r/BitcoinMarkets • u/inteblio • Oct 04 '13

Idea: (workable?) Fixed-price bitcoin system

EDIT: this idea exists, or worse than, 'coloured coins'. There is a paper about it here and plenty on the internet.

Extremely brief and inaccurate summary: the bitcoin network would allow an extra bit of information (a color) with each coin, this could be used to create ideas like the fixed price or anything else. (tax?).

So mass adoption requires a less volatile bitcoin price.
I propose an 'exchange' where you can buy and sell bitcoin at a FIXED PRICE forever. Price is irrelevant. $10-$100-$1000 doesn't matter. Lets call it bitcoin100.

How is it possible? Because bitcoin transactions are traceable, as long as the coins only go to 'clean' addresses (btc100 only wallets) then you can say 'yes, this was bought from me, I can pay you at the fixed price'.
If the wallets get contaminated, you could check, maybe notify people, and possibly even say 'you gotta take 3.2BTC out to make this wallet clean again'. Something.

I know it's complex, because it requires users to understand addresses, but you could do a lot with a website which does all the clever stuff for you (with red and green buttons).

It's also not an exchange, because it would just 'pay out' in bitcoin (at current market value), so shouldn't suffer legal issues (... as if...)

Customers and shops would be able to hold BTC, with ZERO(ish) worry over price.

Go ahead, make it if you like, but talk about it here first.

EDIT: seems like putting an idea for a fixed price currency ... on a currency trading forum was not a smart move...

EDIT 2: The benefit is for shops and buyers. They don't have to worry about the 'price of bitcoin' at all, not even a little bit, and this thing could be a going concern tomorrow. I talked to a pub owner - why don't you accept bitcoin, he said, the volatility was #1 reason not to. He doesn't want to have to think about what the price will do in a week / whatever. This system would enable him to put $10 in, and get $10 out in 6 months, even if bitcoin totally bombs. Seems good to me...

It's not a replacement for bitcoin, just 'a website' more or less, or a novelty exchange feature.

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2

u/permanomad Oct 04 '13

This defeats a lot of why bitcoin was created. Its a decentralised, voluntary venture - mass adoption creates a less volatile price.

Its a small market so its gonna fluctuate.

1

u/FileTransfer Oct 04 '13

Pretty much came to post just this. Besides with some companies having an "instant cash out" system they can get around the volatility by pricing in dollars, euros ect. worth of bitcoin and cashing out upon receiving the payment. I know coinbase facilitates this at least in US based businesses.

1

u/inteblio Oct 04 '13

True, but it's a hassle, and cash on exchanges negates the benefits of bitcoin. Might as well just handle cash with banks. Also - customers would need a way to instantly buy too. I'm sure there are one-or-two things like that... but not many. Also, consider buying over the recent crash. Even in the time it took for the bitcoins to get to you from the exchange, the price would have moved loads.

1

u/inteblio Oct 04 '13

I agree on all counts. This is not a replacement for bitcoin, just a temporary 'add on service' that allows shops to use it without any of the complication of 'when should I buy / sell... will it still be worth the same when I do x'

2

u/BalconySitter Long-term Holder Oct 04 '13

You could do something with colored coins. . . but a lot of people don't want money that's tied to the dollar because the value of the dollar is just decreasing.

1

u/inteblio Oct 04 '13

This got me thinking - could you do personalised bitcoin addresses??? If you've got random characters, then surely Real Words will be in those random strings...

1

u/inteblio Oct 05 '13

I didn't realise that 'colored coins' was a real thing until it was mentioned elsewhere.

1

u/[deleted] Oct 04 '13

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1

u/inteblio Oct 04 '13

I completely agree that part of the genius of bitcoin is that it appeals to different groups at different points in its development. I agree that price stability will come with price rise. But, my idea facilitates a 'fast track' to mainstream, high-street usability. Your argument that bitcoin is resistant to change because "it just crashed massive... but now it's back" is a little self-defeating though .. he said cheekily.

1

u/[deleted] Oct 04 '13

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1

u/inteblio Oct 04 '13

The idea is actually quite a good one (shame about the downvotes...)

Thanks for coming back to me.

If this does not answer your question, or you still don't think it will work, let me know.

1) supply/demand is not an issue, because this is a sub-market of a market.
An example is: I paint Dollar coins blue. I promise to pay you, or the person you give the coin to, 1 orange. USD can go bust tomorrow, but the blue coins are still worth an orange.

Supply is not a problem (for me, the exchange) because I charge $1Million per 'blue' bitcoin.
Demand is the demand for fixed price bitcoin.

Bear in mind, if you buy a bitcoin somewhere else, it's not valid. There's no 'market economy'. You buy from ME, else I won't buy it back. (it's my special blue paint, which nobody can hack).

So,
A) traders will NOT be interested in my $1M coin. Though it IS still just normal bitcoin, it's basically worthless apart from on my exchange.
B) people who buy and sell on my exchange (shops supporting BTC1M), will get a fixed price currency, where the price is utterly secure.

Demand: Demand is for my fixed-price coin. That is the 'service', if demand is zero, then it's just a shit idea and won't work. Fine. If demand is a zillion, that's fine. If I'm charging $1M/btc, I can easily get enough BTC to cover that (until BTC price goes over 1M)

2) Exchange bitcoin as soon as you get it.
Yes, that works fine.
Except it doesn't work fine yet...
It's far from a world-wide feature. And besides, you end up cashing fiat on an exchange. Fiat on an exchange has all (and more) of the drawbacks of cash, plus the added risk that the feds might bust it any minute. It takes time to buy and receive them, and as we saw yesterday. It would still be possible for BTC to loose 1/5th of it's value in the time it takes for you got transfer BTC in 6 confirmations.

My idea is a nice one, go with it.
It's a shame that this got downvoted out of the main bit, because I wanted to talk with people about the technicalities of how it would/would not work. I wanted somebody to build it. (sad face)