The perfect crypto-currency is one that subsumes them all.

[kmarinas86]

http://upload.wikimedia.org/wikipedia/en/8/8f/STKFLW.jpghttp://upload.wikimedia.org/wikipedia/commons/c/ca/StockFlow.gif

The old way is to buy shares of stock.
The new way is to buy shares of flow.

The difference is this:

With shares of stock, you gain money when the price per share increases.
With shares of flow, you gain money when the demand (represented as a flow of money) per share being sold increases.

With shares of stock, the higher the price, the more the people who have the stock for a while want to sell.
With shares of flow, the higher the flux, the more the people who have the stock for a while want to sell.

A share of stock has a value represented by a height.
A share of flow has a value represented by a slope.

Since the peak slope can exist for a longer duration than a peak height, shares of flow are less likely to have sudden sell-offs.
When the slope increases, more people will want to sell their shares of flow.
However, if these were shares of stock, people would wait until the slope decreases, then sell-off.

With shares of stock, sellers profit most when the thing has peaked its success, not before the peak.
With shares of flow, sellers profit most when the thing is still going strong, not when it peaks.

Therefore, shares of flow make more sense for valuation of a currency, as it is inherently anti pump-and-dump in its nature.

It is possible to make a cypto-currency that can be valued in terms of the volume of other cyrpto-currencies as opposed to their reserve quantity.

If one can produce shares the same way that BitCoins are generated, there will be an increasing number of shares, at an exponentially decreasing rate.
Literally thousands of currencies can be fluxed through such shares, some good, some great, some bad, and some ugly.
Such shares can be a kind of money, whose value is protected from the volatility of other currencies.
People will obtain shares of flow based on their contribution to the flux.
People will obtain flux based on their contribution to the sales of shares of flow.
More people will sell their shares of flow when there is a lot of flux available.
If there is many people selling their shares, relative to the demand for them, the people buying them will get them at a discount.
This of course, increases the demand for the shares.
So demand and supply of shares of flow will tend to correlate automatically, regardless of the flux, stabilizing the prices per share of flow.

In contrast, this is situation is unlikely for demand and supply for stock, which tends to decrease as people begin to hoard their stock until prices climb slowly.

Selling shares of stock at a profit reduces the value of existing shares of stock.
Selling shares of flow at a profit does not reduce the value of existing shares of stock, because the flow (slope) of the market backs the share, not the stock (or height) of the market.

Again, with shares of flow:
Demand and supply of shares of flow will tend to correlate automatically, regardless of the flux, stabilizing the prices per share of flow.

Buying crypto-currency for crypto-currency lacks this feature, and is therefore subject to pump-and-dump losses by victims.
Buying cyrpto-currency with crypto-currency flux eliminates this very problem. Pump-and-dump risks can then be completely eliminated for those people preferring to use shares of flow of crypto-currencies as means of deriving value for a stable, balanced crypto-currency that effectively subsumes them all.

[digitalindustry]

i'm going to come back an read this .

[mercSuey]

I didn't read your whole post, but here's how to game the idea of flow as valuation metric:

Say there's a company, Hack Money Inc.

Hack Money Inc. has two subsidiaries, Hacker Company A and Hacker Company B, each supposedly selling some service.

HCA and HCB buy and sell each other's 'service'....infinitely, under the corporate umbrella of Hack Money Inc., so that Hack Money Inc. never realizes a loss in its capital.  But all the while driving the value of its currency upward.

In other words, if currency was valued by 'flow,' you'd see millions of these ghost companies doing 'business' with themselves and able to make a killing by doing/offering nothing of value.

[kmarinas86]

I didn't read your whole post, but here's how to game the idea of flow as valuation metric:

Say there's a company, Hack Money Inc.

Hack Money Inc. has two subsidiaries, Hacker Company A and Hacker Company B, each supposedly selling some service.

HCA and HCB buy and sell each other's 'service'....infinitely, under the corporate umbrella of Hack Money Inc., so that Hack Money Inc. never realizes a loss in its capital.  But all the while driving the value of its currency upward.

In other words, if currency was valued by 'flow,' you'd see millions of these ghost companies doing 'business' with themselves and able to make a killing by doing/offering nothing of value.

The share of flow does not contain the money itself, as the money flow that backed it up continues to circulate outside the shares of flow. If you are going to obtain shares, someone must sell the shares, as any new shares are generated automatically by an inverse proof-of-stake mechanism (remember, the context here is that of applying this principle to a cyrpto-currency). Now you have a question of who sells the shares. If that is you yourself, then the only way you can increase the value of each share of flow is to circulate arbitrary flux, but this flux only gives value to shares of flow being sold, not total shares of flow! The shares of flow have no value themselves until they are sold, except in terms of the context of using shares of flow as their own medium of exchange (i.e. for their own merits). 1 million times 1 millionth is still 1. You are not arbitrarily reporting wealth simply by circulating it - if the accounting is done correctly anyway.

Let C be total capital.
Let F be total flux.
Let f be a sample of flux.
Let S be total shares of flow.
Let s be a sample of shares flow.

0 < s < S
0 < f < F

Let S also be the quantity of the proposed crypto-currency.
Let F be the nominal value of money to be fluxed (U.S. Dollars, Euros, Chinese RMB, crypto-currencies, etc.).
Let C be the wealth that exists.
Let the change of C be the generation of wealth.
Let S_selling be the number of shares of flow presently being sold.
Let S_period be the weighted period of time that shares S_Selling are being depleted.
Let F_period be the weighted period of time that flux F is being extended over.

F / F_period is the rate of currency being fluxed through (the money paid to obtain shares in a period = the money received to sell shares in a period)
S_selling / S_period is the rate of shares being sold (the shares being obtained = the shares being sold)

The amount of flux obtained by an individual is:
((s_selling/s_period) / (S_selling/S_period)) * F / F_period
= % contribution to S_selling * available flux

The amount of shares obtained by an individual is:
((f/f_period) / (F/F_period)) * S / S_period
= % contribution to F * available shares

As you can see, the calculation of the amount of flux and the calculation of the amount of shares obtained by an institution has nothing to do with determining the value of C.

Increasing F / C decreases C / F, which has more to do with reducing capital relative to flux, than it has to do with any income generated by capital. F, taken by itself, is not income by any stretch of the imagination.

The number of shares of flow that have value is:
S_selling
The number of shares that lack value is:
S - S_selling

Let me repeat what I said earlier for more nuance:
"The shares of flow have no value themselves until they are sold, except in terms of the context of using shares of flow as their own medium of exchange (i.e. for their own merits)." The merits are obtained because when these shares are traded for currency, they have value. However, when shares of flow are not being traded for other currencies, they do not have any value in terms of other currencies except through indirect actions via the buyer and seller market. Only during the action of direct trade between currencies is the value of each stock of flow well-defined with respect to other currencies.

The value of each share of S_selling is:
F / S_selling
Assuming that F is constant.
If F is not constant, then we can still calculate the value obtained by S_selling during the present block.
(F / F_period) / (S_selling / S_period)

[kmarinas86]

The number of shares of flow that have value is:
S_selling
The number of shares that lack value is:
S - S_selling

Let me repeat what I said earlier for more nuance:
"The shares of flow have no value themselves until they are sold, except in terms of the context of using shares of flow as their own medium of exchange (i.e. for their own merits)." The merits are obtained because when these shares are traded for currency, they have value. However, when shares of flow are not being traded for other currencies, they do not have any value in terms of other currencies except through indirect actions via the buyer and seller market. Only during the action of direct trade between currencies is the value of each stock of flow well-defined with respect to other currencies.

The value of each share of S_selling is:
F / S_selling
Assuming that F is constant.
If F is not constant, then we can still calculate the value obtained by S_selling during the present block.
(F / F_period) / (S_selling / S_period)

The most important difference between the proposed crypto-currency and any other crypto-currency is that other crypto-currencies derive their value from the deposits of mostly fiat currency. Think about how a person actually gets BitCoins. One likely forgoes the possession of some cash, and now that cash is (or once was) in the hands of an exchange or miner. Depending on the market cap of BitCoins, there is a certain of amount of cash that represents it. The exchanges may or may not have this cash. Whether it's the exchanges or just a miner, these people who sell their BitCoins for cash do not necessarily maintain possession of the market cap. In this sense, BitCoin operates as a fractional-reserve system, to the extent that people who sell BitCoins at a profit decide to spend it into the general economy! Even if more people obtain BitCoins, increasing the value of BitCoin, there will always be this shortfall between market cap and actual cash "backing" BitCoin's market cap, when people decide to sell some BitCoins. This makes the market cap of BitCoins fictitious (to the extent that the non-cryptocurrency profits from running the BitCoin system are spent), and it exaggerates the amount of the potential for any real liquidity that exists in the BitCoin system.

This problem is completely eliminated under my proposed crypto-currency system. All that is required is a transfer of fiat monies from buyers of shares of flow to sellers of shares of flow. The flow backs up the market cap, not deposits. So if it were desired to convert the shares of flow into other currency, this can be done without the possibility of a "run on the bank"-type event.

[Snail2]

As I've made a some profit during pump and dumps I like this volatility...

[kmarinas86]

As I've made a some profit during pump and dumps I like this volatility...

If that's how "crypto-currency" is going to work, it may as well be called "crypto-chips".

While I think there is enough trust for the BitCoin system to not have a "run on the bank" type event in the foreseeable future, the future surely belongs to new ideas that avoid the solvable problems of old, even if the financing of their implementation was only possible in the old system.

You know, technically speaking, the type of system I described here (sans the use of an inverse proof-of-stake method) can actually be used with the existing BitCoin. All you have to is reprogram the exchanges, so that way the buying and selling operations are based on the mechanics I described. Imagine if that were implemented before the boom of April 2013! These things would be WAY more valuable (pump with no dump!) and a hell of a lot more fun using BitCoin as opposed to trading it as it would have more trust with merchants.

[weisoq]

I think you've just more or less outlined a network of decentralised private reserve banks. There are arguments for and against that - an obvious argument against would be that if the entire system is voluntary and private what stops everybody just having a good look at the underlying real rather than synthetic flows (and stock) and all running to the most profitable market before everybody else does i.e. choosing to transact one side of the market because of obvious skew. That would be as game over as without it. Even ignoring that, and assuming you could dampen volatility (to an extent) what would you dampen the stock against or with - a 'flow' btc/usd, 'flow' btc/ltc, 'flow' btc/jpy, everything? How?

The problem you outline basically seems that of finding an equilibrium. That should be attainable already if there is real demand flow (for investment/spending), less hoarding, a liquid market of buyers and sellers (ideally including shorting). The reason it isn't is due to speculation overwhelming investment. Any reserve system, even a state-mandated one, would be pissing in the wind against an asset or currency dominated by speculation alone.