perceived value of the coin doesn't really reflect an increase in the true value of the goods and services produced by the citizens, but merely an increase in the demand for the coin (which isn't really a good or service that adds value to the economy). 

This warped scarcity now drives volatility in the overall normal flow of business activity and can cause some businesses to fail in the short term and eventually nearly all to stall out if there aren't enough coins to do the transactions required for business.

If instead there was an autonomous computer that continuously monitored the supply of coins relative to the overall demand for them and instantly deposited the newly created supply into each citizen's wallet at a proportional and fair value relative to their existing holdings then the net effect would be a zero increase in inflation since all holders increased their holdings at the same level as before the increase.  However, the new supply now enables businesses to continue operating and growing at optimal levels.

[deisik]

If instead there was an autonomous computer that continuously monitored the supply of coins relative to the overall demand for them and instantly deposited the newly created supply into each citizen's wallet at a proportional and fair value relative to their existing holdings then the net effect would be a zero increase in inflation since all holders increased their holdings at the same level as before the increase.  However, the new supply now enables businesses to continue operating and growing at optimal levels

There is no need in an outside computer

The system can be easily self-regulated. Create a bank inside it that would be able to create money when an entrepreneur needs to expand production and comes to the bank for a loan. Set interest rate to 0, and you will get basically the same result without externally manipulating the money supply. If the borrower defaults (e.g. his goods are not in demand or whatever), the bank sells his collateral or his assets and destroys the money

[Fuserleer]

If instead there was an autonomous computer that continuously monitored the supply of coins relative to the overall demand for them and instantly deposited the newly created supply into each citizen's wallet at a proportional and fair value relative to their existing holdings then the net effect would be a zero increase in inflation since all holders increased their holdings at the same level as before the increase.  However, the new supply now enables businesses to continue operating and growing at optimal levels

There is no need in an outside computer

The system can be easily self-regulated. Create a bank inside it that would be able to create money when an entrepreneur needs to expand production and comes to the bank for a loan. Set interest rate to 0, and you will get basically the same result without externally manipulating the money supply. If the borrower defaults (e.g. his goods are not in demand or whatever), the bank sells his collateral or his assets and destroys the money

I think you are missing the point

There is no need for a bank, or debt for that matter, at all in such a system.  Nor is what I propose an "external manipulation", it's totally internal and governed by the actors of the system itself (everyone agrees that more/less supply is needed and who gets it).

If you introduce a bank to manage the loans and supply it then becomes centralized and the bank can refuse loans and thus manipulate the value....which is the exact opposite to what we want.

[hv_]

I m human, I might.
If you ARE god, you set the rules.
If not, decentralization is best approach also for defining the rules by evolution and selection of the strongest. So they must be simple and genius = from god.
I hope your stuff is better than ETH and you re not like VB try to play god.

Strongest money is just not elastic, cause money is base entity for valuation of all goods and services.
Compare to numbers in math.
Compare to work in pyhsics.
Not good to change basis of any metrics.

Think of a simple example and it will help illustrate why the statment "strongest money is not elastic" is maybe not the right way to go.

A community of 10 people have 50 coins in circulation so they can use them as a medium of exchange between other members within the group for goods and services (i.e. closed economy).

These 50 coins have a perceived value as defined by the relative basket of goods and services each coin can procure.

The coins themselves are basically worthless intrinsically, but they have value in that they are mutually agreed to as a medium of exchange between the 10 citizens.

Over time the population of 10 people now grows to 50 (through normal birth and immigration activities).  At this point in time there are still 50 coins in circulation, but there are not enough of them to transact normal business activity and thus their percieved value increases as they are now a scarce resource.  This increase in perceived value of the coin doesn't really reflect an increase in the true value of the goods and services produced by the citizens, but merely an increase in the demand for the coin (which isn't really a good or service that adds value to the economy).  

This warped scarcity now drives volatility in the overall normal flow of business activity and can cause some businesses to fail in the short term and eventually nearly all to stall out if there aren't enough coins to do the transactions required for business.

If instead there was an autonomous computer that continuously monitored the supply of coins relative to the overall demand for them and instantly deposited the newly created supply into each citizen's wallet at a proportional and fair value relative to their existing holdings then the net effect would be a zero increase in inflation since all holders increased their holdings at the same level as before the increase.  However, the new supply now enables businesses to continue operating and growing at optimal levels.

Mostly understood and yes there will be always fiat to solve some issues here.
But fiat (here your central computer goes into) is set to always loose against better money like gold or bitcoin.

Edit: There is no need to mimic fiat in crypto world. We need sth really orthogonal thats the genius new thing. The mixture of bitcoin and fiat is there to be and everybody is free to decide how much to invest into.

[deisik]

If instead there was an autonomous computer that continuously monitored the supply of coins relative to the overall demand for them and instantly deposited the newly created supply into each citizen's wallet at a proportional and fair value relative to their existing holdings then the net effect would be a zero increase in inflation since all holders increased their holdings at the same level as before the increase.  However, the new supply now enables businesses to continue operating and growing at optimal levels

There is no need in an outside computer

The system can be easily self-regulated. Create a bank inside it that would be able to create money when an entrepreneur needs to expand production and comes to the bank for a loan. Set interest rate to 0, and you will get basically the same result without externally manipulating the money supply. If the borrower defaults (e.g. his goods are not in demand or whatever), the bank sells his collateral or his assets and destroys the money

I think you are missing the point

There is no need for a bank, or debt for that matter, at all in such a system.  Nor is what I propose an "external manipulation", it's totally internal and governed by the actors of the system itself (everyone agrees that more/less supply is needed and who gets it).

If you introduce a bank to manage the loans and supply it then becomes centralized and the bank can refuse loans and thus manipulate the value....which is the exact opposite to what we want.

It is a moot point really

I could just as easily challenge your stance by claiming that the actors of the system might disagree on how much they would want to increase or decrease money supply, and now what? In this sense, the bank would be more useful. Basically, it is the "autonomous computer" that runs inside the system itself. It is interesting as a feedback mechanism that allows automatic regulation of money supply in this society. Let's assume that its aim consists exclusively in creating and destroying money as required, i.e. not in manipulating it

[iamnotback]

If you manufacture too much of something, its perceived value drops, and vice versa if you don't create enough.  Same applies with money.

I am not following the context of this discussion, but the above bolded is incorrect.

The Quantity Theory Of Money is incorrect. The value of money is dictated by public confidence.

[Fuserleer]

If you manufacture too much of something, its perceived value drops, and vice versa if you don't create enough.  Same applies with money.

I am not following the context of this discussion, but the above bolded is incorrect.

The Quantity Theory Of Money is incorrect. The value of money is dictated by public confidence.

You can quantify that.  

There are 2 independent monetary systems, say fiat and X.

Value is inflowing into X, therefore you can state that confidence is leaving the fiat system and entering the X system (bull market anyone?)

The same is true in the opposite direction, value is leaving X and flowing into fiat thus reduced confidence in X (bear market).

It's as simple as that and simple is king.

Although I would argue that public confidence rarely comes into it anymore, especially with fiat.

Furthermore to your statement, the value of a commodity is also dictated by public confidence.

The latest Samsung phone is case in point....everyone wanted them and was willing to pay for them.  They started blowing up, thus confidence dropped, now they are worth nothing.

There are a lot of parallels between commodity & currency when you keep the economic parameters simple.

[iamnotback]

Well with money, isn't it more of a waterfall collapse. The public confidence is there until it isn't, then you have hyperinflation.

Hyperinflation is not caused by overprinting of money, but rather when the public looses all confidence in the government that is backing the currency regime.

As for speculation on value, that is distinct from confidence. Confidence is more like an on/off switch, not a fluctuation.

For example, if tomorrow everyone became convinced that Bitcoin has a bug which makes it possible to create units of currency willy-nilly, then confidence would plummet and the value would go to near 0.

I don't think speculation value can be tightly controlled by quantity theory either though. Dogecoin's spike in value is one evidence.

[Fuserleer]

You're talking about black swan events, rapid loss of confidence due to some uncontrollable (usually external) factor.

There are plenty of examples of marginal confidence loss that did not end in disaster....Brexit for one.

Upon announcement a large amount of confidence left the £ and headed for other currencies such as $, but it didn't result in the UK burning to the ground because the £ didn't go to zero.

Now tell me, if the Bank of England was able to reduce the amount of sterling in circulation immediately to match the appropriate confidence levels that the value of a single £ would not have remained the same.

[hv_]

Last try here for education sake.

If you try to achieve mass adoption you need to understand phase separation mechanics in physics.

Think of getting control over density of water when you reach 100C at 1 atm by having a fast heating velocity.

You just cant. If it starts boiling the density drops  hyperbolic and as far as I can remember there can be higher order phase separations less understood and even harder to 'control'. We learn about that a complex system needs to find equilibrium at its own dynamics. Who dares to have this understanding and power individually?

Findinig this equilibrium quickly, simple rules are your friend + maximal distribution from start.

[dinofelis]

You're talking about black swan events, rapid loss of confidence due to some uncontrollable (usually external) factor.

There are plenty of examples of marginal confidence loss that did not end in disaster....Brexit for one.

Upon announcement a large amount of confidence left the £ and headed for other currencies such as $, but it didn't result in the UK burning to the ground because the £ didn't go to zero.

Now tell me, if the Bank of England was able to reduce the amount of sterling in circulation immediately to match the appropriate confidence levels that the value of a single £ would not have remained the same.

I think iamnotback is referring to the disruption of what makes a monetary asset into a monetary asset: a recursive belief system, while you are referring to market forces of offer and demand.  Of course, both are related, but iamnotback is perfectly right when he talks about hyperinflation as the breakdown of the recursive belief system.

After all, why does a monetary asset have monetary value ?  It is because Joe considers it of value and is willing to give goods and services to obtain some, because he believes that Jack will also give goods and services for it, because Joe believes that Jack believes that Mary will accept goods and services against it, and Joe believes that Jack believes that Mary believes that... Joe will accept it against goods and services.  In other words, there is a community of users of that monetary asset that believes that each of them believes that each of them believes that .... believes that others in the community will accept it.
This is a bi-stable system: or everybody believes it, and the belief is self-sustaining ; or essentially nobody believes it, and that non-belief is also self-sustaining.  It is like many bi-stable systems, with isles of stability, and regions of instability (transition zones) between them.

When the belief is not there, the "value" of the asset is near zero.  It doesn't have to be strictly zero.  It can have "fun" value (collector value, joke value, ....).  When the belief is there, it has a significant value.  What value ?  Well, THAT will be determined by the market of course, by offer and demand.

During a transition zone from non-belief to belief, there is a speculative region which looks a lot like a "greater-fool game".  Early adopters may think that if the asset is going to get generally believed to hold value, they can still get hold of it for not much.   During the onset of a monetary asset, fortunes can be made.  In fact, a monetary asset usually starts its journey as a "speculative bubble that fails to pop".

The transition from belief to non-belief, hyper inflation, is in fact, that speculative bubble that finally pops.

A speculative bubble of which the main or sole drive is "greater fool theory" has to pop, because one runs out of greater fools.  But with a monetary asset, one doesn't need a GREATER fool, just a SAME fool.  This is why the infinitely recursive belief system is sustainable: the same entity can appear several times in it (like in my example: Joe believed in Jack who believed in Mary who believed in Joe accepting the asset).  There's no expectation of gain.

Now, whether an external event has as a consequence a price fluctuation (a "crash" for instance) or has as a consequence a hyperinflation, depends on whether the stability island of the belief system is left or not.

[sidhujag]

You're talking about black swan events, rapid loss of confidence due to some uncontrollable (usually external) factor.

There are plenty of examples of marginal confidence loss that did not end in disaster....Brexit for one.

Upon announcement a large amount of confidence left the £ and headed for other currencies such as $, but it didn't result in the UK burning to the ground because the £ didn't go to zero.

Now tell me, if the Bank of England was able to reduce the amount of sterling in circulation immediately to match the appropriate confidence levels that the value of a single £ would not have remained the same.

I know another crypto trying to do the same... to artificially try to reduce volatiility or try to reach a target price but funds are essentially locked.. although im skeptic about the design as you cannot generate money velocity without intrinsic demand for the token i am nontheless open and interested in learning of the outcome of the experiment. How do you plan to reduce supply and expand in a decentralized way? I guess you would be locking and unlocking aswell?

[Peachy]

I think iamnotback is referring to the disruption of what makes a monetary asset into a monetary asset: a recursive belief system, while you are referring to market forces of offer and demand.  Of course, both are related, but iamnotback is perfectly right when he talks about hyperinflation as the breakdown of the recursive belief system.

After all, why does a monetary asset have monetary value ?  It is because Joe considers it of value and is willing to give goods and services to obtain some, because he believes that Jack will also give goods and services for it, because Joe believes that Jack believes that Mary will accept goods and services against it, and Joe believes that Jack believes that Mary believes that... Joe will accept it against goods and services.  In other words, there is a community of users of that monetary asset that believes that each of them believes that each of them believes that .... believes that others in the community will accept it.
This is a bi-stable system: or everybody believes it, and the belief is self-sustaining ; or essentially nobody believes it, and that non-belief is also self-sustaining.  It is like many bi-stable systems, with isles of stability, and regions of instability (transition zones) between them.

When the belief is not there, the "value" of the asset is near zero.  It doesn't have to be strictly zero.  It can have "fun" value (collector value, joke value, ....).  When the belief is there, it has a significant value.  What value ?  Well, THAT will be determined by the market of course, by offer and demand.

During a transition zone from non-belief to belief, there is a speculative region which looks a lot like a "greater-fool game".  Early adopters may think that if the asset is going to get generally believed to hold value, they can still get hold of it for not much.   During the onset of a monetary asset, fortunes can be made.  In fact, a monetary asset usually starts its journey as a "speculative bubble that fails to pop".

The transition from belief to non-belief, hyper inflation, is in fact, that speculative bubble that finally pops.

A speculative bubble of which the main or sole drive is "greater fool theory" has to pop, because one runs out of greater fools.  But with a monetary asset, one doesn't need a GREATER fool, just a SAME fool.  This is why the infinitely recursive belief system is sustainable: the same entity can appear several times in it (like in my example: Joe believed in Jack who believed in Mary who believed in Joe accepting the asset).  There's no expectation of gain.

Now, whether an external event has as a consequence a price fluctuation (a "crash" for instance) or has as a consequence a hyperinflation, depends on whether the stability island of the belief system is left or not.

Good discussion.  And what would drive those users to "want" to use that system?  Speaking personally: A reduction in the friction-costs of the existing system(s).

With existing fiat the merchant's customers usually pay with credit cards which means they (the merchant) have to absorb the 2-3% EMV fee (we can argue the number forever, but it's a cost the business must absorb) vs. the cash cost (whether you want to call this a cash discount or credit card surcharge don't bother until the supreme court decides that wording later this year).  Either way, its a friction cost for the merchants.  Likewise, so is the 30 day holding period before they can actually receive the funds for the goods sold.

With bitcoin (and frankly all other current crypto solutions) any debit card charges go across the very same EMV network and thus the merchant still incurs the 2-3% surcharge cost or that cost is passed to the user.  Someone has to pay it.  However, the 30 day waiting period is now eliminated and thus the utility of bitcoin debit cards vs. fiat credit cards does have value for them.

With our solution there is no need for the merchant or user to pay the 2-3% EMV and you can create your own debit card for yourself and for any friends/family you wish (equipment cost to crank them out is negligible).  The card you create will work on any and all existing merchant terminals, but without having to pay EMV and will clear the transaction in around 10 ~ 15 seconds.

This is not the only value-add the system will provide, but just one that clearly shows the improvement in real value vs. any existing project developed or proposed that would drive adoption.

 

[Fuserleer]

You're talking about black swan events, rapid loss of confidence due to some uncontrollable (usually external) factor.

There are plenty of examples of marginal confidence loss that did not end in disaster....Brexit for one.

Upon announcement a large amount of confidence left the £ and headed for other currencies such as $, but it didn't result in the UK burning to the ground because the £ didn't go to zero.

Now tell me, if the Bank of England was able to reduce the amount of sterling in circulation immediately to match the appropriate confidence levels that the value of a single £ would not have remained the same.

I think iamnotback is referring to the disruption of what makes a monetary asset into a monetary asset: a recursive belief system, while you are referring to market forces of offer and demand.  Of course, both are related, but iamnotback is perfectly right when he talks about hyperinflation as the breakdown of the recursive belief system.

After all, why does a monetary asset have monetary value ?  It is because Joe considers it of value and is willing to give goods and services to obtain some, because he believes that Jack will also give goods and services for it, because Joe believes that Jack believes that Mary will accept goods and services against it, and Joe believes that Jack believes that Mary believes that... Joe will accept it against goods and services.  In other words, there is a community of users of that monetary asset that believes that each of them believes that each of them believes that .... believes that others in the community will accept it.
This is a bi-stable system: or everybody believes it, and the belief is self-sustaining ; or essentially nobody believes it, and that non-belief is also self-sustaining.  It is like many bi-stable systems, with isles of stability, and regions of instability (transition zones) between them.

When the belief is not there, the "value" of the asset is near zero.  It doesn't have to be strictly zero.  It can have "fun" value (collector value, joke value, ....).  When the belief is there, it has a significant value.  What value ?  Well, THAT will be determined by the market of course, by offer and demand.

During a transition zone from non-belief to belief, there is a speculative region which looks a lot like a "greater-fool game".  Early adopters may think that if the asset is going to get generally believed to hold value, they can still get hold of it for not much.   During the onset of a monetary asset, fortunes can be made.  In fact, a monetary asset usually starts its journey as a "speculative bubble that fails to pop".

The transition from belief to non-belief, hyper inflation, is in fact, that speculative bubble that finally pops.

A speculative bubble of which the main or sole drive is "greater fool theory" has to pop, because one runs out of greater fools.  But with a monetary asset, one doesn't need a GREATER fool, just a SAME fool.  This is why the infinitely recursive belief system is sustainable: the same entity can appear several times in it (like in my example: Joe believed in Jack who believed in Mary who believed in Joe accepting the asset).  There's no expectation of gain.

Now, whether an external event has as a consequence a price fluctuation (a "crash" for instance) or has as a consequence a hyperinflation, depends on whether the stability island of the belief system is left or not.

I agree to a degree, but I am not talking about trying to stabilize it at the edge of belief breakdown, nor FORCE the price to an absolute value.

Many of us here have no confidence or belief in the fiat monetary systems, but that doesn't lead it to immediately fail.  So long as 2 or more parties believe and agree the same, then that micro economy can function.  

Is it an efficient system?  That depends on your outlook and context but it can still function to serve just those 2 individuals quite fine regardless of everyone else.

Just for the record, what we are trying to do is not to "peg" the currency to remain at a specified value, but to smooth out the short term bumps into a more long term trend so that it is more predictable.  If the market wants a lower value, fine....higher value, fine also...this perfectly and acceptably deals with the consequences of belief, confidence, or whatever else you want to call it.

[Fuserleer]

You're talking about black swan events, rapid loss of confidence due to some uncontrollable (usually external) factor.

There are plenty of examples of marginal confidence loss that did not end in disaster....Brexit for one.

Upon announcement a large amount of confidence left the £ and headed for other currencies such as $, but it didn't result in the UK burning to the ground because the £ didn't go to zero.

Now tell me, if the Bank of England was able to reduce the amount of sterling in circulation immediately to match the appropriate confidence levels that the value of a single £ would not have remained the same.

I know another crypto trying to do the same... to artificially try to reduce volatiility or try to reach a target price but funds are essentially locked.. although im skeptic about the design as you cannot generate money velocity without intrinsic demand for the token i am nontheless open and interested in learning of the outcome of the experiment. How do you plan to reduce supply and expand in a decentralized way? I guess you would be locking and unlocking aswell?

No our methods are completely different and do not "lock up" users funds in any manner.  Simply:

To increase supply the system creates new units and distributes them according to a set of rules (accounts with balance, work performed by nodes). 

The act of stabilizing the short term bumps in the price trend requires that the system acts as a narrow market maker, which in turn leads to "profit".

In the event that a supply reduction is required, the "profit" from market making is burnt for all to see.

Overly simplified but provides a 100,000 ft view.

The critical part is the market making activities which I'm not going to disclose the low level details of just yet...

[sidhujag]

I think iamnotback is referring to the disruption of what makes a monetary asset into a monetary asset: a recursive belief system, while you are referring to market forces of offer and demand.  Of course, both are related, but iamnotback is perfectly right when he talks about hyperinflation as the breakdown of the recursive belief system.

After all, why does a monetary asset have monetary value ?  It is because Joe considers it of value and is willing to give goods and services to obtain some, because he believes that Jack will also give goods and services for it, because Joe believes that Jack believes that Mary will accept goods and services against it, and Joe believes that Jack believes that Mary believes that... Joe will accept it against goods and services.  In other words, there is a community of users of that monetary asset that believes that each of them believes that each of them believes that .... believes that others in the community will accept it.
This is a bi-stable system: or everybody believes it, and the belief is self-sustaining ; or essentially nobody believes it, and that non-belief is also self-sustaining.  It is like many bi-stable systems, with isles of stability, and regions of instability (transition zones) between them.

When the belief is not there, the "value" of the asset is near zero.  It doesn't have to be strictly zero.  It can have "fun" value (collector value, joke value, ....).  When the belief is there, it has a significant value.  What value ?  Well, THAT will be determined by the market of course, by offer and demand.

During a transition zone from non-belief to belief, there is a speculative region which looks a lot like a "greater-fool game".  Early adopters may think that if the asset is going to get generally believed to hold value, they can still get hold of it for not much.   During the onset of a monetary asset, fortunes can be made.  In fact, a monetary asset usually starts its journey as a "speculative bubble that fails to pop".

The transition from belief to non-belief, hyper inflation, is in fact, that speculative bubble that finally pops.

A speculative bubble of which the main or sole drive is "greater fool theory" has to pop, because one runs out of greater fools.  But with a monetary asset, one doesn't need a GREATER fool, just a SAME fool.  This is why the infinitely recursive belief system is sustainable: the same entity can appear several times in it (like in my example: Joe believed in Jack who believed in Mary who believed in Joe accepting the asset).  There's no expectation of gain.

Now, whether an external event has as a consequence a price fluctuation (a "crash" for instance) or has as a consequence a hyperinflation, depends on whether the stability island of the belief system is left or not.

Good discussion.  And what would drive those users to "want" to use that system?  Speaking personally: A reduction in the friction-costs of the existing system(s).

With existing fiat the merchant's customers usually pay with credit cards which means they (the merchant) have to absorb the 2-3% EMV fee (we can argue the number forever, but it's a cost the business must absorb) vs. the cash cost (whether you want to call this a cash discount or credit card surcharge don't bother until the supreme court decides that wording later this year).  Either way, its a friction cost for the merchants.  Likewise, so is the 30 day holding period before they can actually receive the funds for the goods sold.

With bitcoin (and frankly all other current crypto solutions) any debit card charges go across the very same EMV network and thus the merchant still incurs the 2-3% surcharge cost or that cost is passed to the user.  Someone has to pay it.  However, the 30 day waiting period is now eliminated and thus the utility of bitcoin debit cards vs. fiat credit cards does have value for them.

With our solution there is no need for the merchant or user to pay the 2-3% EMV and you can create your own debit card for yourself and for any friends/family you wish (equipment cost to crank them out is negligible).  The card you create will work on any and all existing merchant terminals, but without having to pay EMV and will clear the transaction in around 10 ~ 15 seconds.

This is not the only value-add the system will provide, but just one that clearly shows the improvement in real value vs. any existing project developed or proposed that would drive adoption.

 

What solution is that? Shakepay?

[dinofelis]

Many of us here have no confidence or belief in the fiat monetary systems, but that doesn't lead it to immediately fail.  So long as 2 or more parties believe and agree the same, then that micro economy can function.  

Indeed, and even if you *say* that you have no belief or confidence in the fiat systems, in fact that is not true, if you introspect sufficiently.  What you do here, is taking an intellectual stance, and because you see a dissonance between what is publicly told what are the principles of the fiat system, and what you think/know is really behind it, you find that it is a system that doesn't deserve your confidence or belief.  But that is from an abstract point of view, when you analyse the system intellectually.   But this is *not* the kind of belief that we are talking about.  In reality, you *do* believe in the fiat system in the following sense: I'm pretty sure that you believe that if one way or another, you've got a suitcase full of (real) 100-dollar bills, that a lot of people are going to do a lot of stuff for you to obtain them.  In other words, the "belief in the system" doesn't matter, the belief in other people's acceptance of that stuff against goods and services matters.
And, unless you are totally deluded, which I'm sure you aren't, you will agree with me that a lot of people would be willing to *accept* a suitcase of dollar bills against things that have quite some value.  As long as many people think the same, the monetary belief system remains in place, no matter what you might "intellectually" think of the failure of the system at hand.

Just for the record, what we are trying to do is not to "peg" the currency to remain at a specified value, but to smooth out the short term bumps into a more long term trend so that it is more predictable.  If the market wants a lower value, fine....higher value, fine also...this perfectly and acceptably deals with the consequences of belief, confidence, or whatever else you want to call it.

In fact, there's a quite easy way to do so.  If you start from bitcoin, you simply don't adapt the difficulty as a function of the time it takes to make a block, but simply to a kind of long-term Moore's law estimation.  As such, the higher the bitcoin market price goes, the more interesting it is to mine, and as the difficulty doesn't get adapted, you mine more and more coins in a given time unit.  The inflationary pressure will then lower the price of a coin to where the mining costs of a coin (which are now fixed) coincide with the market price of a coin.  
The problem here would be unexpected technological advances in mining, which make it cheaper faster than Moore's law.  The other problem is that making the currency is as profitable as obtaining it through selling goods and services, so in the end, there's no incentive to use it as a currency...

The problem is that such a perfect currency would never catch on, because 95% of crypto is about speculation for "moon".  If you build a system that doesn't allow to dream about the moon, but is simply a good stable currency, nobody's going to "invest" in it, and it wouldn't take off.

[Dink]

Thank you for all your inputs.  These are the differing ideas that I wanted to hear(who is correct only the future will tell).  Some very good points were brought up, my Idea of "mass adoption" equated to "mass use"...which was faulty.  I now have a better understanding of what crypto might achieve,

peace,
D