[idea] A federal reserve system for bitcoin

[ifinta]

Report:
 - I decided to act again.
 - My funds on xapo (at this time): 3637.66 EUR (or 2.07594834 BTC)

[deisik]

I started a fund for bitcoin today - a seed for a federal reserve system of the bitcoin

The idea is simple:

I hold 50% - 50% bitcoin and EUR on my xapo account. If the difference between two proportion reaches 10% - I made a transaction to balance it. It is easy with xapo.

If you will join - just create a fund on an exchange or an debit card application, u.s.w. - just as you will. You can deposit, maybe exchange some fiat (EUR, USD, ...) as you wish to this account.
Target is to make this funds balanced: 50% fiat (or gold, or silver) - 50% bitcoins

Could you explain the purpose of all that?

I read it a few times and still can't understand your idea. I understand what you are going to do, basically, you choose to keep balance in your funds at some ratio between fiat and crypto. Obviously, you are free to do whatever you may choose to do with your money. Sell your coins, buy yours coins, even gift them all, but what end exactly this idea should help to achieve?

- This idea should increase the market depth of bitcoin.
- The volatility should decrease.

I don't really understand how it could increase the market depth of bitcoin. In fact, I don't even understand what you mean by that. The same about volatility. How exactly should balancing of one's stash decrease volatility, and what does this all have to do "a federal reserve system for bitcoin". Are you posting this nonsense just to attract some attention to your personality?

If so, then more power to you

[ifinta]

Report:
 - I decided to act.
 - My funds on xapo (at this time): 3913.22 EUR (or 1.93450976 BTC)

Analyse:

   xapo
date eur btc rate
2017-05-23   3817   1,95724298   1950,192203525
2017-05-25   4121,06   1,81859392   2266,0693817782
2017-05-26   3916   1,9184341   2041,2481200162
2017-05-27   3637,66   2,07594834   1752,2883059797
2017-05-28   3913,22   1,93450976   2022,8484140602

I see a small lost in bitcoin and a small increase in eur. Not a good profit. This post isn't about profitable trading - but it isn't a target to loose the funds. Plus Xapo was sometimes unreachable.
Maybe Xapo not the best platform for this experiment, as mentioned oft in this thread.
I searching for other platform. Can you tell me better platforms for this target? Please post it, if you have ideas...

[ifinta]

I found a new platform - Lykke.
They promise 0 fees...
I installed the app on my mobile.
The app shows the lowest ask and highest bid prices also. It is possible to buy/sell/store in wallet XAU (gold) and XAG (silver), ... and EUR, USD, CHF, ... and of course BTC.
As first step I will deposit 2 BTC to my Lykke app.

[ifinta]

I deposited 2 BTC to Lykke. I bought for 1 BTC CHF. My balances on Lykke is at this time: 2222.67 CHF and 1 BTC ...

[VC George]

I don't think you can influence the average Bitcoin price with small amounts of funds, let alone do it by using only one parameter (say Xapo). The Bitcoin "price" is actually the average price of all known/big and trusted exchanges combined to give you a general idea of the spot price each moment. Thus you'd need some 10-20 million dollars in a constant spinning at various exchanges.
Just let it work it's way up & down

[d5000]

I like the idea a bit. So you are willing to create, basically, a contrarian trading group that "backs" the price of Bitcoin in bear markets and limits the spikes in bull markets. It reminds me to an user in the German forum who has propagated this technique for years, but never did this "group" approach. It also reminds me a bit of NuBits.

The problem I see is that it that in certain situations probably your group will be "out-traded" by big whales conspiring to make the price rise or fall. The group that does this contrarian strategy must be very big to be prepared for this kind of "attack". An idea would be the development of a bot that would be used by all the participants (just like in NuBits).

An alternative strategy I would prefer to limit volatility - but that involves the selling of goods and services - is that merchants could back the price giving "price guarantees" for their goods for a certain period (e.g. a day). This would, however, only prevent crashes, but not spikes to the upside. See here for the idea.

The advantage over a "backing the BTC price with fiat" like in your proposal is that goods cannot be easily "traded back" to Bitcoin, so an attacker would have huge transaction costs if he wants to game the system buying all available items, and also that "non-scarce goods" like digital goods would make this kind of attack entirely impossible.

[VC George]

An alternative strategy I would prefer to limit volatility - but that involves the selling of goods and services - is that merchants could back the price giving "price guarantees" for their goods for a certain period (e.g. a day). This would, however, only prevent crashes, but not spikes to the upside. See here for the idea.

The advantage over a "backing the BTC price with fiat" like in your proposal is that goods cannot be easily "traded back" to Bitcoin, so the merchant would have huge transaction costs if he wants to game the system buying all available items, and also that "non-scarce goods" like digital goods would make this kind of attack entirely impossible.

That sounds reasonable.But at the end of the day we need to consider what makes the price of Bitcoin. Until now only big and "trusted" exchanges are counted. If we are to "impose" guarantees for x prices at y moments almost every price observation algorithm should have to include big merchants and at the same time BitPay, Coinify and other api providers should agree at the spreads of the price (eg at 19/6 UTC 00:00 the price stands at 2000$ & we guarantee this value until 12:00) but again the interval is big and they could lose or gain considerable amounts of fees if they are to convert their coins to fiat asap.

[bluefirecorp]

Not a new idea, this was thought of before and a few tried to implement but to no success.
To operate this concept, you cannot rely on a third party wallet, you have to be a full fledged wallet provider yourself. If you rely on a third party and one fine morning the site is gone with all your (rather other's I would say) coins, then you know where you have to head to.

[ifinta]

Thank you for feedbacks

I think more such system works for BTC already independently. Every trader has reserves in fiat and in Bitcoin also. And every trader has a strategy to buy and sell. It is well distributed - and we can see, the big price peaks and big price crashes not more a nature of Bitcoin. Or?
I started an other thread, a poll: https://bitcointalk.org/index.php?topic=1903469.0
It shows the same result: most of people thinks, so big peak as in November 2013 is not more possible... If you has other opinions - please feel free to vote and post your opinions.

Only the app idea seems to me unique - it could give us informations about Bitcoin Market in a new way. Of course it needs a big, living community...

And: I decided to act again - I bought some CHF, and I have on Lykke Wallet 2842.23 CHF and 0.7802 BTC.

[d5000]

To operate this concept, you cannot rely on a third party wallet, you have to be a full fledged wallet provider yourself. If you rely on a third party and one fine morning the site is gone with all your (rather other's I would say) coins, then you know where you have to head to.

For the system to work, it would be necessary obviously that the participants use different wallets and exchanges. A good bet would be a "rebalancer bot" that does the rebalancing in an automatized way, is platform-independent and extensible by the API commands of the different exchanges and "fixed-rate shops" like Xapo.

It would be also interesting to integrate Bitsquare and Coinffeine (if it still exists) and perhaps also "fiat-backed" cryptocurrencies like the BitUSD. This way, single points of failure could be minimized.

PS: Just found this "portfolio rebalancing" bot that already uses the strategy since the year 2013. It was conceived for defunct exchange MtGox but surely can be adapted to be platform independent. Maybe there is a newer bot available.

If we are to "impose" guarantees for x prices at y moments almost every price observation algorithm should have to include big merchants and at the same time BitPay, Coinify and other api providers should agree at the spreads of the price (eg at 19/6 UTC 00:00 the price stands at 2000$ & we guarantee this value until 12:00) but again the interval is big and they could lose or gain considerable amounts of fees if they are to convert their coins to fiat asap.

In my idea, the system would be totally decentralized, so every merchant on every platform could choose the price that he considers convenient to give his price guarantees. BitPay would only have to enable the option for merchants, but the provider itself would not need to guarantee nothing (because then, the backing mechanism would be fiat-based, not backed by "goods and service"). A good idea would be to use a price index like the one Coindesk uses and computes various exchanges and maybe moving averages, to avoid short term spikes.

[hello_good_sir]

Alright. I'm not super great with economics, i failed economics when i was in 11th grade so i'm still trying to comprehend how this works. So in a nutshell this is essentially something to help bitcoin reach its minimal volatility possible, correct?

If i got this right... Why exactly is it called federal reserve? And why does bitcoin need a whole system behind it to prevent it from crashing?

Thank you for feedbacks

I think more such system works for BTC already independently. Every trader has reserves in fiat and in Bitcoin also. And every trader has a strategy to buy and sell. It is well distributed - and we can see, the big price peaks and big price crashes not more a nature of Bitcoin. Or?
I started an other thread, a poll: https://bitcointalk.org/index.php?topic=1903469.0
It shows the same result: most of people thinks, so big peak as in November 2013 is not more possible... If you has other opinions - please feel free to vote and post your opinions.

Only the app idea seems to me unique - it could give us informations about Bitcoin Market in a new way. Of course it needs a big, living community...

And: I decided to act again - I bought some CHF, and I have on Lykke Wallet 2842.23 CHF and 0.7802 BTC.

So are you using Lykke as a platform to hold different currencies right now? What makes them better than, say holding funds on Xapo/a bank? Sorry for this, i just don't get it 100%.

[ifinta]

Alright. I'm not super great with economics, i failed economics when i was in 11th grade so i'm still trying to comprehend how this works. So in a nutshell this is essentially something to help bitcoin reach its minimal volatility possible, correct?

Yes. Plus we become through an app more information about Bitcoin trading community.

If i got this right... Why exactly is it called federal reserve?

It is a joke. I take this name from FED of US dollar. But if more people joining - we will have a reserve (in more fiat/precisous metal/...) for Bitcoin price "stability".

And why does bitcoin need a whole system behind it to prevent it from crashing?

Bitcoin doesn't need this system. Bitcoin can work well in volatility also. Only humans (we both i.e.) angry because of heavy volatility... This system is for us, for humans

So are you using Lykke as a platform to hold different currencies right now? What makes them better than, say holding funds on Xapo/a bank? Sorry for this, i just don't get it 100%.

It is your choice, if you will join. I tried xapo also - see above - but I trying just Lykke, because they promise no fee's.

[ifinta]

Report:
 - I decided to act again.
 - My funds on Lykke (at this time): 2407.76 CHF and 0.9449 BTC

[ifinta]

Report:
 - I decided to act again.
 - My funds on Lykke (at this time): 2407.76 CHF and 0.9449 BTC

My funds on Lykke not reachable at this time The same amount... But not as valuable, as before. I try to contact Lykke support this year also... I need patiente, I know.

A question: did sombody implemented this algo? Or act similar at price changes?

[Crypdon]

I like this idea, it helps to ensure that there is no overspend. However, it will be hard to maintain in a volatile market unless you have a lot of capital to make up the difference. Never used xapo so i won't participate but it is interesting nonetheless.

[ifinta]

I like this idea, it helps to ensure that there is no overspend. However, it will be hard to maintain in a volatile market unless you have a lot of capital to make up the difference. Never used xapo so i won't participate but it is interesting nonetheless.

Many thanks. I think - it needs an app. With gun.db i.e. It could be act through a community - using such app. Every member can decide - how to do, but should be save the actual portfolio after every step.
I am at this time in an other project...... No time for all ideas - sorry. But this algo is unlicenced here But please let me inform, if you are ready with the implementation - I would like to be a node or member Sure.

[ifinta]

Report:
 - I decided to act again.
 - My funds on Lykke (at this time): 2407.76 CHF and 0.9449 BTC

My funds on Lykke not reachable at this time The same amount... But not as valuable, as before. I try to contact Lykke support this year also... I need patiente, I know.

A question: did sombody implemented this algo? Or act similar at price changes?

My funds are unreachable at Lykke - since end of 2017?
I trying to solve it, but I have no enough time to do everything...

[ifinta]

Report:
 - I decided to act again.
 - My funds on Lykke (at this time): 2407.76 CHF and 0.9449 BTC

My funds on Lykke not reachable at this time The same amount... But not as valuable, as before. I try to contact Lykke support this year also... I need patiente, I know.

A question: did sombody implemented this algo? Or act similar at price changes?

My funds are unreachable at Lykke - since end of 2017?
I trying to solve it, but I have no enough time to do everything...

My Lykke wallet working!!!! Many thanks for the Support from Lykke......
I see my assets again.

[ifinta]

Report:
 - I decided to act again.
 - My funds on Lykke (at this time): 2407.76 CHF and 0.9449 BTC

My funds on Lykke not reachable at this time The same amount... But not as valuable, as before. I try to contact Lykke support this year also... I need patiente, I know.

A question: did sombody implemented this algo? Or act similar at price changes?

My funds are unreachable at Lykke - since end of 2017?
I trying to solve it, but I have no enough time to do everything...

My Lykke wallet working!!!! Many thanks for the Support from Lykke......
I see my assets again.

This thread shows a possible FED system for bitcoin. But... It exists many issues. Fee's or unreachable accounts on exchanges, wallets...... Randomly.

We should learn from past - I think.
I started a development to establish a backed crypto - Charm. 100 Charm are 1 Kiss. It is possible then to pay with Kisses for a pizza or caffe It shouldn't be taxed. Or?
This "money" backed through "cells" and values as gold, silver, emeralds, ... later: oil, immobiles, ...

We planning this asset for Bitcoin network also! We hope, we find partners for our development. Dorotheum? Christie? ... Some is under diskussion already.

Please see and follow the steps of our development in the official thread:
https://bitcointalk.org/index.php?topic=4392525.0

Many thanks for attention, for any support...