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December 27, 2013, 10:57:50 AM |
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It's not going to be easy to setup a "stable" coin that doesn't require trust in a central authority.
Ultimately, to make a coin that is truly stable, you need to have it backed up with something. If you have a central authority that sells the coin at $1.05 per coin and promises to buy any number of it at $0.95 than you'll have a reasonably stable currency with the central manager actually making a bit of a profit for his trouble.
But comes a time, when the central manager can just say, screw it, I have 350 Billion dollars I'm keeping it all and letting the coin fail.
From what I can tell, there are few ways to try and resolve it:
Create a legal framework to enforce the behavior of the backers of the currency through contract law. But when billions are involved, contract law is probably not going to be sufficient.
To help with that we might try and setup a situation where a greater number of backers. Setup a few hundred backers with a billion limit each, and you'll have plenty of big hitters keeping each other in check.
Or you can go even further. Rather than making absolutely sure that every "backer" will not default. Make "backers" pay interest on the money they receive as backing and force them to put something up as collateral. The interest + collateral should be sufficient to cover those that default.
That last one is a debt based currency which is how Fiat money works.
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