Can someone suggest a stable priced crypto that is actually useful for transactions? I have zero interest in speculating on the values of these things, but I would really like to start using crypto currency obtained from cash ATM's for all of my online purchases and avoid ever entering a credit card number anywhere again. Why hasn't that been solved?
If the crypto doesn't have a central bank to institute monetary policy and manage supply, it's unsolvable.
I feel like a broken record saying this: Demand for the currency will fluctuate. If the supply is fixed, the price will be demand-driven. Which means volatile. Fiat currency has a central bank with active control over the supply, so it is capable of keeping a stable price if the central bank does its job.
There is nothing to say that all coins need a fixed supply. It wouldn't be hard to establish voting to release a given amount of funds/authorize the selling of bonds. All blockchains have a transient central authority, the miner.
This comment is a perfect, concise explanation of why cryptocurrencies are strictly less ideal than fiat currency with a central bank with control over supply.
I do think cryptocurrencies do satisfy some use cases in a superior way to fiat currency. But there are some serious economic advantages that a currency with a central bank gives you that cryptocurrencies will never have (at least, the way they're currently designed).
I have stopped looking at bitcoin as a currency and have started looking at it as a stock or bond without any backing collateral or assets. The only particular properties are that it trades in a special way (in fractional quantities and round the clock) and that the number of shares is known in advance.
Otherwise it has the same volatility as a stock. It can gain or lose half its value in a few hours. Just like a stock the way to take volatility out of it is to diversify.
The volatility has nothing to do in my opinion with the lack of a central authority distributing it. It has to do with heavy speculation of this particular stock. Central banks can only correct for long term price evolutions, not for short term fluctuations.
Not if you make short term plays. Stock shares are also distributed by a central authority incentivized to make the price go up and therefore constrain supply, yet stocks are volatile.
>Just like a stock the way to take volatility out of it is to diversify.
The problem here though, is that every crypto valuation is linked directly to the value of Bitcoin. It's as if the entire S&P tracked the price of Apple.
Let’s assume that you know that the price of the bitcoin will increase during the holiday season due to many online transactions. Won’t people start to collect bitcoin before the holiday season? In turn it will make price increase earlier. It seems to me that can be a stabilizing factor.
Have you taken a look at the Basecoin project (http://www.getbasecoin.com/)? It's a cryptocurrency system that's designed with a central bank in mind - you feed it the current exchange rate relative to some peg, and the system changes the money supply (through bond sales and purchases) to maintain the peg.
* Take the median of the exchange rates from a set of feeds, with that set chosen by vote of holders of the coin (I can personally see this having some conflict-of-interest issues)
* Use what they call a "Decentralized Schelling point scheme" - have coinholders vote on what they think the exchange rate was in a recent time interval, use the median vote, then reward voters who were in the 25th to 75th percentile.
The authors seem to view the third option, with some engineering of the incentives, to be ideal; but I'm skeptical of a system that gives holders of an asset the ability to change the value of that asset. I would honestly prefer the use of a trusted authority - at least that way you have a very clear delineation of what the central authority is supposed to do and can easily audit whether it is doing its job.
Huh? The volitility of Bitcoin is on a completely different timescale than the rate at which the Fed acts. The Fed may be relevant for the store-of-value role of USD, but the top commenter asked about medium of exchange.
Would you get paid in Bitcoin knowing it could be worth 20% less (or more I guess) in real terms on any given day that your company happens to do payrole?
You've misunderstood my comment. I'm not arguing against the idea that Bitcoin is a poor medium of exchange, I'm arguing against the idea that the sort of actions taken by the Fed would help. Rather, the Fed acts on a much longer timescale which are relevant for store-of-value roles.
Is it even possible to have a stable priced crypto?
The crypto money supply is predetermined, but demand is not, often driven by events outside of the blockchain. Supply needs to actively balance demand if the price is to stay stable.
For a stable price you'd need a crypto that adjusts mining difficulty in response to changes in the amount of demand (or something like that? My understanding of crypto currencies is only surface level).
However, the USD-to-Crypto price is something outside of the blockchain, so as far as my understanding goes you can't really use that as an input because you can't get undisputable information on the price, because the entirety of undisputable information should exist in the blockchain.
I guess you could try to use transaction volume as an input but that seems like a bad metric because it's a) gameable and 2) does not necessarily correlate with external demand for the crypto currency.
> Is it even possible to have a stable priced crypto?
It should be possible to have one with reasonably stable value compared to any identifiable external commodity or basket of commodities that is not itself highly volstile, though it would be more complex than existing crpytocurrencies, and may not be completely decentralized.
Stability, decentralization, and trustlessness together...well, you are pretty much asking can you replace an active central bank with an preset, runs-forever algorithm without a trusted source for real world economic data. I'd say probably not.
No, it isn't. People just have trouble imagining non-crackpot cryptocurrency because they've never seen one.
For a stable price you'd need a crypto that adjusts mining difficulty in response to changes in the amount of demand (or something like that?)
Right, you can adjust the block reward so that the rate of issuance of money tracks the rate of change of demand.
However, the USD-to-Crypto price is something outside of the blockchain, so as far as my understanding goes you can't really use that as an input
There are some projects that use "oracles" to publish price information on the blockchain, but then you get into a bunch of complexity about electing oracles and taking the median price of multiple oracles.
I guess you could try to use transaction volume as an input but that seems like a bad metric because it's a) gameable and 2) does not necessarily correlate with external demand for the crypto currency.
Right. You can also use difficulty as a metric (based on the theory that higher price makes mining more profitable which causes more miners to mine which causes difficulty to increase). https://blog.ethereum.org/2014/11/11/search-stable-cryptocur... Note that some of these techniques don't guarantee stable value, just less volatile value.
> Is it even possible to have a stable priced crypto?
Stable with respect to what? Fiat? Which one?
In the limit you will have a cryptocurrency backed by a fiat currency (and I don't consider Tether to be one. Bitfinex will allow you to exchange $1 for 1 tether, but nobody will guarantee you can go the other direction).
I don't think a stablecoin has been made, or at least if it has it hasn't found wide adoption. That is part of the problem, if people couldn't make profit off of speculating on bitcoin it's quite likely that it wouldn't be as widely accepted/talked about.
It wouldn't be too hard to make a inflationary coin, just mint coins proportional to the estimated GH of the network. That would give the coin a price ceiling.
Wow I guess people downvoted the heck out of this comment thinking I'm being sarcastic.
I am not.
Apple pay has all the encryption mechanism that makes it much safer than sending your credit card number over the Internet, which the parent was asking for.
The "obtained from cash ATM's" part of OP seemed to be specifically targeting a higher degree of anonymity to me, but it is indeed open for interpretation.
Personally Apple pay is the primary appeal of Apple's ecosystem for me. No other intermediary's incentives are aligned to prioritize the customer in the transaction ahead of data mining opportunities.
People may see this comment and think it's being standoffish, but it's the truth. What OP wants is a system where you transfer traditional currency into digital money (which you're going to need to use a credit card/bank account at least once to do), and then use that without having to worry about using your card on multiple different websites. This is exactly what Apple Pay/Paypal is, minus the transaction fees. This is not the purpose of cryptocurrencies, nor will it ever be.
I think entering a credit card number isn't a pain for most people (from a safety and convenience perspective). It's a good enough solution, and crypto is not helping people 10x in this matter.
I don't think entering the cc number is the source of pain but rather it is entering a permanent account number that is thereafter always subject to being stolen. Using digital cash would be a wonderful alternative.
The Basecoin project (http://www.getbasecoin.com/) is an as-yet-unreleased cryptocurrency designed for stable value. It's fed an externally-sourced target exchange rate and current exchange rate against some target currency basket and automatically sells and purchases bonds to remove from and add to the money supply, maintaining the currency peg.
To the extent you trust tether. But if trust is centralized, why use a block chain? If tether operated a Chaumian cash server instead of some block chain thing it would be universally better for all involved with no loss of trust from what actually existed before.
you can't redeem or use USDT for anything, and it's supposedly backed up by real usd, but in the terms of service, it says they have no obligation to redeem it.
