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May 09, 2014, 07:04:15 AM |
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A bond would be a new way to add currency to a cryptocurrency system, and is called a bond because it's been inspired by the way US government bonds work.
It would be a new way of introducing currency to a network. You'd get a certificate promising N (say 10) coins in X time (say 6 months) if you are the highest bidder. The coins that get bid could either be destroyed, sent to some master account (owned by the dev), or added in as bonds in the next block (or maybe frozen and added in as bonds in Y blocks). Or the coins spent on bonds could be given to the miners (this might create a conflict of interest if not implemented carefully).
This creates a prediction market for inflation on the network. In a zero inflation or a deflation market, you'd likely see the bids for bonds near or equal to the payout of the bonds. This in general would indicate that people see more value in holding onto their coins, and that they don't feel there is a loss by locking them up for 6 months. In a high inflation market, you'd likely see the bids for the bonds be very low, because people would rather spend their coins today than to lock them up and receive double in 6 months.
You might not actually need to build this into the currency, if some central party (using Bitcoin Script for trustlessness) decided to play the role of the bond dealer. This might not work out well for the bond dealer however so you may want it baked into the network.
It gets more interesting when you set up cross cryptocurrency bonds. Say each block you devote 50 new coins that get released as 6 month bonds. 10 coins are reserved for internal bonds (sacrifice the same type of coin to get the bond), 10 coins are reserved for Bitcoin (you sacrifice Bitcoins - send to a 0 wallet or something, with some way of determining who gets the bonds), 10 for Nxt, 10 for Siacoin, etc. It might be tricky to set up the scripting, or might only be compatible with newer coins, but regardless the outcome is that you get a cross-cryptocurrency prediction market. How much will Bitcoin be worth in comparison to Bondcoin? If you think that Bondcoin is going to explode in value, you might give up a lot of Bitcoins. If you think that Bondcoin is doomed and will flop, bonds might only cost a few satoshis.
Prediction markets have a strong reputation of being very accurate, because many many individuals are making decisions that result in an intelligent aggregate. Bonds would give a stronger glimpse into the public opinion of the future of the currency, and of the future of multiple currencies in relation to each other. This might also remove some of the instability, because people could be more confident about the future of a cryptocurrency, because they have an extra trustworthy signal to watch.
Wondering what you guys think of this potential feature.
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