The RealCoin Idea

[markm]

This is why I liked the "Freeciv Nations' National Currencies" concept.

We could back DigILire with real Lire, Canadian Digital Notes with CAD, United Kingdom Britcoin with GBP and so on for every national fiat currency.

No more need to worry about selling some of your only one type of coin for CAD, some for USD, some for GBP and so on then have a "run on the bank" in which everyone demans CAD or everyone demands GBP or whatever. Having one type of coin for each type of fiat means you can always have exactly the right kind of fiat in reserve to exactly back each coin regardless of what kind of fiat someone chooses to buy cryptocurrency with. You give each customer cryptocurrency that explicitly specifies which type of fiat they bought it with aka provided the reserves to back it with.

-MarkM-

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[cunicula]

How does anyone know if there is "fiat" in reserve? Why would the operators not just run away with the money?

Suppose there are honest operators who won't do that. What stops dishonest operators from setting up shop next door?

How do consumers tell the difference between honest and dishonest operators if they can't check how much money is on reserve in the operator's bank account?

What happens when the gov't freezes the operator's bank account? What is there to prevent this from happening?

What is the mechanism governing how the operator makes decisions? Is there just one dude controlling everything?

There are just too many problems with this. My idea is clearly much better. You probably know that.

[cunicula]

Also, and tell me if I am misunderstanding, but you want to back your version with Bitcoin?  What's the point of that?

To peg the value to one dollar in a way that is verifiable to third parties. Otherwise it will just look like a scam coin as in "Realcoin".

Ah, ok, so I was misunderstanding.

Well, best of luck with your endeavor.  Maybe you can find a way to work it out. 

I did work it out, but I can't program it up because I don't code. Just looking for some interest from people with the proper skills.

[markm]

@Cunicula:

Your idea has its problems too, as I am sure you know.

Thanks for posting so I can post again though, because I wanted to add that blockchains can be used to do voting just like shares, anyone can verify with the block explorer how many coins each address has on balance thus how much voting weight each address could have if it signed a voting ballot.

Thus first I shall address your post, then add on this voting concept as a possible way to handle some distributed decision-making (even if not necessarily actual distributed execution of the decision).

This combines your idea of bitcoin having a central importance, if we use bitcoin for the voting.

Using bitcoins for the voting means it is not unreasonable to propose that IF you legitimately have a stake in actually knowing whether I have a certain amount of a certain type of fiat, THEN you can simply buy that amount of fiat from me with bitcoin.

If you do not have enough bitcoin to buy my entire stock of that type of fiat, I simply snub you as being of too little account for me to worry about whether you believe I have the fiat.

If you *are* of sufficient account though, you CAN buy my entire stock of fifty five Canadian Pennies three Canadian nickels and a tooney that my reserves listing sheet claims I have.

You and everyone else will be able to see on the blockchain that I THEN have enough bitcoin to buy that much CAD.

We could even, you being such a massive shareholder and all, have an agreement whereby I will buy those CAD coins back. We between us will have testified (they have to trust that you really did receive the CAD coins and aren't merely colluding with me) that I did have the CAD I claimed to have and now presumably have it again.

Now you maybe express doubt that I have a one kilogram brick of platinum?

Send me the bitcoins and maybe I can buy one and pretend I had it all along. Or I can maybe point at a pile of bitcoins I prove I control and say to you hey that there IS a brick of platinum any time today at today's spot price, lets do a shareholder vote to see if the holders would like me to have such a brick in my reserves.

So I agree that the transparency of blockchains is very useful, but at the same time it might be useful for the stakeholders, as you seem to like to call them, to be able to decide that actually the way such and such a fiat is fluctuating as compared to bitcoins might make it worthwhile to hold fiat instead of bitcoins at some points in time, or to hold a certain percent of each. Since lately, if you look at which fiats fluctuate a LOT compared to bitcoin you might almost be tempted to claim it is not the fiats that are fluctuating it is bitcoin that is fluctuating.

We could build code that can measure signed vote ballots that are signed by bitcoin addresses to allow bitcoins to act as voting shares...

Then vote on how much of our theoretical 21,000,000 units of currency we should hold as bitcoins, how many as dollars, how many as yen, how many as CAD and so on.

We could maybe start with pennies, try to acquire 21,000,000 pennies, in order to be able to say we at least can back each unit with a whole actual mostly-zinc early 21st or late 20th century penny...

Or try for NicKeLs, like bitNicKeLs aimed at, they aimed to be worth an actual made of nickel old style nickel from back before the nickels got debased...

-MarkM-

[drakahn]

How does anyone know if there is "fiat" in reserve? Why would the operators not just run away with the money?

Suppose there are honest operators who won't do that. What stops dishonest operators from setting up shop next door?

How do consumers tell the difference between honest and dishonest operators if they can't check how much money is on reserve in the operator's bank account?

What happens when the gov't freezes the operator's bank account? What is there to prevent this from happening?

What is the mechanism governing how the operator makes decisions? Is there just one dude controlling everything?

There are just too many problems with this. My idea is clearly much better. You probably know that.

Your questions are the questions i started this thread to try and answer

[markm]

Maybe we could do a pawnshop using a blockchain for its pawn tickets, so people can come visit the shop to see that we have all the goods that "back" the tickets plus after some period of time possibly restricted by law we would be free to turn those assets into cash or whatever else in order to have more room in the shop for more bars of gold or whatever, putting the cash into a trust account etc.

Is it illegal to trade pawn tickets in barter transactions?

Or we could have DryCleanedGarmentsCoin, backed by drycleaned garments, and have blockchain based laundry-tickets redeemable for the garments, and people could barter those?

-MarkM-

[memvola]

Or we could have DryCleanedGarmentsCoin, backed by drycleaned garments, and have blockchain based laundry-tickets redeemable for the garments, and people could barter those?

Let's go for a more universal and purer form of labor: hugs

[jtimon]

You could have a chain where anyone can issue its own currency. Mtgox publishes its private key, tradehill its own, intersango, etc.
People decide which usdCoins, eurCoins, etc they trust and accept.
You make the trades with contracts (need nLockTime).

By doing this, you also enable decentralized chain based Ripple, because you could make a tx like this one (all transfers in the same tx and A, B and C must sign it):
10 mtgoxUSDcoins from A to B
10 tradehillUSDcoins from B to C
10 intersangoUSDcoins from C to D

Everyone being capable of issuing their own currencies and transitive transactions is all you need for Ripple. Maybe this side effect/byproduct feature doesn't interest you much but I think it's important.

The main potential problems I see could come from spaming/DoS, but miner's fees should take care of that.
You would also need a server or a system like darkExchange to move the offers and such. These are called markets in my proposal.
The messages on the proposal are wrong, I'm still thinking about the design, but you can read the specification. Basically is allowing this (iouChain or whatever) and also cryptoAssets that are not only issued centrally but also accounted centrally (instead of through a proof of work chain). About decentralized issuing...I don't think it is possible neither. At most issued by different parties that vote. But if you're backing a currency their users must trust you, there's no other way around it.

About legal issues, I'm not a lawyer, but...aren't paypalUSD, dwollaUSD, mtgoxUSD, etc backed by fiat legally? Is it about "know your customer" stuff? Intersango doesn't require you to identify yourself and it's legal. What am I missing?

[markm]

Intersango doesn't require you to identify yourself and it's legal. What am I missing?

Are you sure Intersango doesn't have to know its U.S.-resident and/or U.S.-citizen customers?

Don't even Swiss financial institutions have to do that nowadays?

-MarkM-

[jtimon]

Intersango doesn't require you to identify yourself and it's legal. What am I missing?

Are you sure Intersango doesn't have to know its U.S.-resident and/or U.S.-citizen customers?

Don't even Swiss financial institutions have to do that nowadays?

I live in Europe and didn't had to. Not even for depositing euros. Maybe is illegal to have an account on intersango if you're a US citizen and you don't identify yourself. But it doesn't ask.
I don't know. Just remember exchanges aren't banks. Are you sure you need to identify yourself for depositing USDs in a foreign business that's not a bank?
Anyway, as always, when it's technically possible, we can try to rely on pseudonym reputation and the martians...

[markm]

Hmm maybe exchanges in Europe aren't as heavily burdened with regulations, maybe you can simply buy currencies over the counter at airports and such without having to show ID or passport, maybe even walk into any bank and buy it over the counter without ID, without creating an account, stuff like that?

How did the far across continent money-transfer networks of the Middle Ages work? Haven't they only recently been "purportedly" shut down, yet operated for centuries even before telegraph, telephone, radio, back in the days of the early computer known as the abacus?

Maybe there was something to be said for trust once upon a time? A simpler, more idyllic age when the darkness of superstitious faith kept people honest by threat of jealous gods? ...

-MarkM-

[SgtSpike]

How does anyone know if there is "fiat" in reserve? Why would the operators not just run away with the money?

Suppose there are honest operators who won't do that. What stops dishonest operators from setting up shop next door?

How do consumers tell the difference between honest and dishonest operators if they can't check how much money is on reserve in the operator's bank account?

What happens when the gov't freezes the operator's bank account? What is there to prevent this from happening?

What is the mechanism governing how the operator makes decisions? Is there just one dude controlling everything?

There are just too many problems with this. My idea is clearly much better. You probably know that.

I think assuming a dishonest operator is silly.  I mean, Paypal could be dishonest and run, but they haven't.  MtGox could, but they haven't.  Dwolla could, but they haven't.  Countless other companies could, but they haven't.

Not everyone wants to be a criminal on the run.

I don't know what you mean by "stopping dishonest operators from setting up next door".  If the honest company controls all of the funds from the get go, what could a dishonest company set up next door do?

The government could freeze the company's account just the same as they could freeze a "warchest" account.  I don't think there's anything to prevent that from happening - it's one of the potential dangers of dealing with fiat.

As with any other company, there should be a hierarchy of decision makers with checks and balances throughout the organization.  Regular audits from an outside company should also be performed, and if they are AML compliant, I imagine the government would likely perform their own audit procedures as well, to ensure that the company isn't out to scam anyone and actually has the reserves to back up the outstanding liabilities.

[cunicula]

The government could freeze the company's account just the same as they could freeze a "warchest" account.  I don't think there's anything to prevent that from happening - it's one of the potential dangers of dealing with fiat.

There is no mention of any interaction with fiat anywhere in the system I propose. Avoiding interaction with fiat is the whole purpose of the system.


Why is the world like this? Why even bother to respond to people like this? Arrghh! Diogenes is looking for a human being in the bitcoin forum.
 

There are similar reading comprehension fails in the rest of SgtSpike's inane ramblings. Sgt. We always knew you were slow. Kindly meander over to a thread targeted at your reading level. Wait... I'm probably the one who should be leaving... Goodbye.

[SgtSpike]

The government could freeze the company's account just the same as they could freeze a "warchest" account.  I don't think there's anything to prevent that from happening - it's one of the potential dangers of dealing with fiat.

There is no mention of any interaction with fiat anywhere in the system I propose. Avoiding interaction with fiat is the whole purpose of the system.

Why is the world like this? Why even bother to respond to people like this? Arrghh! Diogenes is looking for a human being in the bitcoin forum.
 
There are similar reading comprehension fails in the rest of SgtSpike's inane ramblings. Sgt. We always knew you were slow. Kindly meander over to a thread targeted at your reading level. Wait... I'm probably the one who should be leaving... Goodbye.

Sorry - keep getting you and markm mixed up.

The problem with your idea is that it cannot be stabilized, making it no better or different than Bitcoin.

[cunicula]

The government could freeze the company's account just the same as they could freeze a "warchest" account.  I don't think there's anything to prevent that from happening - it's one of the potential dangers of dealing with fiat.

There is no mention of any interaction with fiat anywhere in the system I propose. Avoiding interaction with fiat is the whole purpose of the system.

Why is the world like this? Why even bother to respond to people like this? Arrghh! Diogenes is looking for a human being in the bitcoin forum.
 
There are similar reading comprehension fails in the rest of SgtSpike's inane ramblings. Sgt. We always knew you were slow. Kindly meander over to a thread targeted at your reading level. Wait... I'm probably the one who should be leaving... Goodbye.

Sorry - keep getting you and markm mixed up.

The problem with your idea is that it cannot be stabilized, making it no better or different than Bitcoin.

sure it can be stabilized. it is just a fixed exchange rate. you stabilize it with a warchest just like any country with a fixed exchange rate does. read up on fixed exchange rates

[drakahn]

The government could freeze the company's account just the same as they could freeze a "warchest" account.  I don't think there's anything to prevent that from happening - it's one of the potential dangers of dealing with fiat.

There is no mention of any interaction with fiat anywhere in the system I propose. Avoiding interaction with fiat is the whole purpose of the system.

Why is the world like this? Why even bother to respond to people like this? Arrghh! Diogenes is looking for a human being in the bitcoin forum.
 
There are similar reading comprehension fails in the rest of SgtSpike's inane ramblings. Sgt. We always knew you were slow. Kindly meander over to a thread targeted at your reading level. Wait... I'm probably the one who should be leaving... Goodbye.

Sorry - keep getting you and markm mixed up.

The problem with your idea is that it cannot be stabilized, making it no better or different than Bitcoin.

sure it can be stabilized. it is just a fixed exchange rate. you stabilize it with a warchest just like any country with a fixed exchange rate does. read up on fixed exchange rates

yes but you are backing it with bitcoins, say you did it 1:1
1 bitcoin for 1 coincula - Why would i buy a coincula when bitcoin does everything it does? and its value will always be bitcoins value in fiat
if you mean buy 1 coincula for $1 worth of bitcoins, well you need to have the bitcoins in reserves to do this and there are too many ways to not have enough bitcoins to pay everyone back.

whereas a $1coin tied to USD will always be worth the same USD and make a much easier way to transfer 'fiat cash' around the internet, since each coin would be an iou from '$1coin corp'  and the reserves would be what was paid for them in the first place

[SgtSpike]

The government could freeze the company's account just the same as they could freeze a "warchest" account.  I don't think there's anything to prevent that from happening - it's one of the potential dangers of dealing with fiat.

There is no mention of any interaction with fiat anywhere in the system I propose. Avoiding interaction with fiat is the whole purpose of the system.

Why is the world like this? Why even bother to respond to people like this? Arrghh! Diogenes is looking for a human being in the bitcoin forum.
 
There are similar reading comprehension fails in the rest of SgtSpike's inane ramblings. Sgt. We always knew you were slow. Kindly meander over to a thread targeted at your reading level. Wait... I'm probably the one who should be leaving... Goodbye.

Sorry - keep getting you and markm mixed up.

The problem with your idea is that it cannot be stabilized, making it no better or different than Bitcoin.

sure it can be stabilized. it is just a fixed exchange rate. you stabilize it with a warchest just like any country with a fixed exchange rate does. read up on fixed exchange rates

So, let me see if I get this straight.

You plan to have a warchest filled with BTC and whatever the coin is.
You plan to use said warchest to buy and sell the coin, as needed, to keep the exchange rate basically stable compared to some fiat currency.
You plan to fund said warchest with transaction fees.

Am I correct?

EDIT:  DeathAndTaxes explained it well.  I understand the concept now.  I think it's a good idea, and would make a good alternative to RealPay.  I like the idea of a company-handled coin better myself, but there are certainly people on both sides of the fence in that regard, and I think there's definitely room for both services to co-exist.

EDIT2:  It also helps that DAT explained it without resorting to petty namecalling.   

[drakahn]

Yes i see that the reserve could work but you would always need more than was deposited and could end up paying out more than was deposited (not in usd value, but in bitcoins)

we sell 1 million coins for $1 in bitcoins when bitcoins are at $5 - we have 200000BTC
bitcoins drop to $2 and everyone wants their bitcoins back at the same time to 'get out' as it we're - we have 200000BTC and owe out 500000BTC - where is the 300000BTC coming from?

[marked]

Hmm maybe exchanges in Europe aren't as heavily burdened with regulations, maybe you can simply buy currencies over the counter at airports and such without having to show ID or passport, maybe even walk into any bank and buy it over the counter without ID, without creating an account, stuff like that?

I sold some SA currency a couple of weeks ago at an over the counter exchange, ie. I walked in and they paid spot price for it. Walked away again 2 mins later the only thing I signed was an acceptance of the amount.

marked

[drakahn]

How did trying to figure out how to tie an altcoin with fiat value without loss turn into losing a lot of BTC?