Dollar-Backed Digital Currency Aims to Fix Bitcoin’s Volatility Dilemma

[beetcoin]

it would be better to back it with something like gold.. back a commodity with a commodity. not with an unlimited currency.

[Peter R]

As described that has absolutely zero chance of being approved by the SEC.  Bearer shares and notes are explicitly unlawful under federal law.  They are unlawful for expressly that reason.  It isn't just a US thing, bearer shares have been outlawed most places on the planet.   Sure maybe you can have bearer shares in Somolia but then again the coins are backed by dollars they are backed by the promise of dollars. A quasi illegal entity operating offshore in a state without adequate safeguards.  Yeah I know how much I will trust that.

If the Realcoins aren't approved securities, then--as much as I like the idea of dollar-backed colored coins--they are worthless to me.  

But this brings up another point that's been bugging me.  All the talk about the "2.0 coins" and "decentralized asset exchanges" is really just that--talk.  We are not going to see serious money put into products that are in blatant violation of SEC regulations.  I might go as far as to say that even "IPOing" a pre-mined PoS coin could be considered soliciting investment in a security, in which case this would require SEC approval too.  

IMO, if we want to migrate assets to the blockchain, the place to start is to consider using colored coins as endorsable share certificates.  The ownership of the shares would be recorded in the company's register by legal name and address (the shares are not anonymous), but the shares are endorsable by digital signature and the Open-assets protocol.  The endorsee has to register his name and address with the company to complete the transfer of ownership.  I've begun analyzing the legality of this here: https://bitcointalk.org/index.php?topic=653257.msg7368255#msg7368255

[JorgeStolfi]

As described that has absolutely zero chance of being approved by the SEC.  Bearer shares and notes are explicitly unlawful under federal law.  They are unlawful for expressly that reason.  It isn't just a US thing, bearer shares have been outlawed most places on the planet. 

Are you sure that bearer bonds is the right comparison?  The article says that they are seeking "money transmitting licenses in states that require them", so in practice RealCoin may be more a competitor to PayPal, not a security; and in that case it may not fall under the SECś  jurisdiction, but of some other regulating agency (the Fed?).

[ArticMine]

Problem here is what if the dollar becomes worthless?

They are printing them to infinity. Not a good currency model that holds value.

Really dumb idea in my view.

it would be better to back it with something like gold.. back a commodity with a commodity. not with an unlimited currency.

The problem is not what Realcoin is backed with. There is market here for backing with USD, other fiat currencies, gold, silver etc., as both e-Gold and Liberty Reserve proved. The problem is dealing with literally hunderds of different regulators of over the world each producing thier own special variant of red tape.

But I don't know if I'm following what you are saying in your post.  Let's say CaVirtex received regulatory approval to issue dollar-IOUs using the Open-Assets protocol (colored coins).  It seems to me that once the product was approved, all CaVirtex needs to concern itself with is redemption of those dollar-IOUs back into account balances.  CaVirtex doesn't need to care whether those particular dollar-IOUs went through 10 sets of anonymous hands prior to making their way back to CaVirtex for redemption.  And if this is the case, someone from China might happily accept a CaVirtex dollar-IOU at face value, even though they have no plans to redeem it.  They just trust that the IOUs will always trade near face value as long as someone is able to redeem the IOUs at CaVirtex.  

As described that has absolutely zero chance of being approved by the SEC.  Bearer shares and notes are explicitly unlawful under federal law.  They are unlawful for expressly that reason.  It isn't just a US thing, bearer shares have been outlawed most places on the planet.   Sure maybe you be able to issue bearer shares in Somolia but then again the coins are backed by dollars they are backed by the promise to rpeay dollars.  Any doubt on the legality of the entity casts doubt on the promise to repay.

This could work possibly in the UK where as far as I can see it is legal to issue bearer securites. My take however is that Realcoin will drown is a sea of red tape and in the process further prove the value of Bitcoin.

[Peter R]

As described that has absolutely zero chance of being approved by the SEC.  Bearer shares and notes are explicitly unlawful under federal law.  They are unlawful for expressly that reason.  It isn't just a US thing, bearer shares have been outlawed most places on the planet.  

Are you sure that bearer bonds is the right comparison?  The article says that they are seeking "money transmitting licenses in states that require them", so in practice RealCoin may be more a competitor to PayPal, not a security; and in that case it may not fall under the SECś  jurisdiction, but of some other regulating agency (the Fed?).

I think he was referring to the example being discussed earlier where colored coins are explicit bearer IOUs for dollars.  It's not 100% clear yet what Realcoins are, but the WSJ post makes it sound like bearer IOUs for dollars:

To ensure realcoins retain their value at one dollar, the firm will maintain a real-time record of its dollar-based reserves, all held in conservative investments, and will subject that record to the blockchain’s authenticating system, Mr. Collins said. Realcoins will be introduced or removed from circulation depending on whether dollars are being added or redeemed.

...we are digitizing the dollar and giving that digital dollar access to the bitcoin blockchain…

Realcoin is the latest in a wave of so-called Bitcoin 2.0 ventures, which use bitcoin’s computer infrastructure to exchange property and execute contracts without third-party intermediaries. These projects open up bitcoin’s decentralized, peer-to-peer network to a variety of commercial uses beyond just transactions denominated in bitcoins.

[hiromem]

way to take a great idea and shit on it thanks cock pierce!

[fryarminer]

A Santa Monica-based startup says it has produced the first dollar-backed digital currency. If successful, this new currency could exploit bitcoin’s inexpensive and direct payments network, while avoiding its volatility.
The startup, Realcoin, is set to announce that its digital currency, dubbed realcoins, will be backed one-to-one by a fully auditable reserve of dollars.

I read this far and stopped reading.
Why would I want an alt coin that was backed by dollars? Dollars - really?!

[tmbp]

Realcoin a.k.a Pedocoin

[jbreher]

A Santa Monica-based startup says it has produced the first dollar-backed digital currency.

I made it only to the first sentence before guffawing. Isn't the dollar the first dollar-backed digital currency?

[megashira1]

The dollar already is digital. And if you want it on a block chain just use NXT or BitSharesX.

[QuestionAuthority]

Wait a minute, a prominent member of the BITCOIN Foundation said Bitcoin has a lot of problems but that's ok because I fixed them in my new coin. I bet TBF is so proud. lol

[scryptasicminer]

seems like a conflict of interest considering he is one of the newest members of the Bitcoin Foundation. 

Don't think the director is on salary. Correct me if I am wrong.

[JorgeStolfi]

A Santa Monica-based startup says it has produced the first dollar-backed digital currency.

I made it only to the first sentence before guffawing. Isn't the dollar the first dollar-backed digital currency?

Sometime in the 1980s I was a student intern at the Xerox Palo Alto Research Center (PARC).  Some years before they had developed the Alto, the first usable personal workstation with an ethernet interface, bit-mapped display (instead of the then-standard 25x80 character display), a three-button mouse, and the basic ideas of a GUI -- menus, buttons, sliders, etc.

With much effort, the PARC researchers had managed to convince the upper Xerox management that those weird things could be marketed.  So Xerox started developing commercial versions of the Alto, that were planned to cost 80'000$ or more.

But, before those machines were ready, Apple unexpectedly launched the first Macintosh, which cost only a few thousand dollars and also had a bitmapped display, mouse, and a GUI with buttons, menus etc.  In fact Jobs had seen the Alto and copied those features from it.

As soon as the Macintosh was announced, someone at PARC collected all its TV ads and showed them in the lab's auditorium.  While most of the audience was a bit stunned and worried, there was a small group who laughed at every "weakness" of the Mac: its tiny screen, the mouse with just one button, the lack of a network interface, the floppy disk, and so on.

Needless to say the Xerox workstations were a complete flop, and Xerox had to pull out of the computer market.  And you all know what happened to the Mac.

So, perhaps it is not yet the time to laugh at RealCoin just because it is technically garbage.

[JorgeStolfi]

seems like a conflict of interest considering he is one of the newest members of the Bitcoin Foundation. 

Don't think the director is on salary. Correct me if I am wrong.

Brock Pierce does not need a salary, in fact he paid dearly to get there.

[ejinte]

The dollar already is digital. And if you want it on a block chain just use NXT or BitSharesX.

Neither NXT or BitShares is using the bitcoin blockchain.
Mastercoin is and that's where they're planning to launch realcoin.
FYI the other 2.0 protocol that's using the bitcoin blockchain is called counterparty

[DannyElfman]

As described that has absolutely zero chance of being approved by the SEC.  Bearer shares and notes are explicitly unlawful under federal law.  They are unlawful for expressly that reason.  It isn't just a US thing, bearer shares have been outlawed most places on the planet. 

Are you sure that bearer bonds is the right comparison?  The article says that they are seeking "money transmitting licenses in states that require them", so in practice RealCoin may be more a competitor to PayPal, not a security; and in that case it may not fall under the SECś  jurisdiction, but of some other regulating agency (the Fed?).

The fed does not have authority over any entity that does not accept deposits for account holders. This kind of setup would likely be very similar to bitcoin except the underlying coins would be backed by physical assets (dollars).

[S4VV4S]

-snip-

Edit: I think the important part is that realcoin has full backing, which national currencies usually do not have.

Huh?
So you think realcoin is fine because it's backed up by something that is not?

I don't understand the logic in what you said.....

[Lauda]

worst. idea. ever.

Exactly. Stop holding on to the dollar already.
Such currency will fail and die a horrible death.

[Erdogan]

-snip-

Edit: I think the important part is that realcoin has full backing, which national currencies usually do not have.

Huh?
So you think realcoin is fine because it's backed up by something that is not?

I don't understand the logic in what you said.....

I don't think realcoin is ok, I do not think it will be relevant in two years.

There were some arguments thown back and forth. Compared to a currency like Singapore dollar, that tries to follow a bunch of other currencies in a band, it seems that realcoin in fact can be pegged exactly to the dollar, since it is fully backed. You could also say it is a dollar extension, a warehouse receipt for a dollar stored. So I think it is possible that it can follew the dollar in value closely.

[arbitrage001]

-snip-

Edit: I think the important part is that realcoin has full backing, which national currencies usually do not have.

Huh?
So you think realcoin is fine because it's backed up by something that is not?

I don't understand the logic in what you said.....

I don't think realcoin is ok, I do not think it will be relevant in two years.

There were some arguments thown back and forth. Compared to a currency like Singapore dollar, that tries to follow a bunch of other currencies in a band, it seems that realcoin in fact can be pegged exactly to the dollar, since it is fully backed. You could also say it is a dollar extension, a warehouse receipt for a dollar stored. So I think it is possible that it can follew the dollar in value closely.

It may work. There is a lot of benefit having dollar version of crypto coin. If they can convince merchant to accept it, and make it easy and secure for smart phone users to buy, the potential is higher than bitcoin as most bitcoin users are hoarding it hoping for higher price rather than using it.