While I disagree, I regret bringing this up in the first place. It's a distraction, and even if the concept of a statistically stable contract for difference were useful, it wouldn't be useful any time soon. People who seek stability today should hold dollars. If you want stability while the dollar collapses, you want BitGold. Beyond that isn't worth discussing yet. Today's BitAssets are all we need for now. Let's make them more useful.

http://logicalgrackle.com/bitgold-preserves-wealth.html

http://bytemaster.bitshares.org/article/2014/12/31/Stable-Crypto-Currencies-are-Impossible/

The argument against pegging to a stable value seems to be that the statistics to determine stable value aren't widely agreed upon, so such a pegged asset would fail to attract a market. This is clearly false. Economists broadly agree that the government's methodology for calculating inflation are sound. Some disagree, but they make political objections, not objections that are backed by reasoned arguments in academic papers.

But it doesn't matter. Either of us could be wrong. The only way to find out is to build the price feed, launch the asset, and see if people use it. I plan on doing this, and I hope people join me to help refine the methodologies for building a feed that credibly prices stable value over time.

Good question. The value of the bill only depends on how much $1 buys in one place at one point in time. From there, I suspect we can use commonly collected sets of data to translate that to current values. No one has to keep measuring what a dollar buys in Austin. It's just a reference point.

One way of calculating the value of a bill is by extrapolating from January 1 dollars to dollars at a given point in time using price indexes, like the government's Consumer Price Index, or the Billion Prices Project's index. This will give a precise value of a bill as long as the dollar changes in value slowly.

The dollar may not always change in value slowly. For those scenarios, we need to maintain alternative measures of the value of a bill. One way to do that might be to convert January 1 dollars to January 1 francs, inflate that value using price indexes in Switzerland, then adjust by changes in relative purchasing power to arrive at a value. My economics isn't strong enough to be certain that such a conversion would be sound, but I think it would be.

We would calculate the value of the bill using various methods and data sources, collect input on the validity of our methods, then adjust them until there's a consensus to base a market on. Economists have been comparing past values of money for quite some time. They're good at it. There's just never been a need for a well-defined, broadly accepted reference point for value. Now that we could use such a value to create a fungible currency with that value, it's time to establish one.

Let's build the bill.

BitShares gives us the ability create digital currencies pegged to any price. These digital currencies are called BitAssets, and they track traditional currencies and commodities, like dollars, yuan and gold. BitAssets can track anything with a price, though, so why track those? They have the most stable value available to mankind, but they’re really not all that stable. Gold fluctuates a lot. We think of dollars and yuan as stable, but we all know they lose a few percentage points of value each year to inflation. Today’s dollar is worth less than half of what it was worth thirty years ago.

What we really want is a perfectly stable store of value over time, but we don’t even have a good way of measuring value. To measure distance, we use the meter: one ten-millionth of the distance from the Equator to the North Pole. To measure mass, we use the gram: the mass of a milliliter of water. To measure value, let’s use the bill.

The bill is the purchasing power of one U.S. dollar on January 1, 2015 in Austin, Texas.

Read more: http://logicalgrackle.com/the-bill-perfectly-stable-value.html

I attempted to put the best parts of the BitShares explainers I've seen into one post. Feedback welcome.

http://logicalgrackle.com/how-bitshares-works.html