Bitcoin vs ideal coin

[gollum]

Although I love bitcoin and it was revolutionary in 2009, it is far from an ideal coin the more you analyze it.

The ideal coin should:
-not waste energy and computing power on mining
-derive it's value from real assets instead of being a digital fiat currency
-promote commerce instead of speculation and hoarding
-be 100% anonymous instead of helping big brother
-be scalable instead of having a limit of transactions per second

This is a comparison between bitcoin and an ideal coin:

\	BitCoin	Ideal Coin
Type of coin	Fiat, zero intrinsic value	Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold
Coin issuance	Mining needed, Proof of Work	No mining needed, Proof of Stake used
Supply of coins	21 millions	Unlimited
Rewards	Early adaptors are rewarded	Nobody is rewarded since coins are free
Promotes	Promotes hoarding and speculation because of a limited supply	Promots usage in commerce
Volatility in price	High volatility in price of coin vs dollar	No volatility, since each coin is connected to a real asset
Anonymity	Users can be tracked, like bank transactions	No possibility of tracking, like dollar bills
Scalability	Growing blockchain size, max transactions per second is limited	Distributed blockchain, no limit on transactions per second
Decentralized	Is becoming less decentralized because of ASIC mining and a huge blockchain	No need to download 100% of blockchain, and no mining needed keeps the network decentralized

[benjamindees]

Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold

Lol, no.  Use Ripple if you want counter-party risk.

Unlimited

Also lol.

[Mr. Socko]

Then you have to have it centralized and trust the person holding the gold. Yes it could work, if a trusted source like Kitco decided to do it and acted as their own exchange between gold, US Dollars, and shares of their crypto currency, but like I mentioned in the other thread you'd have to trust Kitco to not go under (they probably wouldn't and might even make money from a service like this)  .. I would trust them actually, to be honest... but I wouldn't trust very many to pull something like this off.

Also like mentioned in the other thread you have to worry about either kitco or you having to constantly track tax gains or losses for every purchase potentially, something I will NEVER do.. I'll pay the sales tax but beyond that I'm not recording anything.

[gollum]

Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold

Lol, no.  Use Ripple if you want counter-party risk.

Unlimited

Also lol.

Life is full of counter-party risks, but we learn which counter parties to trust and trade with.
Assume a respectable mint like Perth Mint issues contracts of 1 oz gold, there is no risk they scam you or go bankrupt.
They are already selling gold certificates, and could issue their certificate on a crypto currency instead of paper.

Unlimited supply -> Coin price will be at zero -> Coin will be used as a certificate instead of a ponzi scheme

What Im suggesting is a decentralized crypto that will store certificates from any issuer.
The market price of each certificate will be the function of the underlying asset and the trustworthyness of the issuer.

[benjamindees]

The market price of each certificate will be the function of the underlying asset and the trustworthyness of the issuer.

So, all the downsides of both currency and barter, and the upsides of neither.  Like I said, look into Ripple.

[gollum]

The market price of each certificate will be the function of the underlying asset and the trustworthyness of the issuer.

So, all the downsides of both currency and barter, and the upsides of neither.  Like I said, look into Ripple.

Yes why not cap the limit at 21 million, pretend we got intrinsic value and reward early adaptors for selling to greater fools in the ponzi scheme.
After all it's safer to pay 1000$ for 1/21 millionth of a ponzi, then to pay 0$ for a blank sheet of paper that could be used to sign a contract for gold, stocks or real estate.

[Mr. Socko]

The market price of each certificate will be the function of the underlying asset and the trustworthyness of the issuer.

So, all the downsides of both currency and barter, and the upsides of neither.  Like I said, look into Ripple.

Yes why not cap the limit at 21 million, pretend we got intrinsic value and reward early adaptors for selling to greater fools in the ponzi scheme.
After all it's safer to pay 1000$ for 1/21 millionth of a ponzi, then to pay 0$ for a blank sheet of paper that could be used to sign a contract for gold, stocks or real estate.

haha well played.  In truth money's value comes from the goods and services it purchases and the faith people have in it. Anything can 'be' money. I could see bitcoin as a viable place to store money in the event there is a major economic disaster, but it needs support from services that can convert between it and other currencies, online marketplaces that will continue to accept it, and I suppose at the very least the government to look the other way, which I suspect they will not do forever. If they said that no company could accept bitcoin... and tigerdirect and overstock.com and every other business vanished.... that could be a problem... that's why this is still the 'wild west'

[FandangledGizmo]

I agree that POS is an advancement over POW but that might not be enough to unseat Bitcoin.

As for the rest, your post is hysterical! No-one on a crypto-currency forum will fall for an unlimited coin that has centralised counter-party risk, tell your banker friends to try again.

The hoarding argument is false. The US grew rapidly into the largest creditor nation in the world in the 1800's using a slightly deflationary currency.

What cost $100 in 1800 would cost $48.94 in 1900.
Also, if you were to buy exactly the same products in 1900 and 1800,
they would cost you $100 and $204.33 respectively.
 

http://www.westegg.com/inflation/infl.cgi

Of course using an inflationary currency for the last 100 years has left them in pretty much the opposite predicament today. (Well even worse actually the $ has lost 96%+ of it's value and it's the biggest debtor nation.)

As for being backed by something physical, there's a market for that, like e-gold. But the millennial (Internet) generation has already shown it generally prefers something decentralised that exists in the digital world with less counter-party risks whose existence is verified/validated by the laws of mathematics.

But good luck, so far every iteration of a very inflationary crypto has struggled/failed.

[odolvlobo]

PoS rewards early adopters because you have to have coins to gain coins and the early adopters have all the coins.

[Rannasha]

Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold

The dollar was a contract where the issuer promised to hold a certain amount of an asset for each bill issued at some point. And look at it now.

A currency is not a commodity and therefore doesn't need intrinsic value in the form of a backing asset.

[FandangledGizmo]

PoS rewards early adopters because you have to have coins to gain coins and the early adopters have all the coins.

True but for the 1st 2 years of Bitcoin, Satoshi controlled obscene amount of total BTC.
Even NXT with only +-70 initial adopters was better distributed.

As for owners of coins earning coins, it's better than miners who can afford most expensive rigs earning coins.
Last I read, GHash.IO which has biggest Bitcoin hashing pool is owned by interests in the city of London.

So with Bitcoin for example, you're already paying $20-40 per year for every $1000 of Bitcoin you own to the City of London based on GHash.IO hashing power. I think the fees being paid back to the actual owners of the coins is a better model.

[BlockChainLottery]

Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold

The dollar was a contract where the issuer promised to hold a certain amount of an asset for each bill issued at some point. And look at it now.

A currency is not a commodity and therefore doesn't need intrinsic value in the form of a backing asset.

Agreed.

• On top of that, a backing asset can become more available or scarcer. That in turn influences the value of the coin.
• Every coin in circulation has an asset sitting somewhere doing nothing.
• If for example gold is the most used asset, not everybody finds it equally valuable. Hungry people can't eat it.
• The coins would be a promise to pay the asset. So not the assets make the system work, but the reliability of promises to pay the asset. In turn not assets or needed to have a working currency.
• Some people could issue contract or promises resembling too much value in comparison to the assets backing it up. After all, if people used this system they probably would never claim the backing assets, and thus it can be fiddled with.

[porcupine87]

Type of coin

Fiat, zero intrinsic value

Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold

This would be a nice other altcoin and users could decide. But how do you want to do that for the same low costs? Explain the mechanism
For sure the coins would be not unlimited but limited by the real real ressources.

My ideal coin would have a proof of work with real life usage. Like Curecoin, but better

[Fizzgig]

Money is an information system, if you back it by something physical you are not achieving the ideal.

[porcupine87]

Money is an information system, if you back it by something physical you are not achieving the ideal.

why? Every good could be theoretical money. Medium of exchange, value storage and value measurement. Some goods just qualify more for money than others (gold vs. iron or horses)

[techstorm2]

Although I love bitcoin and it was revolutionary in 2009, it is far from an ideal coin the more you analyze it.

The ideal coin should:
-not waste energy and computing power on mining
-derive it's value from real assets instead of being a digital fiat currency
-promote commerce instead of speculation and hoarding
-be 100% anonymous instead of helping big brother
-be scalable instead of having a limit of transactions per second

This is a comparison between bitcoin and an ideal coin:

\	BitCoin	Ideal Coin
Type of coin	Fiat, zero intrinsic value	Contract, Each coin is a unique contract where the issuer promises to hold a certain amount of an asset for each coin issued, for example 1 oz gold
Coin issuance	Mining needed, Proof of Work	No mining needed, Proof of Stake used
Supply of coins	21 millions	Unlimited
Rewards	Early adaptors are rewarded	Nobody is rewarded since coins are free
Promotes	Promotes hoarding and speculation because of a limited supply	Promots usage in commerce
Volatility in price	High volatility in price of coin vs dollar	No volatility, since each coin is connected to a real asset
Anonymity	Users can be tracked, like bank transactions	No possibility of tracking, like dollar bills
Scalability	Growing blockchain size, max transactions per second is limited	Distributed blockchain, no limit on transactions per second
Decentralized	Is becoming less decentralized because of ASIC mining and a huge blockchain	No need to download 100% of blockchain, and no mining needed keeps the network decentralized

Ideal coin looks like US dollar pre 1971!

[Peter R]

-derive it's value from real assets instead of being a digital fiat currency

What does it mean for something to be real?  For something to be physical?  I would argue that the DNA that provides the blueprint to our bodies is both real and physical--each cell in our body contains a redundant copy of this information.  What's important about this DNA is the information that it encodes.  And the distributed nature of this information is what gives life its robustness.  

The bitcoin network is analogous to the network of cells in our body.  As each cell carries a copy of our DNA, each bitcoin node stores and builds upon the blockchain.  Instead of genetic information encoded with amino acids, the blockchain encodes ledger entries using electric charge.  At the physical level then, bitcoins are just as real as a gene sequence in our DNA.  Each transaction is accepted by the cells, and through an innovative process known as mining, they agree to add another amino-acid sequence to the blockchain.  

Based on this analogy, I would argue that bitcoins are more robust than conventional physical objects like a gold coin, and definitely more robust than any living organism.  The robustness is more akin to the robustness of an entire species of animals, for example, ants.  You can try and try, but it's pretty difficult to eliminate all the ants in this world!

Or, looking at it from a different angle, think about that embarrassing picture of a friend that got posted to Facebook and copied/emailed all over the place?  Now even Google finds the darn thing!  Bitcoins stored in the blockchain are like this, but even more so.  I would argue that the blockchain is the most highly-secured piece of information mankind has ever created.  

In conclusion, bitcoins are very real.  

[jongameson]

We already HAVE ideal coin.  it's called US Dollar

the problem being, we have to trust the supplier of the note (the US Government) that it's worth something

what happens when China takes over the world.  then what

[Holliday]

OP's idea of "ideal" and my idea of "ideal" are worlds apart.

That said, I fully support alt-coins competing with Bitcoin on the open market. Bring it!

[gollum]

OP's idea of "ideal" and my idea of "ideal" are worlds apart.

That said, I fully support alt-coins competing with Bitcoin on the open market. Bring it!

Yes, thats why we got 100 different alt-coins, people have different opinions and goals with crypto currencies.

Today billions of dollars are invested in Gold ETF's on the stock exchange, some of that money would instead be invested in a gold backed crypto currency if such coin existed,
a coin backed by Kitco or Perth Mint. Trillions of dollars are invested in bonds, some issuers could sell coins based on government bonds and corporate bonds.

I know this sounds like going against Satoshi's original idea (a crypto currency living on it's own without a mint), but ironically I think a mint-based crypto will be the best competitor to fiat currencies.

Abstract. A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution.  Digital signatures provide part of the solution, but the main
benefits are lost if a trusted third party is still required to prevent double-spending.
We propose a solution to the double-spending problem using a peer-to-peer network.
/Satoshi
https://bitcoin.org/bitcoin.pdf

"ideal" coin: peer-to-peer just like bitcoin but we let the mint, a trusted third party, decide the intrinsic value of each issued coin.