Author Topic: Forget Smartcoins, how about Dreamcoins?  (Read 21203 times)

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Offline kenCode

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Ok, go ahead, make your  +5% asset. I support this. Let's see where it goes!

Yep, and if we all start a Meetup group in our local cities (http://www.meetup.com/bitshares-munich/), finding a whale will come much much MUCH sooner than later. It's surprising the number of whales that show up to our different Meetups. It's just a matter of time. If we all pitch in, the probability becomes much higher of finding them.
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Offline yvv

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Ok, go ahead, make your  +5% asset. I support this. Let's see where it goes!

Offline Stan

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The ideal formula would yield an asset that retains constant purchasing power against an honest CPI. 

Yes!

Quote
But we don't need to incur the risks of offering total "idealness" in a global economy where all major currencies are chronically inflating and can even be collapsed on purpose -- causing a hyperinflationary spike in any CPI referencing them.  All we need to do is be +5% better than the best and we've got something attractive that a reliably appreciating BTS could provide to humanity.

Where did you get this number,  +5%? What if inflation on all fiat from your basket will happen to be +8.79% during next decade? Than your token will lose purchasing power, although slower than fiat in your basket, but pity anyway :(



To be a successful currency, you don't need to outrun inflation.  You just need to outrun the competition.

One of these could be my reason for picking 5%:

I picked +5% because of its unique display characteristics in this forum - a hold-over from a distant pre-historic time which could live again.

When I got my first passbook savings account back in the 1960s that's what kind of interest was "normal" in a passbook savings account.

5% is enough better than what my mother can earn on her retirement accounts today to maybe get her attention (if she wasn't invested in BitShares instead).

5% is low enough that a steady rise in BTS of, say 10% annually, would start to be attractive to a hypothetical benevolent whale who might want to deploy a new currency with a hypothetical billion dollar annual revenue stream from some asset she owns.  That stream could automagically issue the Dreamcoin which I postulate would be snapped up by The Greatest Generation and The Baby Boomers if they could earn 5% backed by real BTS collateral.

All of the above.

None of the above.


As outlined in my original Whale Powered Assets article, I'm wondering if I could convince all the candidate benevolent whales out there that this would be a great thing to do with said hypothetical revenue stream because they could double their rate of return on that revenue stream by feeding it through the smartcoin issuing process thereby locking it up as leveraged collateral that is appreciating due to the steady consumption of available supply of BitShares.  And the older the smartcoins issued, the greater gain they would experience - which is the real incentive for said whale.  Excess collateral from older coins could be harvested and fed back into the generation stream. 

Viola!  A fully back currency paying 5% is born.  Surely there are marketeers who could sell something dirt simple like that.  No other speculators need participate except the whale (although some might start participating once they see the plan working.)

Your actual mileage may vary, but I'm looking for the right parameters and any other insights from this community's thinkers.  What breaks eventually?  When we run out of great-grandmas?

One problem might be that the whale would eventually wind up owning >51% of the supply, turning BTS into a privately controlled network.  The question is, would anybody care by that time?


« Last Edit: June 22, 2016, 12:37:04 pm by Stan »
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline yvv

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The ideal formula would yield an asset that retains constant purchasing power against an honest CPI. 

Yes!

Quote
But we don't need to incur the risks of offering total "idealness" in a global economy where all major currencies are chronically inflating and can even be collapsed on purpose -- causing a hyperinflationary spike in any CPI referencing them.  All we need to do is be +5% better than the best and we've got something attractive that a reliably appreciating BTS could provide to humanity.

Where did you get this number,  +5%? What if inflation on all fiat from your basket will happen to be +8.79% during next decade? Than your token will lose purchasing power, although slower than fiat in your basket, but pity anyway :(

Offline nomoreheroes7

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The ideal formula would yield an asset that retains constant purchasing power against an honest CPI. 

But we don't need to incur the risks of offering total "idealness" in a global economy where all major currencies are chronically inflating and can even be collapsed on purpose -- causing a hyperinflationary spike in any CPI referencing them.  All we need to do is be +5% better than the best and we've got something attractive that a reliably appreciating BTS could provide to humanity.

Given a stable demand for a coin of this type, would take a stable stream of BTS off the table, giving the upward draft in BTS price needed to become self-sustaining.

If the right bot feedback mechanisms are developed to keep this from overheating or flaming out, it might be an amazing opportunity for a whale powered asset that could grow to compete with the largest global currencies. 

Just need to find the right formula and a whale willing to try it.


Offline Stan

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The ideal formula would yield an asset that retains constant purchasing power against an honest CPI. 

But we don't need to incur the risks of offering total "idealness" in a global economy where all major currencies are chronically inflating and can even be collapsed on purpose -- causing a hyperinflationary spike in any CPI referencing them.  All we need to do is be +5% better than the best and we've got something attractive that a reliably appreciating BTS could provide to humanity.

Given a stable demand for a coin of this type, would take a stable stream of BTS off the table, giving the upward draft in BTS price needed to become self-sustaining.

If the right bot feedback mechanisms are developed to keep this from overheating or flaming out, it might be an amazing opportunity for a whale powered asset that could grow to compete with the largest global currencies. 

Just need to find the right formula and a whale willing to try it.
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline kenCode

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Nice thought experiment, but I think the original model, were shorters paid interest to longs in bitUSD or bitEUR was much better. This should be reintroduced in my opinion... as an alternative at least to the current interest-free bitUSD... perhaps the bondmarket as well.

I understand the logic behind this... but people would not like to see such experiments and they might not understand it, as the whole project is already called an experiment...
Certainly it would not be called an experiment by the time it was presented to the General Public.

At that point, it would all be boiled down to a menu of smart coins with various defined behaviors.
The average consumer would be presented with a simple list of coins they could buy:

bitUSD tracks the value of the US dollar.
bitGold tracks the spot price of gold.
bitSumo appreciates against a basket of currencies by 5%.

You buy these coins like you buy any CD and hold them as investments.
They each can be explained in about as much text as a product on Amazon.

They could certainly be explained as a 5% CD.  The only difference is the black swan protection against any single currency suddenly collapsing - a real probable scenario in the next few years.

I'm not sure there is any difference between what we are saying other than how it is explained.  My proposal is simply implemented by publishing the price feed formula as a function of other price feeds. 

How is what you are saying different and why would it be better?

Perhaps if it is only a new custom price feed. which does not mess with any other thing, why not try it out... perhaps you are right... but for now I think shorters would not want to short it... But if you have a whale at hand... you can perhaps kickstart this vicious cycle. :)

Agreed. See my earlier comments about the "bitBasket". Name it whatever you want, but moving forward this is the way to go. All the fiats on their own are on their way out. Peg baskets, indexes and tangibles into the mix and you've got one hell of an unstoppable Smartcoin, solid.
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Offline okidoki

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Nice thought experiment, but I think the original model, were shorters paid interest to longs in bitUSD or bitEUR was much better. This should be reintroduced in my opinion... as an alternative at least to the current interest-free bitUSD... perhaps the bondmarket as well.

I understand the logic behind this... but people would not like to see such experiments and they might not understand it, as the whole project is already called an experiment...
Certainly it would not be called an experiment by the time it was presented to the General Public.

At that point, it would all be boiled down to a menu of smart coins with various defined behaviors.
The average consumer would be presented with a simple list of coins they could buy:

bitUSD tracks the value of the US dollar.
bitGold tracks the spot price of gold.
bitSumo appreciates against a basket of currencies by 5%.

You buy these coins like you buy any CD and hold them as investments.
They each can be explained in about as much text as a product on Amazon.

They could certainly be explained as a 5% CD.  The only difference is the black swan protection against any single currency suddenly collapsing - a real probable scenario in the next few years.

I'm not sure there is any difference between what we are saying other than how it is explained.  My proposal is simply implemented by publishing the price feed formula as a function of other price feeds. 

How is what you are saying different and why would it be better?

Perhaps if it is only a new custom price feed. which does not mess with any other thing, why not try it out... perhaps you are right... but for now I think shorters would not want to short it... But if you have a whale at hand... you can perhaps kickstart this vicious cycle. :)

Offline Chronos

I'm not shorting that with a 10-foot pole.  :)

Offline yvv

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You can surely peg bitAsset to whatever formula you want. Important question is what is a point of your token? If you want to preserve its purchasing power why don't you peg it to something like US consumer price index? Imagine a token which can buy the same amount of basic goods 50 years from now as it can buy today, no matter what USD inflation is, 2% or 200%.  Is not this what everybody wants?
If you can come up with a consice formula that achieves this reliably .. i am all yours and we can geg that doon asap .. but you still need people to go short ..

Well, we don't need to invent the index. There a bunch of them invented by top level economists. For example, US CPI is pretty good one. It reflects a change in cost of living in the world largest economy, and US bureaucrats are very accurate with statistics. A token pegged to US CPI would be probably a pretty good store of value outside USA too. So, we know CPI:USD rate (published monthly), we know USD:BTS rate -> here we get our price feed. And yes, once bitCPI is created, somebody will have to take a risk to issue it.
« Last Edit: June 20, 2016, 11:28:07 pm by yvv »

Offline xeroc

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You can surely peg bitAsset to whatever formula you want. Important question is what is a point of your token? If you want to preserve its purchasing power why don't you peg it to something like US consumer price index? Imagine a token which can buy the same amount of basic goods 50 years from now as it can buy today, no matter what USD inflation is, 2% or 200%.  Is not this what everybody wants?
If you can come up with a consice formula that achieves this reliably .. i am all yours and we can geg that doon asap .. but you still need people to go short ..

Offline yvv

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You can surely peg bitAsset to whatever formula you want. Important question is what is a point of your token? If you want to preserve its purchasing power why don't you peg it to something like US consumer price index? Imagine a token which can buy the same amount of basic goods 50 years from now as it can buy today, no matter what USD inflation is, 2% or 200%.  Is not this what everybody wants?


Offline Stan

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just do it, we can talk later
On a permission-less ledger like BitShares, we don't need to talk at all :D

There is one general issue I am having when people promise a +5%apr. Not that is sounds fishy and people are going to think its a pyramid scheme - that doesn't need to be the case after all.
The problems I am having result in the 'exponential' behavior of a +5% promise. The value (depending on how you define value) rises by 5% per year gives an equation of 1.05^time which is clearly linear and, as exponentials do, 'escalates quickly'.
There needs to be a very good reasons to think that
a) there is enough backing for that claim
b) the backing is used to buy BTS so that it grows > 5% per year. Otherwise shorters lose out.

Assuming there was a big company that does this and keeps these promises, then shorting would be a
no-brainer for everyone that has BTS, because "the other company is making it happend for you" and takes
care of the 5%+ increase in BTS value each year. They may very well be willing to do so because of the
advantages that come with BTS and bitDREAM:
* permission-less ledger
* ultra-fast
* scalable
* collateralized stable tokens
* global order books
* 24/7 trading

If some company that has the money to do this AND is trusted to keep the promises, then BTS will go through the roof (not an investment advise!)

Good points.

Each coin would be the functional equivalent of a 5% CD, so not hard for consumers to understand - especially retired folks who were counting on being able to earn something like that in order to retire.
 
Is there ever any concern that a 5% CD doubles in value every 14 years?
Why isn't there more concern that the USD has fallen to 2% of its purchasing power 100 years ago?

One difference is that, if it was paying interest we'd have to calculate how long a coin had been held to pay the interest and it would be taxed as ordinary income.

If it just appreciates at a fixed rate, it doesn't matter where you get on and off the elevator, you get the same gain in altitude.  And that is taxed as capital gains which is often a much lower rate in many countries.
« Last Edit: June 20, 2016, 12:35:39 pm by Stan »
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Offline Stan

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BitUSD and "Sumo" serve the same stable-coin market, but shorters would prefer to short the weaker asset, USD, which means more USD would exist. And we have only anemic quantity of USD in existence, about 112000 tokens, so I would expect Sumo to cannibalize it and have fewer tokens in existence.

In short (haha pun), shorters wouldn't create it, so it would be a non-starter. They would prefer to short a fiat peg instead, which is what we actually need to get liquidity juiced up.

Disclaimer: I could be wrong.

In a vacuum, taken in isolation, I would agree with you.
But there are two sides to a market.  Shorters would like it less, users would like it more.

So, if you are going into the hot dog business do you want to offer tasteless dogs that are 5% cheaper to make?

The theory I'm exploring is that there is a huge difference in demand between an unknown experimental asset that pays 0 and one that pays 5%.  If shorters start seeing gains of >20% annually, I think they won't mind sharing some of it "making their hot dogs taste better."

It's all about heating up the air in the fireplace enough so that the first smoke goes up the chimney.

To mix a few metaphors.

:)
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline BunkerChainLabs-DataSecurityNode


How is what you are saying different and why would it be better?


It's an interesting idea.... Ever since you posted those pictured from back in the day where in big bold writing on the Bitshares booth display it read '+5% ON EVERYTHING' it has been floating around in my head how far from a departure the network as a whole has gone from that, and in turn so has a lot of other things as far as the value proposition in Bitshares.

I know there were issues in previous iteration of this.. but I can't help feeling after all this time we should be able to have something better now.

Is it so bad that I would like my dreamcoin to be bitUSD CAD CNY EUR?
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