Fixing the value of the dollar on the Blockchain

[3piecechickendinner]

Ive heard this discussed with block.gyft but I still dont fully understand it.  Does anyone have a way to break this down to me

[cr1776]

Ive heard this discussed with block.gyft but I still dont fully understand it.  Does anyone have a way to break this down to me

What does the question even mean?  Record the value of one bitcoin in dollars?  Forever fix the exchange rate of one bitcoin at $4200 per?  What exactly are you asking?

[3piecechickendinner]

i was listening to a discussion from a company and they were using a DaPP to pay for an item via Bitcoins.  He mentioned that "No risk or volatility and the price is not going to change, the value is not going to change and its fixed to a certain merchant"  So it got me to thinking...how could this be?  So I came here with my questions..But the consensus seems like its not at all possible

[layoutph]

The OP's statement is kinda confusing, I guess his friend is trying to tell that Bitcoin is under price correction. This is hard to understand. But silently the market itself is fixing the price values between BTC and USDT, including the altcoins.

[cr1776]

i was listening to a discussion from a company and they were using a DaPP to pay for an item via Bitcoins.  He mentioned that "No risk or volatility and the price is not going to change, the value is not going to change and its fixed to a certain merchant"  So it got me to thinking...how could this be?  So I came here with my questions..But the consensus seems like its not at all possible

Without knowing more details, they could just accept the payment and immediately sell it for fiat or hedge it somehow. Then there would be almost no price fluctuation risk.  Or they could just pair people up via the distributed app between people who were buying and selling and do an instant swap.  Hard to say for sure!

[mylalaworld]

look into tether, they've pegged their currency to fiats

[aleksej996]

This doesn't have much to do with Bitcoin, it is a smart contract on another blockchain that has nothing to do with Bitcoin. So they probably have it somehow defined in this contract a value for an item in dollars or other tokens that might be centrally controlled in supply to hold the same exchange rate to a dollar.

[3piecechickendinner]

The OP's statement is kinda confusing, I guess his friend is trying to tell that Bitcoin is under price correction. This is hard to understand. But silently the market itself is fixing the price values between BTC and USDT, including the altcoins.

“Her” :0). It’s not related to price correction, just confusion on the way an app was presenting itself to function

[3piecechickendinner]

This doesn't have much to do with Bitcoin, it is a smart contract on another blockchain that has nothing to do with Bitcoin. So they probably have it somehow defined in this contract a value for an item in dollars or other tokens that might be centrally controlled in supply to hold the same exchange rate to a dollar.

This sounds feasible, they did mention the use of smart contracts, but my assumption was that the bitcoin blockchain did not use smart contracts, so maybe they are using Ethereum as well?  Hope that doesn’t sound too far fetched....Thanks for your explanation

[aleksej996]

This doesn't have much to do with Bitcoin, it is a smart contract on another blockchain that has nothing to do with Bitcoin. So they probably have it somehow defined in this contract a value for an item in dollars or other tokens that might be centrally controlled in supply to hold the same exchange rate to a dollar.

This sounds feasible, they did mention the use of smart contracts, but my assumption was that the bitcoin blockchain did not use smart contracts, so maybe they are using Ethereum as well?  Hope that doesn’t sound too far fetched....Thanks for your explanation

You are right about bitcoin blockchain not using smart contracts, that is why I said it was probably a contract on another blockchain. So yes, this really has nothing to do with Bitcoin directly.

[CryptoSpark]

I guess you'd do it the same as the State pegs value to a piece of paper.

At an abstract level you'd create a currency where you promise to exchange $1 for one token then you'd hold the same amount of money in dollars as tokens sold.

So lets say you're writing this in something like Ethereum, Olympus or Rootstock, you'd write an off-chain service where someone can send you dollars with their wallet address and in exchange you'd send them tokens. Let's say they send you $1000 and with their wallet address, your service would create 1,000 new tokens and send them to that address and you'd add that $1,000 to your fund. Then when someone wants to cash in their tokens they'd call a smart contract sending their 1,000 tokens and account number to send the cash to. You'd have a service that detects the transaction and destroys the tokens and sends the dollars to their account.

That's one way but I'm sure you can think of other ways to do it. Since you're promising to buy the tokens for $1 then the value should never drop below $1. Of course it might rise above $1 if someone decides the token has more utility than the dollars they're mapped to.

Plutous does something similar but pegs another token to Bitcoin and there are other systems that peg to gold and dollars. For gold they create a serial number for the gold held in storage and attach it to the token so like with the above system there's a promise in principle to exchange 1 token for 1 gold unit so they're pegged together.

[matthewcampbell]

look into tether, they've pegged their currency to fiats

Pegging currencies is dangerous, we can see this with fiat currencies. When one tries to peg into another eventually there will be situations where one will be unbalanced there will be a massive crash or raise on side, to finally make equilibrium. Only way I can imagine this working with a crypto currency, is if there is a central mint of sorts that is managing the balance