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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.
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 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
words words blah blah words words words blah words JUST PAY IN DAMN DOLLARS.
So, it's a loan, in USD, and the ledger is in a blockchain. That doesn't sound terribly innovative.
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.