Are custodians+nubots the bitbanks in this paper of Cameron Harwick?
– a summary of Cameron Harwick’s working paper which he started last October. I think he might not realize Nu yet because Nu fits well with his theories.


Nice find, I’ve sent Cameron a couple tweets from our Twitter account. I think he would be interested in the design of NuBits and NuShares.

Thanks for pinging me. The NuBits idea is intriguing. At first the currency/shares split looked like a rebasing scheme, which I’ve been skeptical of in the past, but I see now it’s more like a currency board – i.e. someone always stands ready to buy or sell at the peg, albeit in this case with a possible lag. So it looks like you’ll be able to take advantage of stabilizing speculation, at least.

That said, I’m not sure I see the value proposition. So, with apologies if this covers well-worn ground:

Usually a currency board is instituted when a government still wants its own currency, but can only be trusted if it ties its own hands. It’s a response to political problems. NuBit has no interest group demanding a national currency, unlike (say) the Argentine Peso, and its behavior is still subject to shareholder discretion, unlike Bitcoin. If it’s no more or less stable than the dollar, and I still have to trust someone to manage the currency wisely, why not just use dollars? Is there some Public Choice reason I should trust the NuBit shareholders more than Janet Yellen? What if we replaced the Fed’s board of governors with a ballot box proportional to everyone’s USD balances?

As a completely separate matter: the custodian idea is interesting. It could have potential as a way to direct funds to lenders without having the lenders themselves issue currency, a possibility which I haven’t considered. But, as it seems you’ve thought of, I’m not sure there’s a way to direct expansions to intermediaries/custodians (or whatever other class we might like) without some sort of protocol-level voting, or introducing discretion at some point in the chain – which in my mind reduces the importance of crypto-currency to not much more than a technological novelty.

Very interesting analyses. The demand probably originates from the dissatisfaction of how most governments and banks run their currencies. The question is whether the NuShares holders can do better. The technology makes it possible to experiment with new models something which haven’t been possible before. This encourages competition which is the source of most progress humanity makes.

The other advantage is the value of the blockchain itself providing irrefutable and transparent transactions without a third party and therefore at a relative low cost. I think I have said this before, maybe the NuShares holders should just sell the ready-made and tested technology to one or more governments after some time. There might be more value in that than running a crypto currency themselves. Time will tell.

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Thanks for taking time to reply. I think the case for nubits is that it uniquely offers peer to peer payment based on a distributed uncorruptable ledger, with a stable exchange rate and a healthy liquidity (~ $2 million now). In short it is highly usable, secure, yet cheap method for payment, remittence and a host of other functions money has.

Yellen is irrelevant for me mostly. I only have to trust the shareholders for short-mid term use of nubits. I only need to know that the shareholders have their own stakes in keeping the peg up. I don’t have to trust Yellen to use nubits (or the USD) to pay my phone bill, as long as the bill is given in USD.

As for whether the USD is a good long-term store of value to peg to, Nu products pegged to other things are in the plan.

I think that is a given. There is no way around it. Nu is just a mini central bank operated by people. Imagine there will be 50 Nu instances that contribute to a diverse lending market.

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Hi @Cameron, nice to have you commenting here.

This is true, and this is also why this is even better for the peg mechanism. Shareholders most pressing (financial) interest is keeping the peg and offering an optimal 1$ digital currency.

Asking this question is like asking for a comparison between digital mathematical currencies and fiat. I am sure there is no need to get into that discussion in this thread.

You might argue why did NuBits choose to peg to 1 USD, which is a different subject. So I answer to that with a question for you : maintaining NuBits architecture, what assets would you ideally use to peg that represents “true stability” ?

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There is voting mechanism in Nu in which shareholders can vote for motions or custodian granst if you meant that sort of voting.

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Hi Cameron. There are a variety of different applications that make NuBits extremely useful. The underlying blockchain technology provides tremendous value in many instances.

One example would be for remittances. If you could play along for a minute, pretend you have a family back in China that you would like to transfer funds to from some of the economic consulting work you do on the side of your PhD - say $1,000.00 US.

A quick search shows that you would pay $12.00 through Western Union to transfer the funds, and it would take three days. Alternatively, you could pay $48.00 to have it arrive within minutes.

These fees exploit individuals from second and third world countries, but they can’t be avoided because of the underlying operational costs that need to be covered, including salaries, benefits, technological infrastructure, building rent, etc. for Western Union.

With NuBits, this same transaction looks very different. Using an exchange is more expensive than some other options, but let’s walk through it:

  1. You and your family would each download a free NuBits mobile wallet app from Coinomi:

  2. You would purchase 1,000.00 NBT for $1,000.00 (plus an exchange fee, perhaps 0.2% or lower).

  3. You would send 1,000.00 NBT to your family in China through the app. It would take six minutes for the entire transaction to confirm, and the total transaction fee is $0.01 (one cent).

  4. Your family would redeem 1,000.00 NBT at a local Chinese exchange like At the moment they would redeem NBT for Bitcoin, and then sell Bitcoin for CNY. This would add another 0.2% in exchange fees at current rates.

The summary of events:

Western Union: $12.00 for a 3 day transfer, $48.00 for a “within minutes” transfer
NuBits: $4.01 for a six-minute transfer if using an exchange.

Lastly, if your family in China decides to sell their NuBits to local traders in person without using an exchange, they could conceivably only pay $0.01 for each batch of NBT they sell for CNY. If they find a local buyer for 1,000.00 NBT, they would pay a total of $0.01 in transaction fees. That is a more competitive rate than any brick-and-mortar institution like Western Union can offer.

Bitcoin enthusiasts have already started to see the value in remittances, but BTC’s volatility reduces its usefulness in this application. NuBits is uniquely suited to transfer value very quickly and cheaply. I think your original statement questions whether holding USD or NuBits is wiser in the long-term, which is a legitimate question, since we’re only about 100 days into our experiment. This hypothetical question should be re-framed to consider the utility provided by blockchain technology, in this case nearly instantaneous, frictionless money transfer worldwide.


So it’s a regress on the Bitcoin model, at least as far as trust goes, in order to compete more directly with foreign exchange middlemen like Western Union. I can see the value in that; I’m just not sure why you’d want to hold NuBits except to spend in the context of a foreign exchange transaction. Maybe these new middlemen will be the most important custodians? Otherwise I’m not sure how well NuBit-mediated forex will work without an independent demand to hold outside of that context.

Obviously, though, the proof is in the pudding, so I’ll be happy to be proven wrong.

I think the only limit is your imagination. The World Bank estimates that over half of the population worldwide does not have access to traditional banking services. Limitations exist because of "high cost, physical distance, and lack of proper documentation.”

NuBits has transaction fees that are nearly zero, no physical distance limitations, and no documentation required. Digital currencies offer a lot of promise for unbanked peoples worldwide who may not have access to mainstream banking, but may soon have their first mobile phone. Many individuals in those countries store their money under a mattress; there are better innovations coming soon to help them.

Even in the first-world there are uses. One of the first use-cases I expect to see will be on gambling websites. Holding your stake in NBT ensures that your value isn’t compromised over time while you play games. It also saves you the hassle and risk of leaving your USD funds on an online gambling site that may fold unexpectedly overnight. You can withdraw your NBT to a private wallet each night with the day’s winnings (or losings) and re-deposit the next day when you’re ready to play again.

More precisely it answers the call in the title of the article summarizing your paper – solving bitcoin’s volatility problem.


@cameron, you’ve raised two important issues.

  1. why do people trust Nu shareholders especially those several custodians who are holding all reserve fund now? What if they run off? What if they have health problem?

  2. why do people wanna hold nubits except that they need to use it? Since nubits pegged to USD and inflationary. Would you hold nubits for 10 years and use it as your children’s education fund?

These are the two reasons I am not convinced by Nubits.

Either nubits project hardcore team reveal their real identity or nubits get decentralized, otherwise the “trust” issue remains the biggest barrier to the public.

As FA Hayek said, the more people like to hold a private currency, the more success.

In 1976, Hayek told us how to issue a private currency and the only barrier is political reason: governments love monetary monopoly. And in 2009 the blockchain technology give people the very chance to issue currencies, however, most cryptos implement fixed supply and disobey Hayek’s theory where the stable currency is favorited.

Nu is very close to Hayek model but not 100%.

If I have enough money I will hire some programmers and issue a 100% pure Hayek money which is of the people, by the people and for the people.

Hayek coin: HYK

Anyone holding HYKshare can issue HYK by pledging hykshare to protocol, the pledge ratio is voted by Hykshareholders. Completely decentralized. And the HYK is anti inflation, so we get out of control of federal reserve. HYK’s goal is maintaining stable purchasing power. What’s the definition of “stable currency”? plz refer to chapter XIII “denationalization of money” 1976 by Hayek.

HYK price is maintained by custodians who set up buy/sell wall on exchanges(100% reserve)and the currency circulation is controlled by short term(1-2 weeks) lending. If pledge ratio is voted to lower level, some HYK will return to protocol, in a extreme case if ratio is voted to zero, within 1-2 weeks all HYK will come back to protocol if all HYK Holders agree to sell them, if they don’t, it cost less time to maintain HYK price, this is even better.

In order to anti inflation, that’s 2-3% annually, some HYK will be burned for HYKshare, thus the HYK price can be lifted continually and slowly.

What if custodians run off?

EDIT: typo

If you have 100$ value hykshare, you will borrow as many as 30-80$ value HYK, and you may become a tiny custodian of maintaining 30-80$ buy/sell wall. People can not steal their own money. People issue their own money, the public need to trust a portion of public, decentralized.

Any HYK shareholder can be a custodian, in future maybe thousands even millions of HYK shareholder and perhaps 30-70% of them are interested in becoming custodians, because they have their HYKshare pledged to the protocol by smart contracts, if they run off/ fail to return HYK in time, they lose more valuable Hykshare.

Being a custodian will be rewarded extra hykshare just like they contribute to minting.

Assume one custodian lost his life in a car accident, after some time, his hykshare taken by protocol and all shareholder will vote to sell them by auction. The HYK in his account on exchange, will or will not return to his family or even stolen by hackers, but that’s not important, for whole system, more valuable hykshare sold for USD/btc/ HYK and buy corresponding HYK and burn.

If governments declare Nuclear war on cryptos, for governments, this system is hard to destroy because thousands of people all over the world with each holding a small portion of value, how can UN/IMF arrest 100000 persons all over the world? With only 1000$ value “crime”, put them into prison for two weeks? No, that’s not practical. Will criminals attack a large number of small hykshare holders? Not beneficial, targets too small.

So this is about your idea of putting a bunch of nushares into deposit before claiming a custodian fund that I saw a couple of weeks ago.
I think it is a nice idea.
What was the overall reaction from the community?

Few people are interested in my proposal. Almost nobody like anti inflation feature.

So I just wait for the next Hayek style crypto.

@Sabreiib, I’m interested in knowing what you think about pegging to SDR in terms of stability

Do you mean there is no inflation at all?

SDR is interesting but we will be controlled by IMF.

Roughly no infaltion, but you know it’s impossible to be very exact in real world.