Trustless Pegged Currency

[hack_]

I'd like to initiate public discussion on the feasibility of creating a decentralized currency that is "pegged" either to other digital currencies or to Fiat, maybe even both. While many already exist, they aren't doing so well due to centralization or any other reason.

While this may look like it's fueled by the drop in BTC price, i have been thinking of the idea much longer.

Topics I have in mind:

Exchange fluidity
Ease of access
Decentralization
Value based Distribution
Value conservation and non-externalization.
Maintenance of leveraged Price floor

Please feel free to post theories and related opinions, the self-moderation is simply a precaution against spamming, off-topic and troll posts.

[hack_]

I have seen many coins offer ICO/ISO/IPO whatever they call it, but it has been mostly a one directional thing centered around bitcoins whose value goes in the pocket of devscammer or other such.

How do we create an actual Value Base? I struggled with the question until i came to an idea. Why not back the currency with existing ones?

Say Jane has altcoin A , T and X. And Joe had B, F and L.

Each of these altcoins is not wildly successful but has huge followings. I propose that they pool their resources and merge these small time currencies into a single one based off each individuals supported value.

This means that if every unit of A is 6 units of F, thusly allocation of the new currency is based on those qualified and supported ratios.

The benefits of such a move are enormous.

For example if each coin had an average 1000 exclusive followers, united (while maintaining each individuals value stake ) it brings a single currency with 6 000 exclusive followers and a pre-determined price floor that all the users will respect because they paid for it to get there and will stand to lose if they try to sell off at a lower price than entry.

[Shuai]

Bitshares has market pegged assets:

http://bitsharesblocks.com/assets/market

Not sure if this kind of peg to a real world asset is what you're referring to.

[hack_]

Pow is a leaking sieve and uncontrolled PoS is just as bad. Supply growth rate has to match that is brought into the currency or at least the value spent creating the inflaton or else it's a sinking ship.

Many against PoW have stated that it is wasteful, that is true(to an extent), but the alternative, PoS has been accused of having "nothing at stake".

Many have spoken out against Satoshi based clients relying on extenal data to make critical decisions such aas difficulty and block reward I think a more stable system should have this as a requirement. Possibly from as many as 8 sources. This combined with comparison  of transactional olues and frequeny should provide a more suited set of points to decide on rewards for securing the network.

[hack_]

Bitshares has market pegged assets:

http://bitsharesblocks.com/assets/market

Not sure if this kind of peg to a real world asset is what you're referring to.

Bitshares from Stanlin and friends features 101 centralization and massive misleading. They purposefully diluted and devalued PTS with no equivalent exchange except a "promise". no, they don't fit in here.

their model created predictable price swings, it re-allocated wealth by forced re-distribution. Shall i go on?

[hack_]

i am moderating shuai's post for attempting to turn this into another of Bytemaster's fan pages. I have copied his post to the appropriate discussion so it can be discussed there. Meanwhile the topic here is pretty clear and shouldnt be used as a reference point or marketing ad.

[hack_]

Time to move bitcoin into the shitcoin area and give some alts the possibility to do the jobs better they could not do.

While Bitcoin is strong on users the support is clearly flimsy, it's not fit to be the top dog anymore because it lacks flexibilty.

[brekyrself]

Bitshares has market pegged assets:

http://bitsharesblocks.com/assets/market

Not sure if this kind of peg to a real world asset is what you're referring to.

Bitshares from Stanlin and friends features 101 centralization and massive misleading. They purposefully diluted and devalued PTS with no equivalent exchange except a "promise". no, they don't fit in here.

their model created predictable price swings, it re-allocated wealth by forced re-distribution. Shall i go on?

hack_ check out this blog post which should help put in perspective how decentralized BitShares is.  The real question becomes how much decentralization is enough?

http://bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/

[Crestington]

I was just thinking about a post like this..

I recognized once that Nubits was released that there infact can be a need for pegged currencies. Bitcoin has only a limited supply so the market is really more of a vacuum with large players scalping the market for more BTC but if coins were tied to respective pegged currencies then there is near unlimited volume. I think BitUSD is going in the right direction, I popped by the Bitshares forums and immediately came across an article or two about Nubits being setup like a ponzi, where it uses borrowed capital in order to fund past debt. The custodians have all been doing a proper job but the Nubits peg broke recently for a short period but was quickly put back up so Nubits is not quite there yet but it is a step in the right direction.

I do think Bitshares has the right idea with their BitUSD peg being backed collateral, this is Bytemaster's article on Nubits being like a ponzi http://bytemaster.bitshares.org/article/2015/01/13/NuBits-is-a-Ponzi-Scheme/

I wouldn't say to go out and sell your Nubits though since it also relies on trust and PeerCoin has shown that consistently. So then when thinking about a pegged currency, how then can it be trustless? and what would be backing the assets of the peg? If all currencies were pegged to their respective dollars, would that not make the financial system the same as what it was before?

I guess it all comes down to trust and the age old question "what determines value?"

[monsterer]

Its unclear whether it is actually possible to have a trustless peg simply because the price information has to come from a source external to the currency.

Bitshares peg isn't trustless - it comes from the delegate's price feeds. Nubits peg isn't trustless - it comes from market makers.

This is one of the best articles which discusses the problems and potential solutions for stable valued crypto-currencies that I've read: https://blog.ethereum.org/2014/11/11/search-stable-cryptocurrency/

[hack_]

Bitshares has market pegged assets:

http://bitsharesblocks.com/assets/market

Not sure if this kind of peg to a real world asset is what you're referring to.

Bitshares from Stanlin and friends features 101 centralization and massive misleading. They purposefully diluted and devalued PTS with no equivalent exchange except a "promise". no, they don't fit in here.

their model created predictable price swings, it re-allocated wealth by forced re-distribution. Shall i go on?

hack_ check out this blog post which should help put in perspective how decentralized BitShares is.  The real question becomes how much decentralization is enough?

http://bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/

I think that centralization works for some models, but not direct currency models, those MUST be completely decentralized in an unlimited fashion.

[hack_]

I was just thinking about a post like this..

I recognized once that Nubits was released that there infact can be a need for pegged currencies. Bitcoin has only a limited supply so the market is really more of a vacuum with large players scalping the market for more BTC but if coins were tied to respective pegged currencies then there is near unlimited volume. I think BitUSD is going in the right direction, I popped by the Bitshares forums and immediately came across an article or two about Nubits being setup like a ponzi, where it uses borrowed capital in order to fund past debt. The custodians have all been doing a proper job but the Nubits peg broke recently for a short period but was quickly put back up so Nubits is not quite there yet but it is a step in the right direction.

I do think Bitshares has the right idea with their BitUSD peg being backed collateral, this is Bytemaster's article on Nubits being like a ponzi http://bytemaster.bitshares.org/article/2015/01/13/NuBits-is-a-Ponzi-Scheme/

I wouldn't say to go out and sell your Nubits though since it also relies on trust and PeerCoin has shown that consistently. So then when thinking about a pegged currency, how then can it be trustless? and what would be backing the assets of the peg? If all currencies were pegged to their respective dollars, would that not make the financial system the same as what it was before?

I guess it all comes down to trust and the age old question "what determines value?"

I agree that the idea is there, a pretty good one, and Dan has a strong understanding of Economics, his main problem though is Mathematics and exaggeration not sure if this is on purpose or otherwise. I used to have regular chat with hi when i worked with their development team. Yes i am one of the guys who was pushing I3 up until the AGS fiasco.

Your question is what i spend nights on

Dan would say the masses
BTC users say it's a mix of masses and cost of production
USD would say trust in an institution

I tend to believe that value is determined by many moving goal posts. Hell, FUD deterines price these days. I will come up with a more complete response and PM you

[hack_]

Its unclear whether it is actually possible to have a trustless peg simply because the price information has to come from a source external to the currency.

Bitshares peg isn't trustless - it comes from the delegate's price feeds. Nubits peg isn't trustless - it comes from market makers.

This is one of the best articles which discusses the problems and potential solutions for stable valued crypto-currencies that I've read: https://blog.ethereum.org/2014/11/11/search-stable-cryptocurrency/

So, how to make it trustless?

Say we try to factor in cost of production, by a rudimentary in built calculator that tries to tell us the current cost of 1 block.

It does this by using accepted average price of electricity vs difficulty with salt for luck.

would this be a start or is it a dangerous precedent?

[fenghush]

How can you peg a decentralized currency to a centralized one i.e. flat? It's a prime example for a paradox.

[unusualfacts30]

checkout BitBay it'll be pegged to $ soon.

[hack_]

How can you peg a decentralized currency to a centralized one i.e. flat? It's a prime example for a paradox.

i touched on pegging to other decentralized ones in my second post. All still in the cloud though , because they are all unstable.

[freigeist]

How can you peg a decentralized currency to a centralized one i.e. flat? It's a prime example for a paradox.

i touched on pegging to other decentralized ones in my second post. All still in the cloud though , because they are all unstable.

Nothing is stable everithing is changeing
because the change is the only constant in the universe!

Also the stability depends on adoption, supply and conctentration of capital.
In case of crypto adoption is small supply is limited and concentration of capital (distribution) is usally in the hands of the
few that manipulate the markets for speculative gains.
I don not think that pegging one crypto with similar parameters to another crypto with simillar parameters
will resolve anything also peging to FIAT is the same as for instance
if you would peg to EUR you would have to produce same amount of crypto to stay at ratio of 1:1.
As you can see they (central european bank) decided this days that they will print more worthless euros out of thin air in near future 
So neither FIAT is stable

Let us know when you come up with something

[monsanto]

I'd like to initiate public discussion on the feasibility of creating a decentralized currency that is "pegged" either to other digital currencies or to Fiat, maybe even both. While many already exist, they aren't doing so well due to centralization or any other reason.

I spent some time working on this problem last July by beginning to create Dollarcoin.  I have some new ideas on how this could be implemented.

https://bitcointalk.org/index.php?topic=702098.0

[hack_]

What we wish to peg is value depicted in currency units after an exhaustive session, i have come up with the following idea.

Most Blockchain do not use external data, but i think for any chain looking to peg itself to real world value measures, it will need to interact with external data.

My idea has expanded as follows:-

How the Peg is Calculated

Let's take into account the world's strongest measures of value by type

Paper Money

USD, EUR, GBP, NOK, CHF

Metals

Gold, silver, platinum, and palladium

Crypto Currencies

BTC , XPR , LTC , BTS

Stock Shares

GEICO, GOOGLE, APPLE 

Oil and the ruble are out, lol.

What we do is create our unit 1 MV (measure of value ) and equate it to each of these.

then calculated separately then together we keep track of the changes and their overall effect relates directly to how we value our 1 MV.

Now, we move on to the Blockchain.


First of we need to know how much work does it take to produce 1 MV?

We can calculate that by looking at how much the average Joe/Jane works to get in in a normal job.

I will pick 5 representative pairs

1) USA - Chile
2) Germany - Greece
3) Russia - Belarus
4) South Africa - Zimbabwe
5) China - N.Korea
6) Australia - N.Z

@ #4 i think we need an equalizer, not sure i'll be able to get accurate data on that though. If i can't i'll find a set of similar African countries.

Now we know how much on average an individual works to produce 1 MV

We can say Block reward is produced on a daily basis by average. and because it is using external data, Block reward will always vary.

So people will get paid fair value for solving a block. The MV unit is pegged not to a currency but to actual real world value. and the cost of producing an MV can be explained using real world terms, instead of hashes/collisions per second.