What do you think? Bitcoin's RGB network and national currencies

[Elwar]

I have been doing some thinking on how one would gradually convert a national currency to bitcoins.

The idea being that colored coins are used to peg the currency to the national currency for a specific amount of satoshis.

The amount of satoshis would need to equal the amount that the specific nation could handle as the smallest value that can be used as a currency.

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).

For simplicity let's say the current BTC price is $10k/BTC. $1 billion would be needed to set this up.

Each colored satoshi will be given the value of .001 cents at the current conversion rate, and follow the rate of the nation's currency either through some sort of smart contract or centrally controlled ("trusted" sources) method.

People then use these colored coins in their day to day transactions, setting up payment terminals, lightning network payments, etc. It's just a new payment method with their same currency using a back end network that they need not understand.

As the bitcoin price rises from $10k/BTC to $1 million/BTC, their satoshis are now equal to one penny.

It is at this point that the moniker of their old currency is dropped and they use the satoshi as the smallest denomination, 100 satoshi as their main currency. They can now interact with this currency with the full Bitcoin network.

It may take years, but the adoption of this method for the nation would push that bitcoin price toward that $1 million/BTC and the same approach can be done for other nations.

TL;DR Smallest currency denomination is pegged to colored satoshis until one satoshi equals the smallest currency denomination and it is no longer colored.

Thoughts?

[1714106212]

1714106212

[timerland]

This was extremely confusing and hard to understand, even the TL&DR, lol.

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).

This in itself is unfeasible, in my opinion. The extent of investment that this requires is extremely large, and I doubt anyone with that kind of capital, looking to put a fiat currency on the blockchain will look at colored coins as a viable option to digitize their economy.

So, who will be issuing it?

Why would anyone trust that whoever issuing it will back the value of these colored coins, since they are initially pegged to a fiat value, before they "equal the smallest currency denomination"?

[hatshepsut93]

1. Why would any government do this or allow it to happen?

2. Who in their right mind would give up the value of underlying Bitcoin just to give people the ability to use Bitcoin's network for these "stablecoins"?

3. How would you enforce the use of colored coins as colored coins and not as bitcoins? As far as Bitcoin's protocol is concerned, all coins are equal, it doesn't know anything about colored coins.

[Elwar]

All of this is assuming cooperation with the nation whose currency you are replacing. They would need to be able to collect taxes, fines, pay for things with this currency.

Also, it would not be necessary for all of the money to be reserved up front as a colored coin. An exchange or the government service could specify the addresses they will use as passthroughs to colored coins and as people convert to bitcoin the colored coins grow until they reach the threshold.

Consider a country like Panama which has no central bank (and whose banks were just put on the gray list so they cannot do international wire transfers), they could easily do the transition without disrupting any powerful organization. The long term benefit is a more valuable currency that has more features than all other currencies while being able to compete globally.

Going this route allows several years of transition which does require a central peg at start but is guaranteed to leave that peg once the value reaches a certain point.

[Ozero]

No state will ever take any measures to transfer their national money into Bitcoins or another decentralized cryptocurrency. This would mean the loss of its own monetary system, and with it the loss of its statehood. As long as there are states with their own financial and other interests, until then they will have their own national currency. Only when states combine their financial resources, as we see in the example of the European Union, only then can states temporarily refuse national money. Therefore, to fantasize about what can not be in practice, meaningless.

[kryptqnick]

I think the implementation is too difficult. And besides, how to give people these very small amounts of money with current transaction fees? And the volatility is just too high to sustain a normal economy on Bitcoin. But boosting adoption can be easier, even though riskier.
1. Print more national fiat, pay out the loans your country took, raise salaries and scholarships, etc.
2. The national currency will become less and less valued as you do that.
3. Tell people about Bitcoin and how it's not susceptible to inflation. Accept payments in Bitcoin.
4. As fiat goes down, people will naturally invest in the safer thing, which at that time will be Bitcoin.
This list doesn't solve the issues of micro-transactions, of course, but this can boost adoption, even though in a very risky way.

[mdgabrielzim]

it does not make sense to use two currencies at the same time. I believe that btc has to be implemented as the only currency, connecting several countries.

[FlightyPouch]

I don't think this will be possible. The thing here is that there is no country that will be accepting bitcoin as their national currency or crypto currency. Decentralization, volatility, and fees could affect the economy. That is fine if that is just a way to gradually adopt bitcoin but I don't think bitcoin will be more than an alternate payment method, or an investment.

[yusupjatigumilar]

I think it will be very difficult to make bitcoin as an international currency because right now not all countries support the use of bitcoin, many countries actually forbid their people to use bitcoin and even using bitcoin is considered an unlawful act, besides all countries have internet access and infrastructure needed to be able to use bitcoin.

[Elwar]

Oops...ventured into the dirty part of bitcointalk...forgot how it was out here.

NVM

[davis196]

I don't think that we need colored coins in order to convert any national currency into bitcoins.
If bitcoin really gets mass adopted and used on a daily basis by millions of people,the btc price volatility will become way lower,thus it will be way easier to buy btc without any future losses.

[fiulpro]

It would change every moment and then when you go and buy some stuff you will have to change the value if you are well informed and if not then the shopkeepers might make a good use of it .
Kids and old people will be duped for sure , this isn't something that will work until and unless there is some price telling thing with everyone at every moment and that is not something everyone can afford, thus I don't think it can ever replace fiat , in places where everyone is above the poverty line and infact well above the poverty line they could afford that thing but I don't think there is any nation like that.

[nakamura12]

I think it's impossible that national currency will be converted to bitcoins but it could happen but not gradually convert national currency to bitcoins instead they'll create a blockchain based platform that the currency is backed by the national currency or in short creating a digital national currency which the value is the same as the fiat currency but faster in transaction and more.

[ityandsyn]

I have been doing some thinking on how one would gradually convert a national currency to bitcoins.

The idea being that colored coins are used to peg the currency to the national currency for a specific amount of satoshis.

The amount of satoshis would need to equal the amount that the specific nation could handle as the smallest value that can be used as a currency.

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).

For simplicity let's say the current BTC price is $10k/BTC. $1 billion would be needed to set this up.

Each colored satoshi will be given the value of .001 cents at the current conversion rate, and follow the rate of the nation's currency either through some sort of smart contract or centrally controlled ("trusted" sources) method.

People then use these colored coins in their day to day transactions, setting up payment terminals, lightning network payments, etc. It's just a new payment method with their same currency using a back end network that they need not understand.

As the bitcoin price rises from $10k/BTC to $1 million/BTC, their satoshis are now equal to one penny.

It is at this point that the moniker of their old currency is dropped and they use the satoshi as the smallest denomination, 100 satoshi as their main currency. They can now interact with this currency with the full Bitcoin network.

It may take years, but the adoption of this method for the nation would push that bitcoin price toward that $1 million/BTC and the same approach can be done for other nations.

TL;DR Smallest currency denomination is pegged to colored satoshis until one satoshi equals the smallest currency denomination and it is no longer colored.

Thoughts?

      It could be very complicated to replace the national currency by bitcoin since not all people and also government officials are not interested in bitcoin but gradually people using BTC especially in gambling and this the only thing that makes sense for bitcoin as of now .

[noormcs5]

I have been doing some thinking on how one would gradually convert a national currency to bitcoins.

The idea being that colored coins are used to peg the currency to the national currency for a specific amount of satoshis.

The amount of satoshis would need to equal the amount that the specific nation could handle as the smallest value that can be used as a currency.

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).

For simplicity let's say the current BTC price is $10k/BTC. $1 billion would be needed to set this up.

Each colored satoshi will be given the value of .001 cents at the current conversion rate, and follow the rate of the nation's currency either through some sort of smart contract or centrally controlled ("trusted" sources) method.

People then use these colored coins in their day to day transactions, setting up payment terminals, lightning network payments, etc. It's just a new payment method with their same currency using a back end network that they need not understand.

As the bitcoin price rises from $10k/BTC to $1 million/BTC, their satoshis are now equal to one penny.

It is at this point that the moniker of their old currency is dropped and they use the satoshi as the smallest denomination, 100 satoshi as their main currency. They can now interact with this currency with the full Bitcoin network.

It may take years, but the adoption of this method for the nation would push that bitcoin price toward that $1 million/BTC and the same approach can be done for other nations.

TL;DR Smallest currency denomination is pegged to colored satoshis until one satoshi equals the smallest currency denomination and it is no longer colored.

Thoughts?

This is both hard to understand and implement too. Colored satoshi idea is just not suited for a currency which is not physical. The best idea can be to allow and legalize bitcoin in your country and use them as a means of payment. Although government will lose control over the currency, but this is the only way we can shift to bitcoins and digital currency.

[stompix]

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).
~~~~~~
As the bitcoin price rises from $10k/BTC to $1 million/BTC, their satoshis are now equal to one penny.
~~~~~
It may take years, but the adoption of this method for the nation would push that bitcoin price toward that $1 million/BTC and the same approach can be done for other nations.

First, welcome back! I'm not lurking in the WOT anymore so I wasn't aware you're back:P

Now, the first problem with this theoretical approach is the need for such an amount of for collateral coins.
Let's talk about a real-life scenario of a pegged currency, Bulgaria, which uses the leva but it's pegged to a value of 1.95583 leva = 1 euro,  without the Bulgarian central bank reserve having enough euros to cover all the monetary mass, in their case it's about 1/2 if we consider only m1.

Second, it would be that the mere gossip of a country embracing bitcoin would make the price skyrocket and thus dropping the requiring coins for collateral.

But, there is a problem with both your scenario and mine.
The rate of fiat vs bitcoins or colored satoshi in your case.

Once any nations go and plan to do this, the soaring price of Bitcoins will make the transitions very dangerous for the economy, since the growth of 30% of the price in one day since the start of the campaign will make people want to convert their assets first and some will try to avoid the mess and use a different fiat currency for a while, hedging their valuable in euros, usd or something else , exporters avoiding shipping and both employees and employers wondering what to use.

In both cases, the bank will have to set a standard value for their fiat against bitcoin, and some will try to avoid this rate as most likely it won't be advantageous for everyone.

No matter how many steps you put between btc and fiat, at once a point when you will do the transitions you will have to use a value for BTC for a while, and BTC is not known for keeping value for too much, a 20% swing might either make one's economy rich or send it back to the stone age.

So, the use of an intermediary won't solve the problem, it would rather be far more important for bitcoin to achieve itself the goal of a worldwide currency and stabilize on its own due to economic limitations before being adopted for real by countries as their main currency.

Oops...ventured into the dirty part of bitcointalk...forgot how it was out here.
NVM

It doesn't sound nice but in BD and Economics section, it's better to use self-moderated topics to prevent two lines of spams.

[Elwar]

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).
~~~~~~
As the bitcoin price rises from $10k/BTC to $1 million/BTC, their satoshis are now equal to one penny.
~~~~~
It may take years, but the adoption of this method for the nation would push that bitcoin price toward that $1 million/BTC and the same approach can be done for other nations.

First, welcome back! I'm not lurking in the WOT anymore so I wasn't aware you're back:P

Now, the first problem with this theoretical approach is the need for such an amount of for collateral coins.
Let's talk about a real-life scenario of a pegged currency, Bulgaria, which uses the leva but it's pegged to a value of 1.95583 leva = 1 euro,  without the Bulgarian central bank reserve having enough euros to cover all the monetary mass, in their case it's about 1/2 if we consider only m1.

Second, it would be that the mere gossip of a country embracing bitcoin would make the price skyrocket and thus dropping the requiring coins for collateral.

But, there is a problem with both your scenario and mine.
The rate of fiat vs bitcoins or colored satoshi in your case.

Once any nations go and plan to do this, the soaring price of Bitcoins will make the transitions very dangerous for the economy, since the growth of 30% of the price in one day since the start of the campaign will make people want to convert their assets first and some will try to avoid the mess and use a different fiat currency for a while, hedging their valuable in euros, usd or something else , exporters avoiding shipping and both employees and employers wondering what to use.

In both cases, the bank will have to set a standard value for their fiat against bitcoin, and some will try to avoid this rate as most likely it won't be advantageous for everyone.

No matter how many steps you put between btc and fiat, at once a point when you will do the transitions you will have to use a value for BTC for a while, and BTC is not known for keeping value for too much, a 20% swing might either make one's economy rich or send it back to the stone age.

So, the use of an intermediary won't solve the problem, it would rather be far more important for bitcoin to achieve itself the goal of a worldwide currency and stabilize on its own due to economic limitations before being adopted for real by countries as their main currency.

Oops...ventured into the dirty part of bitcointalk...forgot how it was out here.
NVM

It doesn't sound nice but in BD and Economics section, it's better to use self-moderated topics to prevent two lines of spams.

Thanks for the informed response. And for welcoming me back...I am finally in a safe location and feel a bit more comfortable being on the Internet again.

I am not sure if we are understanding each other on this. The colored coin would originally be pegged to the national currency.

So in your example, the colored coin would be pegged to the Bulgarian leva (which is pegged to the euro). You are correct in assuming that the price of bitcoin would rise quickly once it is announced. So, say the bitcoin price jumps 30% on day one. If it is pegged then the rate will be the same. Nobody will notice the change in the underlying bitcoin. The value of a colored coin is determined by consensus. If the colored coin value is established to be the rate of some national exchange or some combinations of euro exchanges, then it will maintain the peg until 1 satoshi equals a set amount (ie .01 leva). When BTC is worth close to $1 million each then it is very likely that there will be no huge swings anymore.

Having competing currencies may work too.

I just think it would be wise to strategize how it could possibly done in case some bitcoin friendly government is ever elected somewhere.

My friend went to Tuvalu when the price was around $2 encouraging them to switch over to bitcoin as their national currency.

They could be richer than the US right now if they had.

As for having the money up front to do it...I think if there is a list of addresses used as gateways into the colored coin addresses then one or two exchanges in the country could be used. Instead of having all of the money up front, as people start converting their fiat into the pegged coin it goes to that address. Leva exchanged for euros which are exchanged for bitcoins which are then filtered through that address to become colored coins (colored leva). The key being that over time, it won't matter if they are colored or not anymore as the values would match and the peg would be lifted.

[stompix]

Thanks for the informed response. And for welcoming me back...I am finally in a safe location and feel a bit more comfortable being on the Internet again.

Glad to hear that, stay out of trouble

I am not sure if we are understanding each other on this. The colored coin would originally be pegged to the national currency.

So in your example, the colored coin would be pegged to the Bulgarian leva (which is pegged to the euro). You are correct in assuming that the price of bitcoin would rise quickly once it is announced. So, say the bitcoin price jumps 30% on day one. If it is pegged then the rate will be the same. Nobody will notice the change in the underlying bitcoin. The value of a colored coin is determined by consensus. If the colored coin value is established to be the rate of some national exchange or some combinations of euro exchanges, then it will maintain the peg until 1 satoshi equals a set amount (ie .01 leva). When BTC is worth close to $1 million each then it is very likely that there will be no huge swings anymore.

Yeah, there was a little or a medium size misunderstanding.

I thought that the currency switch will be done at an x moment, well before the rate would arrive at the 1 sat /cent moment and this is why I assumed that people will try to speculate on the price.
As you say when it will hit such huge value probably there will be no more such dramatic swing as we experience unless we have a war or economic crisis that would affect the economy anyway, so people won't be tempted to try to outsmart the bank when the conversion is done.

As for having the money up front to do it...I think if there is a list of addresses used as gateways into the colored coin addresses then one or two exchanges in the country could be used. Instead of having all of the money up front, as people start converting their fiat into the pegged coin it goes to that address. Leva exchanged for euros which are exchanged for bitcoins which are then filtered through that address to become colored coins (colored leva). The key being that over time, it won't matter if they are colored or not anymore as the values would match and the peg would be lifted.

Sounds logical but I'm not sure any country would embark on such a project anytime soon.
Probably even if they would be half convinced this is a good thing they will hold a referendum for this and I'm willing to bet that not only now, even if we talk 4-5 years from now people would vote against this.

And now that I think about, I believe a lot of governments would only complete half of the plan, issue the stable colored coins, print as many as they can and use them to cover up government expenses forgetting about the second stage and so the value of 1sat/cent would be achieved by the cent being worthless not the other way around.

[sana54210]

I have been doing some thinking on how one would gradually convert a national currency to bitcoins.

The idea being that colored coins are used to peg the currency to the national currency for a specific amount of satoshis.

The amount of satoshis would need to equal the amount that the specific nation could handle as the smallest value that can be used as a currency.

Let's say that country X has a total of $100 billion of wealth in its own currency. To have each penny equal to one satoshi you would need 100,000 BTC set aside as colored coins for this nation (however that is done, a big national push, wealthy group, whichever).

For simplicity let's say the current BTC price is $10k/BTC. $1 billion would be needed to set this up.

Each colored satoshi will be given the value of .001 cents at the current conversion rate, and follow the rate of the nation's currency either through some sort of smart contract or centrally controlled ("trusted" sources) method.

People then use these colored coins in their day to day transactions, setting up payment terminals, lightning network payments, etc. It's just a new payment method with their same currency using a back end network that they need not understand.

As the bitcoin price rises from $10k/BTC to $1 million/BTC, their satoshis are now equal to one penny.

It is at this point that the moniker of their old currency is dropped and they use the satoshi as the smallest denomination, 100 satoshi as their main currency. They can now interact with this currency with the full Bitcoin network.

It may take years, but the adoption of this method for the nation would push that bitcoin price toward that $1 million/BTC and the same approach can be done for other nations.

TL;DR Smallest currency denomination is pegged to colored satoshis until one satoshi equals the smallest currency denomination and it is no longer colored.

Thoughts?

Know that in this world, we have many great intelligent thinkers like you, and I am sure there would have been someone also close to government and financial institutions who would have also thought of this great idea, especially the ones that are believers of bitcoin, but with your idea, we still need the involvement and support of government to make it happen, and this has to be anonymously agreed on by all government through a treaty to make this happen.

Nevertheless, the reason why some government jettison the idea of using cryptocurrency, especially that of bitcoin as global currency or would allow it to see the light of the day as global currency is because of its decentralized technology which makes the transactions within it invisible to the government, and this is the big issue with crypto and government.

[el kaka22]

You do not really need to do all of that to make a nations money tied to bitcoin that way. All you have to do is to go back on gold standard but instead have bitcoin standard. So, you can still have banknotes and changes and what not but whatever the federal reserves printed they just have to follow that up with having as much in bitcoin as the amount they printed. So lets say all printed money equals to 100 billion dollars, they have to have 100 billion worth of bitcoins on their wallets as well.

Hence, that way the nations money will be pegged to bitcoin as well. It is still not possible considering bitcoin is a global thing and any increase or decrease would make insanely bad changes in nations economy, like if bitcoin drops too much than nations money all goes down in value as well.