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Offline cob

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Least volatile measure of value. What could it be?
« on: December 12, 2014, 05:36:43 AM »

What BitShares is doing with BitAssets is great. It's a way to avoid the crazy volatility present in the crypto world but the BitUSD only pegs to the USD, which is controlled by the FED. BitGold only pegs to Gold which like all commodities can be tampered with.


Are there any projects out there, or thinkers, philosophers, that have an idea how to get a stable measure of value. Something that's barely, if at all, volatile.

I say this because we could create a BitAsset that tracts just that.

Not that this is a priority of course, BitUSD is one hell of an leap forward from any other crypto out there, but it would be interesting to have a crypto that is stable AND free from the FED price controls and market manipulation of gold and silver.

I read an E.C.Riegel book a few weeks ago. He has an interesting approach to money. His approach is an anarchistic, volatility free, IOU approach that looks like it would be a perfect fit with blockchain technology. I have no idea how strong his theory is. I haven't really had the time to think it through and research it more in depth yet. Not with the PeerTracks project!
I'm wondering if there's anything insightful out there on the internet about this very subject.

What would make the perfect crypto unit of account?
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Offline Riverhead

Re: Least volatile measure of value. What could it be?
« Reply #1 on: December 12, 2014, 05:53:25 AM »
This is a great question. I think anything of value is necessarily influenced by human need/desire otherwise it wouldn't have value.

Offline fuzzy

Re: Least volatile measure of value. What could it be?
« Reply #2 on: December 12, 2014, 05:54:00 AM »
What BitShares is doing with BitAssets is great. It's a way to avoid the crazy volatility present in the crypto world but the BitUSD only pegs to the USD, which is controlled by the FED. BitGold only pegs to Gold which like all commodities can be tampered with.


Are there any projects out there, or thinkers, philosophers, that have an idea how to get a stable measure of value. Something that's barely, if at all, volatile.

I say this because we could create a BitAsset that tracts just that.

Not that this is a priority of course, BitUSD is one hell of an leap forward from any other crypto out there, but it would be interesting to have a crypto that is stable AND free from the FED price controls and market manipulation of gold and silver.

I read an E.C.Riegel book a few weeks ago. He has an interesting approach to money. His approach is an anarchistic, volatility free, IOU approach that looks like it would be a perfect fit with blockchain technology. I have no idea how strong his theory is. I haven't really had the time to think it through and research it more in depth yet. Not with the PeerTracks project!
I'm wondering if there's anything insightful out there on the internet about this very subject.

What would make the perfect crypto unit of account?

Eventually, we should likely be able to grow into bitAssets that track the value of a basket of goods/currencies that ensure a highly stable token. 

This would be the solution I think is best.  However, it is my opinion that nothing is outside the control of those currently manipulating valuations.  Why?  Because the same people who control the monetary system are the ones who control most infrastructure.  There is, of course, the BRICS Nations (Brazil, Russia, India, China, South Africa), also known as "the Eastern Block" who are actively dissolving connections between themselves and the Petro Dollar.  They may be a good place to start, but then again, it is highly unlikely that the international cartels are not also behind the creation of this system. 

International cartels are likely creating this division to set up a global war during which they will pull the strings of power on both sides.  In this way, during the ensuing chaos they can grab even more power. 

To answer your question though--a token that tracks the value of a basket of assets.  Perhaps one that tracks the value of bitGold, bitSilver, bitUSD and bitYuan would be a good start.  But what to call it?
« Last Edit: December 12, 2014, 05:59:03 AM by fuzzy »
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Offline Riverhead

Re: Least volatile measure of value. What could it be?
« Reply #3 on: December 12, 2014, 05:58:10 AM »
Like a bitAsset mutual fund?

Offline fuzzy

Re: Least volatile measure of value. What could it be?
« Reply #4 on: December 12, 2014, 06:03:08 AM »
Like a bitAsset mutual fund?

Kind of.  Only it wouldn't be centrally administered and might take the collective votes of all delegates (or all users) to add or subtract an asset from the pool of assets whose value are represented.  In this way it could not be bought out and corrupted. 
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Offline CryptoPrometheus

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Re: Least volatile measure of value. What could it be?
« Reply #5 on: December 12, 2014, 06:21:55 AM »
Once the training wheels (price feeds) are off, like when BTS has $200 billion valuation or whatever, won't the BitShares blockchain itself be the "source of value" to which you are referring?

Does it matter if the dollar loses value or gold is manipulated? Governments and (centrallized) markets will collapse, but as long as some fungable source of exchange exists amongst people outside of BTS, than BTS will provide the service of allowing tranparent derivative creation (or whatever we are calling it).

Hell, if the BRICS alliance has anything to say about it,  USD might not even be what ends up propelling BTS to the moon.
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Offline arhag

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Re: Least volatile measure of value. What could it be?
« Reply #6 on: December 12, 2014, 06:46:07 AM »
Define the BitAsset's price (in BTS) as P(t). Define the price of USD (in BTS) as D(t). Define the price (in USD) of a pre-defined weighted basket of goods and services as B_n for natural number n. Let us say the price of that basket is reevaluated every month at time T_n = T_0 + n*(1 month), where T_0 is the time the first price for the basket was published on the blockchain (and the first time that people are allowed to short the BitAsset). Then the formula for P(t) can be given by:
P(t) = ((x)*B_{n-1} + (1-x)*B_{n-2}) * D(t)  for T_{n-1} <= t < T_{n} for n >= 2
where x = (t - T_{n-1})/(T_{n} - T_{n-1})
and
P(t) = B_0 * D(t) for T_0 <= t < T_1

So, then the delegates need to provide and vote for a new basket price once a month. The blockchain takes the most recently approved basket price and counts that as the new official basket price B_n at time T_n. If a basket price was not provided, the blockchain takes the last official basket price as the new one. There is some lag time in this process. One month of trading activity needs to happen to generate the goods/services prices that will then be analyzed to get the next basket price, some time needs to pass until this data can be analyzed to get a new basket price for that month period, additional time has to pass before the delegates can agree to put that price into the blockchain and vote to approve it as the next official price, and then finally another month goes by for those changes to actually be reflected (in a linear manner) in the BitAsset price. However, since the basket price change is slow and the conversion from the USD basket price to the BTS basket price uses the fast (1 hour time scale) D(t), the lag should not have a significant effect on the purchasing power of the BitAsset. USD is price stable in the short-term, it is only in the long-term that it loses its value and that is corrected for using this basket price mechanism.

Finally, the delegates need some source from which they can actually get these basket prices. The sources for these prices (and in fact the definition of the weighted basket itself) can change over time to meet the goals of the price stable BitAsset. For now though, I think using something like the CPI from BLS as the source of these basket prices could work pretty well. If it later becomes necessary to switch to a different source or change the basket, there could be mechanisms to smoothly transition (and perhaps even get the majority approval of the change from the BitAsset holders through voting) while avoiding discontinuous jumps in the value of the BitAsset.

Now, in some distant future time when goods and services are priced in this BitAsset and we are in the saturation stage where there isn't any additional fiat currency to transition over to the BitAsset, I am having trouble imagining how this price stable BitAsset system could even work. It gets really confusing.

Offline CryptoPrometheus

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Re: Least volatile measure of value. What could it be?
« Reply #7 on: December 12, 2014, 06:46:22 AM »
The USD, Euro, and every other government(aka. banker) issued currency out there can be seen as having relative degrees of volatility as well. Heck, the whole idea of a rock solid store of value is only something human beings could dream up, since everywhere you look the universe is basically engaged in violently tearing itself apart. I do not believe that fiat currencies (ledger entries, including all blockchains) can be made into an arbitrary "store of value" as well as remove volitility without the violent cohersion, fraud, and subversion that the bankers' enforcement branch (government) are known for. Strip away the subterfuge, and fiat is nothing but a commodity backed by a "promise".

This is why bit assets are so ingenious. I3 has created a bridge between the existent world of commodities (including all national currencies) and the miracle of transparent ledger interaction. As long as something "stable" exists in the outside world, bitshares is useful. Arhag seems to have arrived at the same conclusion that I have: once we approach the endgame or "saturation stage", the logic begins to break down and its altogether unclear how things will proceed from there.....My guess is some sort of radical social transformation  :D

EDIT: Not at all trying to throw water on the brainstorm, NPI, just pontificating on the (im)possibility of fiat holding any sort of value outside of being a tool for arbitration.
« Last Edit: December 12, 2014, 07:11:03 AM by crypto_prometheus_81 »
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Offline fuzzy

Re: Least volatile measure of value. What could it be?
« Reply #8 on: December 12, 2014, 06:47:24 AM »
Once the training wheels (price feeds) are off, like when BTS has $200 billion valuation or whatever, won't the BitShares blockchain itself be the "source of value" to which you are referring?

Does it matter if the dollar loses value or gold is manipulated? Governments and (centrallized) markets will collapse, but as long as some fungable source of exchange exists amongst people outside of BTS, than BTS will provide the service of allowing tranparent derivative creation (or whatever we are calling it).

Hell, if the BRICS alliance has anything to say about it,  USD might not even be what ends up propelling BTS to the moon.

I believe bitUSD is BM's way of trying to help the dollar keep international traction (he is a patriot in my mind, so this likely is not too far from the mark).  However, I sadly will tend to agree with you that USD will probably not be what takes us to the moon.  I say sadly because I, too, love America (or what it was supposed to stand for).  You may be right about the BRICS alliance, man...I believe they (and the cartels) have bought out almost all our politicians, too.  Not a bad reason for bitshares VOTE.  :)
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Offline eagleeye

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Re: Least volatile measure of value. What could it be?
« Reply #9 on: December 12, 2014, 07:25:57 AM »
What BitShares is doing with BitAssets is great. It's a way to avoid the crazy volatility present in the crypto world but the BitUSD only pegs to the USD, which is controlled by the FED. BitGold only pegs to Gold which like all commodities can be tampered with.


Are there any projects out there, or thinkers, philosophers, that have an idea how to get a stable measure of value. Something that's barely, if at all, volatile.

I say this because we could create a BitAsset that tracts just that.

Not that this is a priority of course, BitUSD is one hell of an leap forward from any other crypto out there, but it would be interesting to have a crypto that is stable AND free from the FED price controls and market manipulation of gold and silver.

I read an E.C.Riegel book a few weeks ago. He has an interesting approach to money. His approach is an anarchistic, volatility free, IOU approach that looks like it would be a perfect fit with blockchain technology. I have no idea how strong his theory is. I haven't really had the time to think it through and research it more in depth yet. Not with the PeerTracks project!
I'm wondering if there's anything insightful out there on the internet about this very subject.

What would make the perfect crypto unit of account?

I am a Financial Scientist and a thinker.  I am not an Economist.

You want something that can be determined either Federal Funds Rate Futures Contract or US Government T-Bills (Treasury Bills).  Bytemaster Dan has already made a revaluation system in the bitUSD market by making it essentially a contractless contract because it expires at the end of the month.  So look at the Futures market.

If you dont like this, peg the value of a stock or mutual fund that does essentially this

SPDR Barclays Capital High Yield Bnd ETF (Has a 6.11% yield=dividend=interest_rate_per_year)  ---- This security=stock=etf=pegged_to_bonds is good because it will cause hype because of the nature of the $550 Junk bond Oil Market
https://www.google.com/finance?q=NYSEARCA%3AJNK&ei=R5aKVKD9NO20iAKB8oDoDA

iShares Barclays 20+ Yr Treas.Bond (ETF) (Has a 2.76% yield=dividend=interest_rate_per_year)  ---- This is a laddered ETF (essentially stock that tracks bonds)  --  This is all essentially what Bytemaster is trying to do with his derivatives bitUSD market
https://www.google.com/finance?q=NYSEARCA%3ATLT&ei=R5aKVKD9NO20iAKB8oDoDA

Vanguard Total Bond Market ETF (Has a 2.52% yield=dividend=interest_rate_per_year)----  This is a bond mutual fund/etf  --- ETFs are essentially low cost mutual funds that are mostly passively invested (not forever though they have begun to be actively investment vehicles I believe (meaning the managers who run it change stocks on intervals they desire))
https://www.google.com/finance?q=NYSEARCA%3ABND&ei=R5aKVKD9NO20iAKB8oDoDA

iShares Premium Money Market ETF  (Has a 0.78% yield=dividend=interest_rate_per_year) ---- Riskless money 0.78% dividend yield (interest rate) yearly.  This is pegged to the Bank of Canada Central Bank Interest Rate, (ie like the US Federal Funds Rate = Government Rate = Backed by the people of the country = Backed by the interest rate = http://futures.tradingcharts.com/chart/ZQ/ = Symbol ZQJ6)
https://www.google.com/finance?q=TSE%3ACMR&ei=sZeKVKitMtG1iAKnt4DoBw

Im way ahead of you guys in terms of implementation of these assets I know how to create a platform that takes into consideration a fully functioning derivatives market where the future end result would be bts_asset_backed_security_barclays_secured_loans_4_percent_expires_2022_December_25 .  If you dont understand that you dont know how far ive thought.


As a note I put the underscores on purpose
« Last Edit: December 12, 2014, 08:09:03 AM by eagleeye »

Offline Markus

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Re: Least volatile measure of value. What could it be?
« Reply #10 on: December 12, 2014, 08:37:21 AM »
Let me try to prove that what the OP wants is impossible:

Something might have a stable value but it's price will still fluctuate with supply and demand. And those can be highly dependent on location, time and other factors.

For example the most valuable commodities are air and water. But because they're in over-supply on the surface of earth their price is mostly zero. Different though on a space station ...

Something with negligible value like gold might fetch a huge price because of over-demand. In over-supply it will plummet, ask Midas about that.

Offline eagleeye

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Re: Least volatile measure of value. What could it be?
« Reply #11 on: December 12, 2014, 08:42:13 AM »
Let me try to prove that what the OP wants is impossible:

Something might have a stable value but it's price will still fluctuate with supply and demand. And those can be highly dependent on location, time and other factors.

For example the most valuable commodities are air and water. But because they're in over-supply on the surface of earth their price is mostly zero. Different though on a space station ...

Something with negligible value like gold might fetch a huge price because of over-demand. In over-supply it will plummet, ask Midas about that.

Markus, it matters how much the fluctuation is.

Offline Markus

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Re: Least volatile measure of value. What could it be?
« Reply #12 on: December 12, 2014, 08:50:43 AM »
I wasn't too serious anyway. :)

I guess a weighted average of all commodities used in the global economy should do the job then.

Offline pc

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Re: Least volatile measure of value. What could it be?
« Reply #13 on: December 12, 2014, 09:38:17 AM »
So, then the delegates need to provide and vote for a new basket price once a month.

How about creating a metaAsset from the bitAssets that we already have? For example, create a basket from bitUSD, bitEUR, bitCNY, bitGLD and bitOIL (once all of these have sufficient price feeds of course). The DAC can track the basket value by looking at the internal markets and create an artificial price feed for the basket.
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Offline arhag

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Re: Least volatile measure of value. What could it be?
« Reply #14 on: December 12, 2014, 09:44:51 AM »
So, then the delegates need to provide and vote for a new basket price once a month.

How about creating a metaAsset from the bitAssets that we already have? For example, create a basket from bitUSD, bitEUR, bitCNY, bitGLD and bitOIL (once all of these have sufficient price feeds of course). The DAC can track the basket value by looking at the internal markets and create an artificial price feed for the basket.

You could do that if you think a basket consisting of only USD, EUR, CNY, GLD, and OIL is good enough. I think we would want a more sophisticated basket than just that however.

 

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