Bitcoin: A "Store of Value" Solution

[Phinnaeus Gage]

Alice acquires $1,000 USD worth of bitcoins, but wants to maintain that relative purchasing power down the road, i.e. not just $880 USD buying power due to some dip, albeit upticks are welcomed, but Alice opts to not play that game, for lack of a better term. Thus, Alice opts for the "Store of Value" option via ticking a box. So, instead of having an address 1xxxXXX..., she has SV1xxxXXX... (x & X denote random digits, of course).

Now, down the road, whatever direction the bitcoin exchange rate takes, no matter how drastic, Alice would still has $1,000 USD worth of bitcoins to make her purchases.

An example if the rate doubles from $1,000 USD/BTC to $2,000 USD/BTC:

Alice has $1,000 USD in the form of SV1xxxXXX..., of which just happens to equal exactly 1 BTC that's, for practical purposes, irrelevant, for in the next few minutes 1 BTC could easily equal $1,006.72 USD.

Several months later, Alice desires to make a purchase of some item that has a price point of exactly $1,000 USD, and the seller, of course, gladly accepts bitcoins. Even though the currently exchange rate is now $2,000 USD/BTC, Alice transfers her SV1xxxXXX... to the merchant's wallet of 1xxxXXX...., but the merchant now has 0.5 BTC equating to exactly $1,000 USD. (like everybody else, the merchant also has the option of accepting BTC and placing them into an SV bitcoin wallet)

Likewise, if the exchange rate halves to $500 USD/BTC:

Several months later (or whatever timeframe), Alice desires to make a purchase of some item that has a price point of exactly $1,000 USD, and the seller, of course, gladly accepts bitcoins. Even though the currently exchange rate is now $500 USD/BTC, Alice transfers her SV1xxxXXX... to the merchant's wallet of 1xxxXXX...., but the merchant now has 2 BTC equating to exactly $1,000 USD. (like everybody else, the merchant also has the option of accepting BTC and placing them into an SV bitcoin wallet)

Alice is not force to spend the entire $1K USD SV at one shot. She could easily opt to spend any fraction of her SV, maintaining the balance SV, but the merchant having the dollar amount converted to his 1xxxXXX... bitcoin wallet.

At any time, Alice would be able to take out a fraction of, or her entire holding, and transfer it to another wallet she maintains that's not an SV wallet.

The above is the gist of the idea I came up with while on the road to Philly. Since then, something else came to mind, of which I'm not as sure it working as strongly as I envisioned the above, but I'll express it below nonetheless.

If a critical mass of bitcoiners opt for the SV option, of course visible on the 'blockchain', then an algorithm could be devised to track at what price point SVs were locked in at to act as a bellwether for the current exchange rate, either as a supplement to, or as the official stock exchange rate, thus eliminating all rouge exchanges. If such were the case, then exchanges would be just that: acting ONLY as the facilitator of BTC to fiat, and vice versa, based upon the rate set by the SV holding patterns, along with having a nominal fee structure to compete with the myriad competition.

Yes, the SV system could be gamed to effect the exchange rate, but at a cost of all transactions being readily available for all to see exactly what is going on, and not behind some doors of some entity named after the owner's cat.

Also, Alice could easily opt to play the game. If she feels that BTC is going to increase in value, she could easily transfer all or part of her SV holdings to a conventional wallet address that she maintains. Conversely, if Alice feels that the rate is about to drop, she could transfer all or part of her holdings to a new SV bitcoin wallet. Obviously, an SV bitcoin wallet can only be used once (unless I'm missing something, though perhaps an argument could be made that if it's funded with the exact dollar, or other fiat, amount that it was originally set up for, then that may work--KISS).

Discussion.

~Bruno Kucinskas

[1714682343]

1714682343

[1714682343]

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[Phinnaeus Gage]

If such a system were in place, then the "Store of Value" aspect that most the naysaying pundits are concerned about would no longer be an issue.

[ElectricMucus]

Congrats you just re-invented ripple USD IOUs.

[Phinnaeus Gage]

Congrats you just re-invented ripple USD IOUs.

If that's the case, it goes to show how much I know about Ripple. What about the exchange aspect I outlined? Taxing my memory, I'm pretty sure I've seen discussions about peer-to-peer changes, but didn't read, nor versed in such.

[ElectricMucus]

Congrats you just re-invented ripple USD IOUs.

If that's the case, it goes to show how much I know about Ripple. What about the exchange aspect I outlined? Taxing my memory, I'm pretty sure I've seen discussions about peer-to-peer changes, but didn't read, nor versed in such.

Well, in the end you need somebody willing to exchange real dollars to the pegged virtual currency, I don't quite see that aspect in your idea, but I assumed it's omitted because it's obvious. ripple has 'gateways' issuing each their own derivative of USD for example, a gateway can be special entities (like bitstamp are now) or just a regular user. You can trade IOUs of the same currency or different currency in a public orderbook, it works all the same.

[b¡tco¡n]

I don't get it? Why wouldn't Alice just keep the $1000 in fiat?

[franky1]

bitcoin is speculative/volatile.

i would simply tell alice to buy $1000 of an altcoin that is permanently pegged at 1 £/$/Euro. such as HullCoin. that is going to be pegged at £1.

re inventing bitcoin or altering bitcoin is not required. there are many alts that have passed by, claiming they will be pegged at $1. you just need to find the one that wont topple over with too many sells due to miners making millions of the coins, with only a gerbil wheel as the power of the miner.

i would look into Hull coin for idea's on your scenario. although as i said, many others have appeared in the past, hull coin is mined by the local council and fairly exchanged at the £1 price point. stopping random people making millions of coins and emptying the exchange account of all its FIAT.

[DrBitcoin]

Alice acquires $1,000 USD worth of bitcoins, but wants to maintain that relative purchasing power down the road, i.e. not just $880 USD buying power due to some dip, albeit upticks are welcomed, but Alice opts to not play that game, for lack of a better term. Thus, Alice opts for the "Store of Value" option via ticking a box. So, instead of having an address 1xxxXXX..., she has SV1xxxXXX... (x & X denote random digits, of course).

Now, down the road, whatever direction the bitcoin exchange rate takes, no matter how drastic, Alice would still has $1,000 USD worth of bitcoins to make her purchases.

An example if the rate doubles from $1,000 USD/BTC to $2,000 USD/BTC:

Alice has $1,000 USD in the form of SV1xxxXXX..., of which just happens to equal exactly 1 BTC that's, for practical purposes, irrelevant, for in the next few minutes 1 BTC could easily equal $1,006.72 USD.

Several months later, Alice desires to make a purchase of some item that has a price point of exactly $1,000 USD, and the seller, of course, gladly accepts bitcoins. Even though the currently exchange rate is now $2,000 USD/BTC, Alice transfers her SV1xxxXXX... to the merchant's wallet of 1xxxXXX...., but the merchant now has 0.5 BTC equating to exactly $1,000 USD. (like everybody else, the merchant also has the option of accepting BTC and placing them into an SV bitcoin wallet)

Likewise, if the exchange rate halves to $500 USD/BTC:

Several months later (or whatever timeframe), Alice desires to make a purchase of some item that has a price point of exactly $1,000 USD, and the seller, of course, gladly accepts bitcoins. Even though the currently exchange rate is now $500 USD/BTC, Alice transfers her SV1xxxXXX... to the merchant's wallet of 1xxxXXX...., but the merchant now has 2 BTC equating to exactly $1,000 USD. (like everybody else, the merchant also has the option of accepting BTC and placing them into an SV bitcoin wallet)

Alice is not force to spend the entire $1K USD SV at one shot. She could easily opt to spend any fraction of her SV, maintaining the balance SV, but the merchant having the dollar amount converted to his 1xxxXXX... bitcoin wallet.

At any time, Alice would be able to take out a fraction of, or her entire holding, and transfer it to another wallet she maintains that's not an SV wallet.

The above is the gist of the idea I came up with while on the road to Philly. Since then, something else came to mind, of which I'm not as sure it working as strongly as I envisioned the above, but I'll express it below nonetheless.

If a critical mass of bitcoiners opt for the SV option, of course visible on the 'blockchain', then an algorithm could be devised to track at what price point SVs were locked in at to act as a bellwether for the current exchange rate, either as a supplement to, or as the official stock exchange rate, thus eliminating all rouge exchanges. If such were the case, then exchanges would be just that: acting ONLY as the facilitator of BTC to fiat, and vice versa, based upon the rate set by the SV holding patterns, along with having a nominal fee structure to compete with the myriad competition.

Yes, the SV system could be gamed to effect the exchange rate, but at a cost of all transactions being readily available for all to see exactly what is going on, and not behind some doors of some entity named after the owner's cat.

Also, Alice could easily opt to play the game. If she feels that BTC is going to increase in value, she could easily transfer all or part of her SV holdings to a conventional wallet address that she maintains. Conversely, if Alice feels that the rate is about to drop, she could transfer all or part of her holdings to a new SV bitcoin wallet. Obviously, an SV bitcoin wallet can only be used once (unless I'm missing something, though perhaps an argument could be made that if it's funded with the exact dollar, or other fiat, amount that it was originally set up for, then that may work--KISS).

Discussion.

~Bruno Kucinskas

What a complex yet pointless idea. Why bother converting your USD to BTC if the value of your BTC will always be pegged to USD at the time of purchase? When I convert USD to EUROS, if EUROS drop in value and I try to convert back to USD I get less money.

Your solution is a compete fail.

The way to solve the "store of value" issue is massive volume. When Bitcoin has massive volume, it will stabilize and the lack of fluctuation will increase its value as a currency...which the IRS says it isn't. For now, I like the fact that Bitcoin is a speculation investment. Buy at $450, sell at $700. Etc.

[leopard2]

How the heck should that work?

Unless there is a counterparty that is willing to exchange coin xyz against USD or GBP or whatever, this won't work

And such a counterparty is a central entity that can be attacked. So Ripple and Hullcoin are not real cryptocoins. A "Government Cryptocurrency"  WHAT??!!

The idea of having a pegged vehicle to get money in and out is great; but other than with BTC, the exchanger would be local by definition (because fiat is local) and thus very vulnerable.

[Phinnaeus Gage]

I don't get it? Why wouldn't Alice just keep the $1000 in fiat?

For a myriad reasons. Travel, shopping, send to herself when she travels in a few months to some foreign land, uncertainty, etc.

[Phinnaeus Gage]

Congrats you just re-invented ripple USD IOUs.

If that's the case, it goes to show how much I know about Ripple. What about the exchange aspect I outlined? Taxing my memory, I'm pretty sure I've seen discussions about peer-to-peer changes, but didn't read, nor versed in such.

Well, in the end you need somebody willing to exchange real dollars to the pegged virtual currency, I don't quite see that aspect in your idea, but I assumed it's omitted because it's obvious. ripple has 'gateways' issuing each their own derivative of USD for example, a gateway can be special entities (like bitstamp are now) or just a regular user. You can trade IOUs of the same currency or different currency in a public orderbook, it works all the same.

One could just convert some BTC that they already have to a SV address, no longer wanted to participate in the volatility, or somehow feel the rates going to go down, and needs most all that currently store for an upcoming purchase/sale.

BTW, the ATMs work perfect for this, for Alice can put $100 in and later draw exactly $100 out sans possibly a lesser fee (hopefully, and thinking out loud).

[skooter]

This is like exchanging all your USD For GBP and saying you want a fixed amount of USD back when you turn in your GBP a year later.

Not possible.

Or if it was done in some way, you're not really holding GBP, you're holding USD and calling it GBP.

[Phinnaeus Gage]

Alice acquires $1,000 USD worth of bitcoins, but wants to maintain that relative purchasing power down the road, i.e. not just $880 USD buying power due to some dip, albeit upticks are welcomed, but Alice opts to not play that game, for lack of a better term. Thus, Alice opts for the "Store of Value" option via ticking a box. So, instead of having an address 1xxxXXX..., she has SV1xxxXXX... (x & X denote random digits, of course).

Now, down the road, whatever direction the bitcoin exchange rate takes, no matter how drastic, Alice would still has $1,000 USD worth of bitcoins to make her purchases.

An example if the rate doubles from $1,000 USD/BTC to $2,000 USD/BTC:

Alice has $1,000 USD in the form of SV1xxxXXX..., of which just happens to equal exactly 1 BTC that's, for practical purposes, irrelevant, for in the next few minutes 1 BTC could easily equal $1,006.72 USD.

Several months later, Alice desires to make a purchase of some item that has a price point of exactly $1,000 USD, and the seller, of course, gladly accepts bitcoins. Even though the currently exchange rate is now $2,000 USD/BTC, Alice transfers her SV1xxxXXX... to the merchant's wallet of 1xxxXXX...., but the merchant now has 0.5 BTC equating to exactly $1,000 USD. (like everybody else, the merchant also has the option of accepting BTC and placing them into an SV bitcoin wallet)

Likewise, if the exchange rate halves to $500 USD/BTC:

Several months later (or whatever timeframe), Alice desires to make a purchase of some item that has a price point of exactly $1,000 USD, and the seller, of course, gladly accepts bitcoins. Even though the currently exchange rate is now $500 USD/BTC, Alice transfers her SV1xxxXXX... to the merchant's wallet of 1xxxXXX...., but the merchant now has 2 BTC equating to exactly $1,000 USD. (like everybody else, the merchant also has the option of accepting BTC and placing them into an SV bitcoin wallet)

Alice is not force to spend the entire $1K USD SV at one shot. She could easily opt to spend any fraction of her SV, maintaining the balance SV, but the merchant having the dollar amount converted to his 1xxxXXX... bitcoin wallet.

At any time, Alice would be able to take out a fraction of, or her entire holding, and transfer it to another wallet she maintains that's not an SV wallet.

The above is the gist of the idea I came up with while on the road to Philly. Since then, something else came to mind, of which I'm not as sure it working as strongly as I envisioned the above, but I'll express it below nonetheless.

If a critical mass of bitcoiners opt for the SV option, of course visible on the 'blockchain', then an algorithm could be devised to track at what price point SVs were locked in at to act as a bellwether for the current exchange rate, either as a supplement to, or as the official stock exchange rate, thus eliminating all rouge exchanges. If such were the case, then exchanges would be just that: acting ONLY as the facilitator of BTC to fiat, and vice versa, based upon the rate set by the SV holding patterns, along with having a nominal fee structure to compete with the myriad competition.

Yes, the SV system could be gamed to effect the exchange rate, but at a cost of all transactions being readily available for all to see exactly what is going on, and not behind some doors of some entity named after the owner's cat.

Also, Alice could easily opt to play the game. If she feels that BTC is going to increase in value, she could easily transfer all or part of her SV holdings to a conventional wallet address that she maintains. Conversely, if Alice feels that the rate is about to drop, she could transfer all or part of her holdings to a new SV bitcoin wallet. Obviously, an SV bitcoin wallet can only be used once (unless I'm missing something, though perhaps an argument could be made that if it's funded with the exact dollar, or other fiat, amount that it was originally set up for, then that may work--KISS).

Discussion.

~Bruno Kucinskas

What a complex yet pointless idea. Why bother converting your USD to BTC if the value of your BTC will always be pegged to USD at the time of purchase? When I convert USD to EUROS, if EUROS drop in value and I try to convert back to USD I get less money.

Your solution is a compete fail.

The way to solve the "store of value" issue is massive volume. When Bitcoin has massive volume, it will stabilize and the lack of fluctuation will increase its value as a currency...which the IRS says it isn't. For now, I like the fact that Bitcoin is a speculation investment. Buy at $450, sell at $700. Etc.

I'm not advocating changing the entire protocol that would eliminate why you use it. It'll only be an option for those desiring a solid Store of Value. Plus, it would should that Bitcoin is perfect as a Store of Value of those desiring such of their currency or money, whatever the case may be.

[Phinnaeus Gage]

This is like exchanging all your USD For GBP and saying you want a fixed amount of USD back when you turn in your GBP a year later.

Not possible.

Or if it was done in some way, you're not really holding GBP, you're holding USD and calling it GBP.

Same as if I loan you 2 BTC today and expect to be paid back 2 BTC a year from today, or $100 USD for $100 USD a year from now. Or $100 USD is put in some personal safe and retrieved later to have the same $100 in hand, worth the same in the holders mind, but probably lost some value due to inflation.

If I were to deposit $100 USD via an ATM converted to BTC, at the time of deposit I would have the option or putting it in a conventional wallet or an SV wallet. We all know how the conventional one works, thus no need explaining it again. But, since I scanned an SV wallet, the $100 USD retains exactly $100 USD for as long as the US/FED is around to back it. Five years from now, I can only retrieve a $100 USD bill(s) if via ATM/bank/other, or having only $100 purchasing power via BTC. Once transferred, the new holder has exactly $100 USD in value as if a $100 USD bill was just transferred to his account, but the BTC amount would be different. That is all.

Of course all this could be done with alts, but the goal is to have it all under one roof, so to speak, i.e. Bitcoin's protocol.

[Phinnaeus Gage]

How the heck should that work?

Unless there is a counterparty that is willing to exchange coin xyz against USD or GBP or whatever, this won't work

And such a counterparty is a central entity that can be attacked. So Ripple and Hullcoin are not real cryptocoins. A "Government Cryptocurrency"  WHAT??!!

The idea of having a pegged vehicle to get money in and out is great; but other than with BTC, the exchanger would be local by definition (because fiat is local) and thus very vulnerable.

Putting the exchange aspect aside, I'm just talking about a program tweak for accounting purposes. That is all.

Currently, it works as follows sans the SV aspect:

- $100 USD goes in via ATM and the ledge show X BTC in wallet 1xxxXXX....
- Or, wallet 1xxxXXX... consisting of X BTC valued at $100 USD is transferred to wallet 1yyyYYY... consisting of X BTC valued at $100 USD if the rate hasn't changed. If it has, then all chances accordingly minus the minute fee, of course.

As a Store of Value (SV) it works like the following:

- $100 USD goes in via ATM or from other source (doesn't matter from where) and ledge shows X BTC in wallet SV1xxxXXX...
- If from elsewhere, i.e. 1yyyYYY... consisting of $100 USD is transferred to wallet SV1zzzZZZ... and will retain that $100 USD value until spent.
- If when spent the rate has increased say 5 fold, then if the wallet SV1zzzZZZ... is move en masse to wallet 1aaaAAA..., the latter wallet would have $100 USD in it but will have 5Xs less BTC then the original wallet. The value is the same, just like now having $100 USD in BTC has a different decimal amount/placement then if $100 were deposited 3 years ago, albeit that 3 year old account would be worth a heck of a lot more but have the exact same BTC amount down to the last satoshi.

[bitpop]

Neobee