Stablecoins: A Holy Grail in Digital Currency
thecontrol.co
thecontrol.co
So many schemes in the "blockchain" space fail to understand the core problem Bitcoin solves. Bitcoin solves trust. You can transact Bitcoin with anybody and you don't have to trust a single person, even the sending party. If someone sends you Bitcoins and the transaction is 6+ confirmations deep in the blockchain, you can be certain that you own those Bitcoins and nobody else can take them from you without your private keys. Not a bank, not a government, not a miner, not a "core dev", not a full node operator. The only necessary assumption is that 51% of the hash power is not conspiring against you.
Whenever you see a new "blockchain" scheme coming out, ask yourself who you need to trust for it to work. If the answer is not "nobody", then it is not worth any more of your time.
That's not true. Even if a miner has 51%+ hash rate, they can't "steal" your coins. They can, however, prevent you from moving your coins but that puts them at risk of getting forked. (unless they have way more than 51% of the hash rate)
In practice these attacks probably need significantly more than 51% hash rate, but there is some % hash rate where they would work. Of course, evidence that such an attack was being carried out would immediately crash the Bitcoin market, which would destroy the value of the miner's investment in mining hardware. (A crude form of proof of stake?) So it's hard to imagine that such an attack would actually happen in reality, unless it was carried out by someone with the intent to destroy Bitcoin and a few billion dollars to burn.
If the party that sent you the coins controls (directly or indirectly) >50% of the hash rate, they can reclaim the coins they sent you by omitting the transaction in a fork.
No amount of hash rate lets you send coins to arbitrary places - you need the sender's key to sign a transaction.
Nope. Unless they have your private key, they can't sign your coins no matter how much hashing power they have.
What they can do is unspend their own coins. So if they paid you BTC$1,000 and you gave them a yacht they can go back and send that money to someone else (double spending). But even that is limited:
You can think of it like a race. With 51% of the network you're slightly faster than the other half. That means you can probably win disagreements going forward. But in order to change past transactions you have to go backwards in the race and then catch up again.
Your ability to do that is proportional to how far back you are going and how much above 50% you have. If I want to go back one block (ten minutes) and I am going at 1.1x the rest of the network, it will take me 100 minutes to catch up (I can do 11 blocks to their 10).
If I want to go back 2 blocks (20 minutes), it will take me 3 hours to catch up. You can see how this gets out of hand quite quickly.
They don't need to sign your coins. They need to sign the previous owner's coins. And they don't need to literally be the previous owner, they just need the previous owner's cooperation. And in fact they don't even need that: they can omit the transaction without knowing anyone's keys, and they've still deprived you of your Bitcoins. And they don't need to go back in time, they can omit all of your future transactions and thereby make your Bitcoins worthless, or hold them for ransom.
Its really easy to see the MKR-holders as just a formalization of the movers of high-finance in the fiat currency world- they would have a similar oversight role and powers as the high-level bankers and governmental financial regulators that control the workings of conventional markets. I suppose the idea is that MKR-holders have it in their best interest to defend a system they've invested in. But if the motivation of the whole digital currency movement is autonomy this seems to defeat the point.
Hype aside, public, shared, consistent, irrevocable ledgers are useful for all sorts of things even if you're not attempting to solve the "no trust" problem.
Of course you're still trusting them in other ways.
So yeah, we trust Linus. And it works.
Or s network operator , to be pedantic.
Trust can only be eliminated in narrow circumstances involving low-risk transactions or in environments with some extrinsic enforcing mechanism. For a cautionary tale see https://aeon.co/essays/why-the-hidden-internet-can-t-be-a-li...
And here where the "Scam" alarms go full retard, basically panicking the whole building I'm living in. The concept is yet to be finalized, let alone functioning and yet these guys started selling "tokens" a la "DAO".
I wonder when regulators are going to strongly hammer the ICO (or the crypto equivalent of IPO) by a 15 year of jail and catching bad jokers inland and overseas.
More people will store more wealth in cryptocurrencies as the number of applications grow. Being able to pay for my Chipotle, or renew domain names, or buy stock in companies, or run a website all make me more willing to keep more of my wealth in ETH. Eventually stability will come as the relative utility of a currency pushes volume up.
The last thing I want is stability as a believer in the Ethereum platform. I want the price of Ether to go up pursuant with the growing utilities Dapps provide.
In the interim, solutions like Bitpay that pay merchants in USD over BTC are brilliant. They allow merchants to buy into cryptocurrency without accepting the volatility risk until it's low enough.
Now, I am sure there will be an argument made that the central bank is beholden to special interests, who use their wealth and power to control our democracy... but won't that same thing happen with these 'MKRs'? The wealthy and powerful will have more control over them, and will certainly use that power and control in their own benefit.
It seems like a common flaw in all of these 'alternative' systems people create to replace large scale institutions; they might seem different than what we have now, but when you scale it up to match the size of the current system they are aiming to replace, you end up seeing that the systems are nearly identical in practice.
There's next to zero reason for a random merchant to accept an altcoin unless there are people using it, and unless that coin is known. Speculators and volatility are very big generators of noise that gets the coin noticed and helps bring in actual for-the-sake-of-the-coin holders, which then makes the coin itself more attractive to a merchant (as there are people who wish to use the coin).
As much as coin purists may like to speak derisively of speculators, I believe that altcoins would be nowhere without those who have come in to the game to try to earn money off of the volatility.
I think stablecoins will play out differently though and are an important component of attracting new users. I believe decentralized applications will be built that bring mainstream users in, and these users will want a stable store of value to use these applications.
dollars are stablecoins
i get it, dollars are digital. but really thats the only similarity.
http://www.popsci.com/worlds-most-stable-currency-is-backed-...
So, my scheme was to put something like Ven in a sane country such as Switzerland under a nonprofit/foundation with strict rules aimed at preserving stability, security, innovation of ecosystem, and cap on admin overhead. If that works out pretty well, we can try a decentralized version of the same thing. Meanwhile, centralized can already work very well. Just eliminate as many incentives to mess it up as you possibly can to make it better.
The big brains haven't explored this option enough since they want a crypto/algorithmic solution to hard problems instead of using the well-understood systems of law, accounting, and safe investments. There's also a strong preference for decentralize stuff highly-likely to fail vs centralized stuff way better than what we have. I think that's ideological or even youth-related.
I will gladly accept his BTC from 2009 and give him USD from 2009 for the 2009 price.
Sorry, but stability is not holy grail in itself. I would prefer constant supply to it for long term store of value
However, I think if I had a reliable income that was measured and paid out in BTC, then the answer would be yes.
That's really the benchmark for when BTC can be used as a proper currency, when people are prepared to set their value in BTC.
At the moment it makes a decent transfer mechanism for funds where the quantity is calculated relative to another currency at the time of transfer.
If Bitcoin were to become a standard currency it will necessarily have to go though more volatility. Bitcoin's value, should it succeed, is significantly higher than where it is now (conversely, should it fail, lower). When its value does not match its utility it must eventually move. Stability increases utility. These oppossing forces will cause occilations like a plucked string. The occilations should deminish over time as the forces reach equilibrium. The point of balance is anyone's guess right now.
I think you haven't thought it through if you still think that. 2BTC is currently worth just over 2g in dollars. In 10 years time, it might be worth 10g in dollars or it might be worth 4g in dollars. You'd be crazy to agree to pay 2BTC a month for 30 years with a currency that doesn't have a predictable future value. The dollar has a predictable future value; stability is not about not losing value, it's about predictable value.
> That's really the benchmark for when BTC can be used as a proper currency, when people are prepared to set their value in BTC.
No, people can do that now, but they do it in relation to exchange rates of more stable currencies. BTC will be usable as a proper currency only when its future value becomes somewhat predictable, predictable enough to denominate long term contracts like mortgages in it without relation to another currencies exchange rate. It'll take decades to reach that point.
A currency without a reasonable long term predictable value, isn't a currency, it's a commodity.