People still dont get NuBits (and Bitcoin's issue)

[Joe]

Yah idk what i was thinking. Pegging a crypto to any fiat currency does not actually solve volatility since the peg is still subject to the volatility of whatever fiat currency its pegged to. I would really like to read more discussion about pegging to a basket of goods.

[cryptog]

pegging to a basket of goods.

This is what to do ultimately or ideally but USD is good enough for me.

[Joe]

Is it possible to create a currency pegged to a basket of goods (bog) but initially valued at 1 bog = 1 usd? The goal being it would be initially just as useful as usd and over time become worth slightly more.

[drei4u]

No country wants their currency to be volatile. It’s bad for business. Central banks shudder when their currency appreciates because exports become expensive. They rather prefer devaluation like what’s happening in China and Japan. However, they also don’t want their currencies to drop in value so fast because it will hurt the purchasing power of its citizens.

That’s why central banks manipulate their currency in the free market by quantitative easing or increasing interest rates, etc.

Now, Bitcoin with no means of controlling its value will rise up exponentially and people won’t spend it. And then when it swings downwards, businesses won’t hold it. Bitcoin may be valuable as something else, but never as a currency.

I don’t think Nubits is really pegged in a sense because it’s operating in a free market. A peg is when an entity like a country will guarantee fix rate at their expense like what happened with CNY years ago and Iraqi Dinar.

The US Dollar is freely traded and has volatility, but I’m sure the Federal Reserve is making sure it does not rise too fast.

Imagine your one USD which equals some 1.10 EUR today and next week it becomes 2.50 EUR, I wouldn’t spend USD at all and spend EUR instead.

[crypto_coiner]

That is my understanding of the general plan of the nushareholders and my want too.
Also, I dont see why it is not achievable.

[crypto_coiner]

[quote="drei4u,

post:14, topic:1716"]
That’s why central banks manipulate their currency in the free market by quantitative easing or increasing interest rates, etc.
[/quote]

How does one manipulate the currency in a free market?

[crypto_coiner]

Imagine your one USD which equals some 1.10 EUR today and next week it becomes 2.50 EU

How are rates actually determined?

[crypto_coiner]

I don’t think Nubits is really pegged in a sense because it’s operating in a free market

In contrast, what does nubits operate in these free markets?

[Joe]

Now, Bitcoin with no means of controlling its value will rise up exponentially and people won’t spend it. And then when it swings downwards, businesses won’t hold it. Bitcoin may be valuable as something else, but never as a currency.

Do you have any sources to back up that claim? I can just as easily say that bitcoin will eventually reach an equilibrium when user adoption is complete. This model makes more sense to me. I’ve never seen a market behave like the wild west for it’s entire life time. A similar model we have to compare with is the internet and we all know how that one went.

[drei4u]

http://www.investopedia.com/ask/answers/07/central-banks.asp and http://www.investopedia.com/terms/o/openmarketoperations.asp

[drei4u]

Exchanging banks worldwide set the rates by trading

[drei4u]

You cannot compare Bitcoin to the Internet because the Internet has no financial aspect, whereas BTC is paired with fiats. Bitcoin behaves more like gold. And the world cannot go backward. Read this carefully http://mentalfloss.com/article/12715/why-did-us-abandon-gold-standard

WHY DID THE U.S. ABANDON THE GOLD STANDARD?

To help combat the Great Depression. Faced with mounting unemployment and spiraling deflation in the early 1930s, the U.S. government found it could do little to stimulate the economy. To deter people from cashing in deposits and depleting the gold supply, the U.S. and other governments had to keep interest rates high, but that made it too expensive for people and businesses to borrow. So in 1933, President Franklin D. Roosevelt cut the dollar’s ties with gold, allowing the government to pump money into the economy and lower interest rates. “Most economists now agree 90 percent of the reason why the U.S. got out of the Great Depression was the break with gold,” said Liaquat Ahamed, author of the book Lords of Finance. The U.S. continued to allow foreign governments to exchange dollars for gold until 1971, when President Richard Nixon abruptly ended the practice to stop dollar-flush foreigners from sapping U.S. gold reserves.

[Joe]

You cannot compare Bitcoin to the Internet because the Internet has no financial aspect

I completely disagree. Both bitcoin and the internet are protocols. They both were considered as ‘fads’ in their earlier years. Like the internet, bitcoin has massive amounts of venture capital being invested into building up businesses and ecosystems that use bitcoin. Bitcoin had a HUGE crash just like the dotcom bubble.

Holy cow that looks familiar!

The Great Depression is not a good argument against the gold standard because there has only ever been a single great depression. Additionally there is no solid consensus on the cause either. I acknowledged that the gold standard might have been a cause, but I need more proof. The Austrian school of economics makes FAR more sense to me. But when 99% of the world believes inflation is good (i refuse to believe that) it’s hard to find unbiased opinions…

[tomjoad]

I would really like to read more discussion about pegging to a basket of goods.

We had a team of researchers send us their concept of an “iGDP” pegged currency. The paper is available here if you’re interested: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2542541

Abstract:

We define iGDP, the gross domestic product (GDP) aggregated via a valuation of all finished goods and services produced within a country using a universal numeraire we refer to as iCurrency. We propose 4 criteria for iCurrency:

1. it is not a currency issued (or backed) by any government;
2. it is valued based solely on supply and demand;
3. it is easily transferred across regions and globally accepted as a payment method;
   and
4. it is algorithmic, with no human intervention. Using the iCurrency concept as a universal numeraire makes iGDP less prone to: 1) erratic FX rate fluctuations; 2) possible government manipulation; and 3) comparative advantage intervention policies.
   …
   We further ponder the benefits of employing iCurrency as a universal world currency, which could enable more precise estimations of global inflation, global output, global productivity, global labor gains, and other global
   macroeconomic indicators, and improve overall measurements of our global economy.

[crypto_coiner]

Wow, now that sounds appealing and interesting. For Nu too.

[crypto_coiner]

it is algorithmic, with no human intervention.

A currency without human intervention is possible if human behavior is deterministic and gets mechanical, e.g. upon AI augmentation and control, but this is not in the plans of the majority.

[drei4u]

Could you buy the Internet? No. You buy Internet-based companies. These companies’ stocks can fluctuate in value. They’re not currencies.

[cryptog]

Yes. And bitcoin is even not a company (dao) nor a protocol. It s an economic-technical hybrid protocol at best. It s rather a flawed economic system.

[Joe]

Could you buy the Internet? No. You buy Internet-based companies. These companies’ stocks can fluctuate in value. They’re not currencies.

If people could instantly send Google stock to any other person in the world instantly and for a penny, yes it would be used as a currency.

[drei4u]

Not if the Google stock drops 20% or gain 20% the next day after you sent. Also, if you’re a merchant, you have to adjust your merchandise’s prices daily or even hourly - not efficient at all.