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Comment by rdl | Hacker News Reader

As long as we're in the business of building cryptographic financial systems to test out the theories of economics -- I want a "market basket of commodities" currency to test out Hayek's theories.

(I am not sure if I could make a sustainable business out of it, or even a fundable business, but a chaumian blinded digital token system (software and then multiple hosting options) where people got to then run their own arbitrary currencies, with a lot of them choosing to do commodity or equity/debt currencies, would be a pretty awesome thing. It would probably cost $2-5mm to do, though, and while I think you could avoid most legal challenges by separating out the software dev vs. hosting mints vs. hosting exchange vs. currency underwriting vs. marketing vs. wallets vs. merchant services vs. end users, I'm not sure how you could realistically make money doing it.)

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You might want to look into Open-Transactions [1], which is a Chaumian blinded token system supporting basket currencies out of the box. You'd presumably have a list of reliable issuers that mint their own tokens backed by real-world assets, then do a basket currency over all of them together.

[1] https://github.com/FellowTraveler/Open-Transactions

I wonder who that is (is he public?)

Chris Odom:

http://monetas.net/team

The fundamental flaw with Chaumian token systems is that the trustworthiness of the currency is completely concentrated in the identity of the exchange. The kind of institutions which build up and delegate trustworthy identities (eg governments, banks) are inherently predisposed against anonymous transactions.

The point of a decentralized system would be to have large numbers of issuers, each of which might have independent ways to become trusted.

The exchange itself doesn't need to be particularly trusted; you could do a transaction either instantaneous and of low value, or some more complex protocol. There's also no inherent monopoly for the exchange, although there's a natural monopoly for any given pair of currencies.

Assuming everything is automated and low friction, you could be in and out of a given currency to make a transaction pretty fast, so arbitrarily short risk. You could split transactions up into smaller transactions so arbitrarily low financial risk per transaction.

If you can't be confident that an exchange (blind token signing key) will hold value for the long term, the exchanges are really only functioning as short-term mixes for some 'real' currency (as you describe), and the problem remains creating a currency issuer that won't eventually work to prevent anonymous transactions.

In your described system, the issuers still face the fundamental problem of having to have a good reputation, but being unable to obtain this reputation in the standard way (real-world identity in a powerful "rule of law" jurisdiction), lest the delegator 'discourage' them from facilitating anonymous transactions. Multiple competing issuers do not help the situation due to the catastrophic failure mode of each - bank run and worthless currency.

Creating a widespread reputation that isn't derived from real-world identity is the problem that bitcoin is attempting to solve, which is why the novel part of it is solving a coordination problem and not a problem from cryptography.

Simply buy a basket of commodities futures, or create an ETF/Index fund that trades a basket of commodities futures.

I'd bet Vangaurd or another major IB has a product similar to what you're looking for.

It's easy to own commodities futures, but hard to use them to buy stuff directly. The closest you can get is having a brokerage account and using the debit card or checks to make purchases, liquidating investment portfolio as you go. But even there, you're using USD as the unit of account.

The point of most of these currencies (bitcoin, freicoin, et al) is to avoid the consequences of inflation. Yet because of the volatility inherent in the small monetary base they expose the holder to more inflationary risk. In laymans terms, the USD has never lost 90% of it's purchasing power in a month or two.

Commodities futures are far more liquid than bitcoin, freicoin, etc. USD has far less inflationary risk than bitcoin, etc.

Economies don't run on math, they run on confidence, there is little confidence in bitcoin/freicoin. That's the quintessential problem, like it or not, far more people have confidence in the $5 wrench (fiat) than computational complexity (cryptography).

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