Stabilized Bitcoin using eMunie economics

[Peachy]

For a start - where is a "professor of economics" that backs your theory?
(presumably you would at least have one)

Oh, I don't know.  How about Milton Friedman (ie. The Quantity Theory of Money)
http://www.econlib.org/library/Enc/bios/Friedman.html

On the Quantity Theory:
John Maynard Keynes accepted the theory in general and wrote:  "This Theory is fundamental. Its correspondence with fact is not open to question."

[Fuserleer]

Well if you re-read the original post, you'll see that I did not run the simulation with the elastic supply enabled, but with the emission algorithm as defined by Satoshi

So in fact this test was a very close simulation of attempting Bitcoin stability as the supply is not modified in any way other than diverting some of it to fund the buffer, and the overall emission follows Bitcoin exactly.

well if you are not creating the supply when emulating the bitcoin historic data. then your results would fail because the historic data would be void once you start playing with orders (butterfly effect)

you cant change orders and think that the future demand/supply and orders would still exist. so im still wondering why you would think that bitcoin would be stable based on your use of irrelevant historic data.

anything after the first day of daytrading in 2011 becomes a new dimension and no longer part of historic data.

people who cant get their orders processed because your system cant find a counter order to match. would cause people to withdraw funds(affecting your buffer) or they would change their order price(affecting history and demand). which as i say makes history change. and no longer relevant to use any further data from the next days data, as it would be invalid and not the same.

or more concisely put

You can easily create back-dated models for trading that work perfectly on history but will fail after they work live so it isn't a valid test.

(anyone who does automated trading knows this)

EG.
if you changed the winter 2013 spike of $1000 so that it stayed around the $100 level. lots of people would withdraw from your system(buffer supply dries up) to sell coins privately on other exchanges. which would mean that your exchange is then lacking supply and stuck at a false price of $100 with no resistance or no demand to sell.. what would then happen is lots of dollar holders throwing in more dollars to buy your limite supply of cheap coins that are left(by those stupid enough to not withdraw) thus they would lose out selling too cheap and the buyers would get cheap coins to then arbitrage until all supply buffer is gone.

leaving your system in a totally different dimension of value than other exchanges.

the only way your system would work is if you were the only exchange and no one had any other means of exchanging away from your system.

and so i think your system would be more suited to the fiat controlled and centralised economy. and not so much to manipulate bitcoin at the expense of people who want a true freemarket

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

If that trade was posted because the trader wanted to cash out because the price was $1000, then that same sentiment is present in our test.

Therefore if the sentiment isn't changed, then there is no butterfly effect.

In fact I would argue that due to this, it is HARDER to stabilize the price, as we are applying rational sentiment against prices that now make it irrational, and irrational trades are MUCH harder to stabilize.

For example User A has a Bitcoin that was worth $1000, as of the pump at the start of 2014, a few days later it was at $800, a lot of people cashed out because the sentiment was panic.

In our stabilized model we have that same trade, but it is applied to a stabilized price with the same sentiment, panic.  Even though in our stabilized test, there was no reason to panic because the price hadn't dropped 20% in a few days, perhaps only 0.5%.  In the stabilized environment that user A probably wouldn't have sold, but in our test he still process the sell with the same sentiment, even though its now irrational.

[Fuserleer]

For a start - where is a "professor of economics" that backs your theory?
(presumably you would at least have one)

WOW!

So I need to have a Professor that endorses my idea before I should present it? 

[franky1]

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

but by changing the trades, (making the $1000 never happen) you are changing the sentiment, which then effects future sentiment. and that is the exact problem, by not considering that sentiment will change because of your actions. you have failed to take that into account..

as ciyam said.. it wont work with live data as that involves live human emotion and change of sentiment in reaction to your model, and thus using historic data after the first day of changing it. makes all further days of historic data irrelevant

your model would only work on a centralised control of currency where you are the only exchange and hoarding environment available

[CIYAM]

For a start - where is a "professor of economics" that backs your theory?
(presumably you would at least have one)

So I need to have a Professor that endorses my idea before I should present it?  

If you look at what is going on in this field then I would say the more respected academics that you have to endorse your ideas the better (you think it is acceptable to have zero?).

Otherwise should we say that you and @CfB are equals then?

[Peachy]

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

but by changing the trades, (making the $1000 never happen) you are changing the sentiment, which then effects future sentiment. and that is the exact problem, by not considering that sentiment will change because of your actions. you have failed to take that into account..

as ciyam said.. it wont work with live data as that involves live human emotion and change of sentiment in reaction to your model

Did you read what he wrote?  The $1000 trade DID happen.

[Anima]

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

but by changing the trades, (making the $1000 never happen) you are changing the sentiment, which then effects future sentiment. and that is the exact problem, by not considering that sentiment will change because of your actions. you have failed to take that into account..

as ciyam said.. it wont work with live data as that involves live human emotion and change of sentiment in reaction to your model

What you're talking about is the market dynamics during a pump (FOMO) and dump (fear), which is correct.However, you're wrong. The test is done so that the sentiments are tested, which gives a worst case scenario for the price stability mechanism. In a live testing, these extremes will be much less pronounced and hence the stability will be easier to keep. It does not invalidate the algorithm, it backs it up since it will likely not see such pressures in live environment.

[franky1]

Did you read what he wrote?  The $1000 trade DID happen.

Here's the view if BTC was using the eMunie economics method (Baseline start cost $0.10): http://imgur.com/cMIHT2P

min/max btc (from the chart above): $2.22/$1163 (delta: 1160.78 or 1160780.00%)

min/max emu (from the chart above): $0.09832/$0.10322 (delta: 0.0049 or 4.9%)

seems like over 5 years of your model it never reached $1000

anyway.. goodluck with your emu coin.. it wont work on the freemarket, but may be a good demonstration for the fiat centralised and controlled economy

[Peachy]

For a start - where is a "professor of economics" that backs your theory?
(presumably you would at least have one)

So I need to have a Professor that endorses my idea before I should present it?  

If you look at what is going on in this field then I would say the more respected academics that you have to endorse your ideas the better (you think it is acceptable to have zero?).

Otherwise should we say that you and @CfB are equals then?

So isn't taking the next logical step in rationally implementing the Quantity Theory of Money (first proposed in the 80s when technology would have been limited for a useful implementation) considered relatively the same thing as having it supported by a sizable population of academia?

[Fuserleer]

Keep at it Fuserleer! Always nice to see something new..  

And if inflation (ie. new supply) is distributed equitably and fairly across all users based on their existing holdings then the net effect on them is zero.  

So - accounts can have the total amount of EMU increased, to ensure that the overall price stays stable ?

I may have 10 EMU, and that is worth $1. But if the price of EMU halves, I will have 20 EMU, but still $1..  (I think ?)

Can you only increase EMU per user, and remove EMU from the Buffer ?

What happens if the Buffer is empty and you still need to remove more coins.. ? (global demurrage ?)

Almost but from the wrong angle

The price of EMU has no bearing on how much you hold, if you hold 10EMU and the price drops from $1 to $0.50 you still have 10EMU.

The demand of EMU does have effect though, so if the price of EMU is going up due to demand, and there is not enough supply, new supply is created and distributed in a number of ways.

One of those ways is "dividend on balance" (or stake), so if there was 10% new supply created, you would receive a 10% dividend on your balance.  Now you have 11 EMU, not 10.

Its preferable when attempting to maintain a stable price, that absorbing new incoming value is done by an increase in quantity, and not the price of each unit.

Can you only increase EMU per user, and remove EMU from the Buffer ?

Yes if the buffer has an excess, then it will not be allocated a portion of more supply, only users will (getting a bit out of the realms of the discussion here, but it was a good question!)

What happens if the Buffer is empty and you still need to remove more coins.. ? (global demurrage ?)

The buffer can always remove EMU from supply (fill sell trades) as it is able to do the conversion of EMU to another token at will and "in place"

Example, you are selling 1 EMU for 1 USD.  The buffer has no EMU and no USD tokens, it can take your 1 EMU, convert it to 1 USD token, and send it back to you.

You can then exchange that 1 USD token for a real USD dollar via the TRAID network (again a bit out of realm for this topic, but I want to be through)

Later the person that exchanged you 1 real USD for your USD token wants to by an EMU, he posts a trade and the process repeats, converting that USD token to EMU if possible, or your trade of that USD token sits on the exchange until someone other than the buffer comes and fills it (at this point, the buffer is not able to intervene so the prices run unhindered until it can).

[CIYAM]

So isn't taking the next logical step in rationally implementing the Quantity Theory of Money (first proposed in the 80s when technology would have been limited for a useful implementation) considered relatively the same thing as having it supported by a sizable population of academia?

I am just wondering why there don't seem to be any economists (Hungarian or otherwise) backing your model.

(if your idea is backed by the so-called Hungarian's then why are they not being supportive of it?)

[Peachy]

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

but by changing the trades, (making the $1000 never happen) you are changing the sentiment, which then effects future sentiment. and that is the exact problem, by not considering that sentiment will change because of your actions. you have failed to take that into account..

as ciyam said.. it wont work with live data as that involves live human emotion and change of sentiment in reaction to your model

Did you read what he wrote?  The $1000 trade DID happen.

http://imgur.com/cMIHT2P
seems like over 5 years of your model it never reached $1000

Yes, the baseline (start) cost was set to $0.10.  The btc prices were then normalized to this value since that is the expected start value for eMunie (tentatively).

[Fuserleer]

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

but by changing the trades, (making the $1000 never happen) you are changing the sentiment, which then effects future sentiment. and that is the exact problem, by not considering that sentiment will change because of your actions. you have failed to take that into account..

as ciyam said.. it wont work with live data as that involves live human emotion and change of sentiment in reaction to your model, and thus using historic data after the first day of changing it. makes all further days of historic data irrelevant

your model would only work on a centralised control of currency where you are the only exchange and hoarding environment available

The sentiment doesn't change!

That trade even though it is now only at $1 is processed as if it was at $1000.

[Fuserleer]

I didn't alter the sentiment of the trades though, the sentiment of every single one of those 58M trades is exactly as it was.

but by changing the trades, (making the $1000 never happen) you are changing the sentiment, which then effects future sentiment. and that is the exact problem, by not considering that sentiment will change because of your actions. you have failed to take that into account..

as ciyam said.. it wont work with live data as that involves live human emotion and change of sentiment in reaction to your model

Did you read what he wrote?  The $1000 trade DID happen.

http://imgur.com/cMIHT2P
seems like over 5 years of your model it never reached $1000

Yes, the baseline (start) cost was set to $0.10.  The btc prices were then normalized to this value since that is the expected start value for eMunie (tentatively).

Actually the start cost of $0.1 was based on the first every trade of BTC at that price, from Mt.Gox.

[Fuserleer]

So isn't taking the next logical step in rationally implementing the Quantity Theory of Money (first proposed in the 80s when technology would have been limited for a useful implementation) considered relatively the same thing as having it supported by a sizable population of academia?

I am just wondering why there don't seem to be any economists (Hungarian or otherwise) backing your model.

(if your idea is backed by the so-called Hungarian's then why are they not being supportive of it?)

Surely to get backing I need to present my idea first...which is what Im doing here and seemingly getting scolded for it.

[Sparky_eMunie]

Another issue that faces traditional monetary systems is that the feedback loop is full of delays.  By the time the controlling authority has all the information about what the economy is doing and makes a decision on what the best course of action is, the economy is already doing something totally different.

In a system such as this, there isn't that large delay, its to the minute (or even second) information on economic behavior, thus the reaction to it will be more relevant and be more efficient.

It's hard to say - the way China has been trying to handle their share market melt down is to shut it down nearly every other day (and that isn't working if you hadn't noticed).

I would agree that there is little point in "delaying things" as you just end up with a "train-wreck in slow motion" (which is exactly what we are seeing in regards to the Chinese stock market).

But overall if the sentiment is overwhelmingly negative there is really nothing you can do to stop the downward trend.

I don't think that the Chinese economy can be compared to eMunie at all. The Chinese economy is an extremely manipulated house of cards build from an insane amount of (often hidden) credit.

[Peachy]

So isn't taking the next logical step in rationally implementing the Quantity Theory of Money (first proposed in the 80s when technology would have been limited for a useful implementation) considered relatively the same thing as having it supported by a sizable population of academia?

I am just wondering why there don't seem to be any economists (Hungarian or otherwise) backing your model.

Well, Friedman died 10 years ago, but that's irrelevant to the facts of his published theory.  I'm guessing since Einstein is dead light can now easily go faster than 'c.'

[CIYAM]

Surely to get backing I need to present my idea first...which is what Im doing here and seemingly getting scolded for it.

Okay - but I would not have thought that this forum would be the appropriate place to present your idea (as I doubt hardly any such people would be looking at this forum).

Also - it is starting to look like you have a bunch of shills here.

If you want to be taken seriously I think you should perhaps ask them to tone it down.

[Peachy]

Surely to get backing I need to present my idea first...which is what Im doing here and seemingly getting scolded for it.

Okay - but I would not have thought that this forum would be the appropriate place to present your idea (as I doubt hardly any such people would be looking at this forum).

Also - it is starting to look like you have a bunch of shills here.

If you want to be taken seriously I think you should perhaps ask them to tone it down.

So answering questions is now considered bad form?  What a concept. 

[CIYAM]

So answering questions is now considered bad form?  What a concept. 

If you were just answering questions (that I'd actually asked you) then that would be totally okay - but I actually haven't even asked you a single question (I was asking the guy in charge).