The Successor To Bitcoin

This is a discussion on The Successor To Bitcoin within the Cryptocurrencies forums, part of the Markets category; ..continue from long thread It may be useful to see why paypal didn't become a currency and that's because there ...

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Old Jan 25, 2014, 2:26pm   #1
Joined Oct 2013
The Successor To Bitcoin

..continue from long thread

It may be useful to see why paypal didn't become a currency and that's because there is no physical representation and physical transaction is the easiest form. With mobile phones, it may be possible to overcome that as the payment could be made over the mobile phone while in person. However, it is rather risky to keep everything in a network that could go down.

So, we can see that the winner currency will likely have a method for offline validation -- it may not be 100% but needs to be 99% effective, will be able to process transactions instantly offline or within a few seconds with network verification, will have an inflationary model so that we don't have to deal with big numbers...

It is relatively easy to do by creating a currency that is fixed to the USD. A centralized and trusted provider holds dollars which are assigned a unique verify number, providing this verify number to another allows money to be transferred to accounts. At which point, the number is no longer valid and becomes valid in the next account with a new random number. With always connected network, double spending is impossible. In offline mode, some sort of verification method that is not easy to duplicate could be used to verify that it was a real ecoin. But, that doesn't mean it hasn't been spent. One solution would be to encode each spend with a key which would prevent receiving party from double spending. But, what about the sending party? This would not be possible... however the retailer/business would have an option of whether to verify payments or trust them in case of network outage.

The Federal Reserve is bet positioned to run this program as it ensures the dollar as the world's reserve currency and the currency of the internet. There would be no transaction fees, as such. Money going into the system could be checked for money laundering just like today, however, money could go out of the system unchecked. Accounts could be created anonymously. So, there is no requirement to transfer to real dollars enabling e-dollars to spread very wide and far. As e-dollars would be a real us dollar, there is no need to convert them except when payment could not be made. In other words, in order to send money you need an edollar account but to receive money, you could have an account created automatically send to an existing account. This enables the system to spread fast.

I'm surprised Fed hasn't did this already. Perhaps it is the risk that if the system were to fail the USD would be on the hook. So, they might have a motivation to create this secretly.

But as for how to create a fixed currency with offline capabilities with the decentralized advantages of bitcoin... Would like to hear suggestions. One might utilize the idea of stock splits/reversals to keep the currency value fixed. Maybe it has two-natures regular coins and minting coins for rewards to miners/verification...

Last edited by OrderFlowDashPro; Jan 26, 2014 at 7:11am.
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Old Jan 25, 2014, 4:11pm   #2
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OrderFlowDashPro started this thread The more I think about it, the more I think that the creation of the anonymous accounts is what can make this idea powerful. If the "value" of a currency is the spread of it, then this is very powerful as one doesn't have to create any sort of account to receive money. You will need an app to store the data. It works just like the a dollar, if you have the code you can spend it.

If I want to give you some Edollar and you don't have an account, that's okay. You need an app but no account. I give you an edollar which is for simplicity a serial number. You redeem the serial number which destroys it from my account, creates a new account, and submits back to you the new value. Just like if I give you a dollar you don't need a wallet. You can put it in your pocket. Most importantly, you don't need to create an account or sign up. It is completely anonymous.

However, it is not decentralized. In order to exchange USD to Edollar, you give the exchange your USD and you receive the edollar which can be exchanged directly for USD. They are always the same.

Of note, it should be possible to create an exchange that can transfer credits with much lower energy costs then bitcoin which suggest that bitcoin won't be able to offer competitive transaction fees long term.

This system also suffers from the same "last mile" problem with bitcoin. In theory, the exchange could use the tokens as contracts to represent anything, like an "I owe you". But that introduces a whole new set of problems.

Summary of thoughts:

* Bitcoin/cryptocurrencies are not easily replaceable. Bitcoin has network effects and offers unique advantages. But, it is not very efficient nor convenient.

* If a country created/backed an efficient anonymous and trusted digital currency then that currency could become the dominant electronic currency.

* Creating a currency that is value pegged to the dollar, gold, or oil would be advantageous.

Last edited by OrderFlowDashPro; Jan 26, 2014 at 7:27am.
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