Why? In order to be able to sell it for 1USD, someone must be willing to physically give you 1USD for it. Who is going to do that? What if noone wants to pay 1USD for them? Then they are worthless.
This was explained pretty clearly in your other threads.. you can't do things like this without a trusted person actually holding the assets. It should be pretty easy to understand.
The concept is quite easy to understand. My plans (similar to Morpheus' goldcoin/stablecoin proposal) depends on people being willing to pay the current bitcoin value of the underlying asset for a token representing that asset. The concept is similar to cash-settled futures, which also track commodity prices without ever actually delivering the product.
Ok, I think I got it.
This is basically like stablecoin being the only difference that you prevent the price to go too high by other mean. Instead of create inflation and give the new coins to the miners, the system would sell newly created coins in exchange of bitcoins being destroyed at a slightly higher price than the target.
You have an exchange of usdcoins for bitcoins inside the chain to track the btc/usdc rate and you would import the btc/usd rate using the same method that stablecoin uses so you can calculate the bitcoin target price.
Is it your idea?
I don't like the idea of destroying bitcoins and I don't think many people in the forum will. Also you would eventually destroy all the bitcoins in which your system relies. Can't the bitcoins just go to your miners?
Why not put them (for this you can't use bitcoin but some form of escrowcoin) in a reserve (see reserveCoin) and allow to sell their usdc to the system at a slightly higher price than the target? You cannot warranty the solvency of the reserve, but it would prevent the price from dropping for more time until you have to rely on destructive fees/demurrage for that.
Note: I've removed the ticker and restored the less centralized "reporting exchange prices by miners". Also I hope you have forgotten the "messaging through value" thing.
Man I love this forum. So many smart people . . .
You've got it exactly. More below . . .
I don't really trust any protocol that relies on "burning" bitcoins. How do I know that the "burner" address really is an invalid address? It is possible to have an address made up of a human-readable string just by chance.
Edit: I know it is unlikely, but it would make deliberate address collisions much worse if they ever become computationally feasable.
Personally, I HATE the idea of destroying bitcoins - they are so beautiful. The problem I have is who to give these bitcoins to. My first choice is myself of course, but that would be silly - nobody would trust me not to buy massive amounts of the commodity tokens from myself and flood the market. If I give the bitcoins to the miners, then they can do the same thing (spend unlimited bitcoins to themselves, getting free tokens). The perfect solution is to split the bitcoins evenly among everyone who holds bitcoins. It turns out that destroying bitcoins does exactly that - it makes everybody else's bitcoins a little more valuable.
The problem with my idea as discussed so far is that I had an unlimited number of tokens for sale, which allowed anyone receiving bitcoins in exchange for newly minted tokens to create infinite "wealth". Over the weekend I've pondered this question, and I think I have a couple better ways to distribute these goldcoins, oilcoins, etc.
1) The first option is to do what morpheus described (and what jtimon suggested above) and give the tokens to miners. A number of the new coins could be released to the address of the most recent miner with each new block. The number of new coins would be determined by the new protocol rules, and they would be "for sale" at a price also determined by the protocol rules. The miner would not have to be participating in this new protocol. Somebody would just send bitcoins to buy the tokens he doesn't know he is selling, and he would be very surprised
The only problem with that is, why would anyone run a ticker?
2) The second option makes the person running the ticker and the hole very, very rich (and I like that thought). The tokens would be released as described in 1), but to the hole instead of the miners. People would buy these new coins as they became available by sending bitcoins to the hole. However, the new coins would NOT be unlimited. They would be released in amounts and at prices determined by the protocol.
But there's a problem with that idea too - the person running the ticker and hole might decide to buy every coin as it became available, artificially limiting supply and making himself even richer.
My current best idea is to combine 1) and 2) - distributing some of the new coins to the miners, and some to the hole. My instinct is to give more to the miners to make sure that plenty of coins make it into circulation. Perhaps 75% to the miners and 25% to the hole.
I'm worried however that someone running the ticker/hole would then have a perverse incentive to mine (so that they could control more coins, limit the supply, and cause more coins to be released . . . to them). One person controlling a large portion of the coins seems dangerous, since they could flood the market or starve the market at their whim. Maybe the split should be more like 90/10.
Finally, I am starting to lean towards using a software PID controller to keep the new currency at the target price (see http://en.wikipedia.org/wiki/PID_controller
). I work with PID loops all the time in my day job (autopilot software, temperature control chambers), so I am very familiar with how they work.
P = Proportional. This just means that the corrective action taken by the protocol is proportional to the price error. If the price is a little high, the protocol releases 10 new coins. If the price is a lot high, the protocol releases 100 new coins. Similarly, if the price is a little low, the protocol might destroy 0.1% of the new currency per transaction. If the price is a lot low, the protocol might destroy 1% of the new currency per transaction.
I = Integral (what do we do if proportional correction isn't working?). The integral term takes care of steady-state error. That is, what do we do if the price is ALWAYS a little too high? The integral term would slowly "wind up", causing more and more coins to be released until the price finally came down to the target. At this point, the integral term starts unwinding, but usually overshoots the target by a large amount (driving the price too low). Similarly, if the price is always too low, the integral term winds up in the other direction, slowly increasing the % of coins destroyed in each transaction until we reach the target. The I term is the most important one for this application, because it is the guarantee that we will eventually get to the target.
D = Differential (oh crap we're gonna overshoot!). The differential term resists ANY short-term movement. Even if the price is way too high, a sudden price drop would cause the differential term to shut off the flow of new coins temporarily. Similarly, a sudden price spike would cause the D term to release a lot of coins all at once.
Obviously we prefer generating coins to destroying them, so the PID controller would have to be biased positive, being stingy with new coin releases, and aggressive at cutting back on the new coin supply when the price starts dropping.