Author Topic: The trilemma problem  (Read 1528 times)

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Offline nomoreheroes7

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lol I was just reading that BitcoinTalk thread and wondering about this myself...glad to hear the answer is relatively simple.

Offline bytemaster

You are right a BitAsset does not have a Soveregn monetary policy, their supply is subject to market forces not our decree.
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Offline Ander

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In this thread on bitcointalk:
https://bitcointalk.org/index.php?topic=877309.20

A user stated that what bitshares is trying to do (market pegged assests) is 'impossible' due to the trilemma (impossible trinity) problem:
en.wikipedia.org/wiki/Impossible_trinity


I fully agree that the impossible trinity is indeed impossible, but I do not think that bitshares is attempting to achieve all three of these policies.  It might be useful to have a whitepaper regarding this issue that will explain bitshares position, and how what we are attempting to do is not impossible by the rules of monetary policy. 

Essentially, the trilemma states that it is impossible to achieve all three of:
* A fixed exchange rate.
* Free capital flow.
* Sovereign monetary policy.

Attempting to have all three of these eventually leads to a monetary crisis.


I believe the response to this is that Bitshares is not attempting to achieve a sovereign monetary policy.  It is only attempting to have a fixed exchange rate and free capital flow. 

That is, we are not making any attempt to control interest rates or the supply of money, these are dictated by free market forces.

However, it would be nice to have someone who is more of an expert in this area analyze this.  Perhaps we should have a white paper explaining the results of this analysis, and showing that bitshares is not attempting to do the impossible with pegged bitAssets.

« Last Edit: December 04, 2014, 04:30:45 pm by cass »
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