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New York State Approves Two Dollar-based Cryptocurrencies (engadget.com)
Today, New York approved the first digital currencies that are tied to the US dollar, called "stablecoins." From a report: These cryptocurrencies avoid the price volatility of their brethren by being pegged to stable assets. The digital currencies in question, from Gemini Trust Company and Paxos Trust Company, are available to trade on their respective exchanges. The Winklevoss twins, who rose to fame with a lawsuit suing Mark Zuckerberg for stealing the idea for Facebook from them, have become major players in the cryptocurrency world. They are behind Gemini Trust Company. The currency is pegged to the US dollar on a one-to-one basis; the company will hold US currency that corresponds with all issued Gemini dollars at a bank eligible for the FDIC's pass through insurance.
Can I get the dollar back later?
The only reasonable "value" from this exercise is the digital (read: artificial) production of crypto dollars (with broad traceability) instead of exchanging of real currency. If this path holds, then soon regulations for dollar-backed cryptos will follow that of big banks; namely, a "monetary stress test" so that the amount of real currency can itself be a diluted quantity from the asset class on hold... and then regulations will again cascade to exotic investment vehicles with another layer of dilution from the real currency. IOW, digitally bigger currency valuations will beget even larger economic collapses.
So say I want $10,000 in one of these Winklevoss crypto-currencies I give them $10,000 in cash, they deposit the $10,000 in a bank, and I have the ability to spend $10,000 as a crypto currency?
How do the Winklevoses cover operating expenses? Am I paying a fee on top of my $10,000? Are the people I give these crypto coins to accepting less than 100 pennies for each crypto coin I give them?
How is this different from a pre-paid debit card?
Ken
There's a difference between 'tied to the dollar' and 'dollar denominated'.
'Tied to the dollar' means the winkle-crypto-coins will forever be worth one dollar, 'dollar denominated' means as the value fluctuates it's value in dollars rises and falls, encouraging speculation.
There will be no valuation fluctuation in Winkle-crypto-coins, no incentive to buy them as an investment, unlike bitcoins.
Ken
A 51% attack against this cryptocurrency would be a direct substitute for counterfeiting US dollars.
Still, the incredible inefficiency of a blockchain makes it far too inefficient to justify its use at any meaningful scale. Visa has a digital currency that is 1:1 with the US dollar, and it's a helluva lot more efficient.
"When information is power, privacy is freedom" - Jah-Wren Ryel
The state is not regulating the value, since they are pegged to dollar.
Support Right To Repair Legislation.
This is actually interesting because it sounds like these cryptocurrencies will be FDIC insured. The fact that it is backed by the US dollar means it is quite a bit more stable than the others out there.
So.. a centrally controlled blockchain based money transfer system? Thinking back to various 'internet gold' projects, I can not imagine this going well
The key to bitcoin is that it solves the DOuble spend problem. Of course it's solution is very electrically expensive. But it's that expense that creates a prohibitive barrier to deter double spending. The consequence of that is that is either fees or inflation (by mining) is absolutely required for bitcoin to work in a distributed system.
You can avoid the extremely high fees that deter doubkle spending if you want to give up the distributed blessing system. In that case you just have a central clearing house that a"promises" no double spends because only it can control the ledger. It can then use it's monopoly instead of a cost barrier to insure each coin is spent once.
by giving up on mining then, the transactions can then become fee based and for a low fee.
But then that's the same a visa or mastercard or for that matter a personal check.
most people associate crytptocurrency with distributed ledgers. not central clearing houses.
It sounds like this is just exactly another clearing house with a ledger that is weakly harder to alter over time than a conventional ledger.
Some drink at the fountain of knowledge. Others just gargle.
Then Chuck E Cheese has been in violation since it started issuing tokens.
sig: sauer
This isn't for buying groceries.
You can only transfer real dollars electronically if both parties have access to dollar denominated bank accounts in institutions that are recognized by SWIFT or the American bank routing system. This excludes most of the world. Even for those able to transact, fees will eat up much of the money for international transactions.
It is also difficult to use real dollars for transactions that involve contract escrow or counter-party risk. A blockchain makes those much easier.
Just because YOU don't need it, doesn't mean others won't benefit.
It's still coining money even if the value is set to the dollar.
So do you "coin money" when you write a check?
words words blah blah words words words blah words JUST PAY IN DAMN DOLLARS.
Then so are coupon companies like GroupOn and the ones printed in newspapers or given out at stores and casinos with their chips.
I thought most two-dollars were taken out of circulation. Maybe this is what the government is doing with all of them?
Interest free loans to a couple of rich dudes? :O
Sure I'll jump right on that
I see no mention of a USE for it yet........
Having more than 10,000 dollars cash is a legal liability.
Cops steal about 5x the amount burglars do, year after year after year.
But this particular crypto currency is too legitimate. Likely tracked by the god damn IRS.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
No, but I'm coining a few pounds of primo 'hemp script' in the backyard right now.
Good for all debts...
This isn't for buying groceries.
No, you use ID for that.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Now you can tip strippers with crypto!
If the Republic of Rurethenia holds its foreign exchange reserves in US dollars, it could 'peg' the Rurethenian rasbucknik as being one dollar times a given coefficient. A country might do such a thing so it can have national pride in its own rasbucknik, with the King's face on it, and have it circulate internally at a fixed rate in dollars.
This proposal is for the same thing, but digital and crypto. The question is, why? The convenience of digital trade in real dollars is well established. If you want anonymity and privacy, just carry around wads of US cash. What commerce can you do with the digital rasbucknik that you can't do in dollars?
So, it's a loan, in USD, and the ledger is in a blockchain. That doesn't sound terribly innovative.
Just swipe your card through 'the slot'. Reader is in a piercing.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
... "New York State Approves Two-Dollar based Cryptocurrencies"
It must have been something you assimilated. . . .
Two flaws in your comment.
1. Its not the expense of mining that protects the integrity of the blockchain. It the distribute nature of the miners that protects the blockchain, the consensus of what the correct transactions are. The "work" in proof of work based system is merely how the mining rewards are randomized.
2. The expense of the work required for mining is actually making bitcoins less secure, increasing the risk of a manipulated blockchain. This expense has led to the development of ASIC based mining. By moving away from CPU and GPU based mining we no longer have a distributed system. ASIC based mining is far more centralized in terms of commercial mining operations so cartels are plausible. They are also highly regionalized, mostly in a single country near cheap government supplied hydroelectric power so government intervention is more plausible. Now I am not saying that cartels or government intervention is likely, the point is that the **reality** of bitcoin has deviated from the **theory** of bitcoin. In theory cartels and government could do nothing because the blockchain is maintained by ordinary users and their ordinary CPUs/GPUs and a 51% attack would be implausible. But with mining consolidate both in terms of commercial operations and regionally, cartel and government manipulation is increasingly plausible.
Bitcoin is at risk because it has deviated from its design, a system of distributed blockchain maintenance and consensus, the distributed nature lost.
Fortunately this can be fixed with a software update, one that brings mining back to the realm of CPUs and GPUs, ie regular users and their regular computers. Unfortunately miners would have to agree with that update and why would ASIC miners do that? So if bitcoin is to be "fixed" it will have to fork and be a different type of coin. The blockchain could fork with the code so no holdings are lost.
Just depositing the 10k$ is going to be an issue. Best just to keep it private.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
If a certain 'currency' is 'spent' 'just once' how the heck is it a currency ??
No currency is spent just once. Think of the journey of a dollar. It is spent by customers and received by your employer to pay your paycheck. It is spent when you go to the store to buy a box of toothpaste, where it is spent on employees, inventory, real estate, utilitiies, insurance. And the mop heads and detergent to clean up after someone made a mess in the bathroom. The manufacturer of the toothpaste spends the dollar to buy the cardboard box, have the box printed, have the toothpaste tube made, have the contents made, have the research scientists who made that new Iridescent White formula made, have the PR company come up with the trade name Iridescent White, etc...
How many hands and pockets and car cupholders does a coin go through in its lifetime?
Every time it is voluntarily exchanged and enters the possession a new holder in its lifetime, it has been spent. Same with paper money. Same with electronic funds transfers.
No currency is spent just once.
Remember that money is just a physical representation of services rendered. Work performed, or materials delivered (work performed by the people who supplied the materials - ie making paper, panning for gold, or running an oil rig to make plastic for iPhones). Money is just a modeling language.
Fire and Meat. Yummy.
Credit card fees can be expensive for some industries (porn) and cryptocurrencies avoid some of the regulatory burdens for money transfers. For as long the financial regulators let them get away with it any way.
Not that the user experience of cryptocurrency is nearly ready for mainstream use yet.
Credit cards indemnify you against counterparty risk and to a large degree your own stupidity along the way, banks do too to some extent (when my card got skimmed I got my money back for instance). With crypto if your computer/phone gets owned or you deal with a fraudster, you're fucked.
Gemini has some delay to let them stop someone cashing out, but that's unlikely to be used for civil disagreements. That's just for when government is at their doorstep.
Maybe you should re-read the original article again :) You are just repeating my thoughts