Hard fork of a different kind

One of the disincentives of using bitcoins is its extreme volatility, which is due to speculation. But the price of volatility has to be involuntarily paid by those who are using bitcoins simply for purchasing something whose value is in fiat currency.
We have had hardforks, such as between bitcoin and bitcash. Would it be practially viable to also have a hardfork such as between bitcoins which are traded in exchanges, and bitcoins which are used to make purchases, whereby traded bitcoins can fluctuate in value, but bitcoins used in purchases have a stable value (such a hardfork would be somewhat analogous to the option that is offered between fixed interest rates and floating interest rates on a loan).

Luit wrote: ↑

February 1st, 2018, 6:03 pm

One of the disincentives of using bitcoins is its extreme volatility, which is due speculation. But the price of volatility has to be involuntarily paid by those who are using bitcoins simply for purchasing something whose value is in fiat currency.
We have had hardforks, such as between bicoins and bitcash. Would it be practially viable to also have a hardfork such as between bitcoins which are traded in exchanges, and bitcoins which are used to make purchases, whereby traded bitcoins can fluctuate in value, but bitcoins used in purchases have a stable value (such a hardfork would be somewhat analogous to the option that is offered between fixed interest rates and floating interest rates on a loan).

So if it's so volatile, how can you generate profits if it's not for transfers?

Luit wrote: ↑

February 1st, 2018, 6:03 pm

One of the disincentives of using bitcoins is its extreme volatility, which is due speculation. But the price of volatility has to be involuntarily paid by those who are using bitcoins simply for purchasing something whose value is in fiat currency.
We have had hardforks, such as between bicoins and bitcash. Would it be practially viable to also have a hardfork such as between bitcoins which are traded in exchanges, and bitcoins which are used to make purchases, whereby traded bitcoins can fluctuate in value, but bitcoins used in purchases have a stable value (such a hardfork would be somewhat analogous to the option that is offered between fixed interest rates and floating interest rates on a loan).

Hello, Luit! You've asked a very important question.
I guess the only way to decrease the volatility is to begin actively using Bitcoin. Once millions prefer BTC over USD and the total crypto market capacity grows from 500B to 5-10T, it will be much harder to manipulate the market and the price will become more stable. Today it's impossible because the Bitcoin network is slow and expensive. Hope Lightning Network will help though

If you create a fork you will need to somehow keep its value constant. But how do you do that without a central authority (Tether does, but it's because they control all the 4B USDT by themselves. It's not good.)

alexanderisora wrote: ↑

February 2nd, 2018, 5:53 am

Luit wrote: ↑

February 1st, 2018, 6:03 pm

One of the disincentives of using bitcoins is its extreme volatility, which is due speculation. But the price of volatility has to be involuntarily paid by those who are using bitcoins simply for purchasing something whose value is in fiat currency.
We have had hardforks, such as between bicoins and bitcash. Would it be practially viable to also have a hardfork such as between bitcoins which are traded in exchanges, and bitcoins which are used to make purchases, whereby traded bitcoins can fluctuate in value, but bitcoins used in purchases have a stable value (such a hardfork would be somewhat analogous to the option that is offered between fixed interest rates and floating interest rates on a loan).

Hello, Luit! You've asked a very important question.
I guess the only way to decrease the volatility is to begin actively using Bitcoin. Once millions prefer BTC over USD and the total crypto market capacity grows from 500B to 5-10T, it will be much harder to manipulate the market and the price will become more stable. Today it's impossible because the Bitcoin network is slow and expensive. Hope Lightning Network will help though

If you create a fork you will need to somehow keep its value constant. But how do you do that without a central authority (Tether does, but it's because they control all the 4B USDT by themselves. It's not good.)

Hello Alexander Isora,
Thank you for your reply. Just when I was feeling like a crypto genius, you inform me that the idea of a stable crypto currency is already utilized by Tether! Upon reading about Tether, however, I learn that it has run into some controversies ("Why Tether's Collapse Would Be Bad for Cryptocurrencies https://www.wired.com/story/why-tethers ... nsiteshare ). Besides, Tether is also a traded currency, although pegged to the dollar and supposedly backed by the dollar.
I am wondering how to restore the original purpose of Bitcoin, which is privacy of transaction and freedom from a central authority - a purpose which got hijacked by hyperspeculative Bitcoin trading, and which is now threatening the very future of Bitcoin as a crypto currency. There could be two ways in which Bitcoin could regain its original purpose. One scenario is that the collapse of Bitcoin value becomes terminal, so that it is no longer attractive as a speculative trading currency, and therefore it once again begins to be used primarily as a transactional currency to make purchases.
If on the other hand, the speculative craze of Bitcoins revives, then the only option seems to be is to have a hard fork and create a crypto currency that is not traded, and is transacted purely to make purchases. In other words, this type of Bitcoin works like a token. When I buy Bitcoin tokens - let's call them Bittokens - with dollars from an exchange, whose sole purpose would be to convert dollars into fixed amount of Bittokens, and then I use the Bittokens to buy an item from a seller, and the seller then redeems the Bittokens from a similar exchange which converts back the Bittokens to the fixed amount of dollars.
Re-establishing Bitcoin as an attractive payment option is the only way to drive greater adoption of Bitcoin, rather than the greed of the Bitcoin gold rush of speculation, which is having the opposite effect of driving away potential adopters because of its hypervolatility.
So time to seriously explore a hard fork between Bitcoin and Bittoken.

Luit wrote: ↑

February 2nd, 2018, 11:26 am

...already utilized by Tether!

There are some more blockchain-based fiat tokens: bitUSD, wUSD.

Luit wrote: ↑

February 2nd, 2018, 11:26 am

Upon reading about Tether, however, I learn that it has run into some controversies

Oh yeah, Tether is very suspicious. So much suspicious it has been subpoenaed by CFTC recently.

Luit wrote: ↑

February 2nd, 2018, 11:26 am

Bittokens - with dollars from an exchange, whose sole purpose would be to convert dollars into fixed amount of Bittokens, and then I use the Bittokens to buy an item from a seller, and the seller then redeems the Bittokens from a similar exchange which converts back the Bittokens to the fixed amount of dollars.

Your idea of Bittkoen has one huge bottleneck: when one buys Bittokens for fiat of sells it for fiat - he reveals himself. The privacy equals zero.


I think dude there is a solution.
First, we need to adopt Lightning Network ASAP - to speed up TXs and decrease fees costs. LN will make Bitcoin will become a very good payment method for the ones who don't care about volatility. It's a huge step forward.
Second, we need masses to adopt Bitcoin. Once everyone buys BTC to spend, not to speculate, the volatility will decrease by itself. It's already happening. Look at the graph!

alexanderisora wrote: ↑

February 5th, 2018, 6:44 am

When one buys Bittokens for fiat or sells it for fiat - he reveals himself. The privacy equals zero.

But isn't that the case with Bitcoins as well? One has to buy BTC with fiat, and most vendors who accept BTC as a payment option would eventually encash it for fiat. The privacy is in the transaction between buyer and vendor, where the sender and the receiver addresses of Bitcoins are encrypted. The only difference with Bittokens is that Bittoken/fiat value would be universally fixed.

alexanderisora wrote: ↑

February 5th, 2018, 6:44 am

Once everyone buys BTC to spend, not to speculate, the volatility will decrease by itself.

This is certainly the hope. As I mentioned in the earlier post, the less attractive BTC become as a speculative currency, the more attractive it is as a spending currency.

Luit wrote: ↑

February 5th, 2018, 8:53 am

But isn't that the case with Bitcoins as well? One has to buy BTC with fiat, and most vendors who accept BTC as a payment option would eventually encash it for fiat. The privacy is in the transaction between buyer and vendor, where the sender and the receiver addresses of Bitcoins are encrypted. The only difference with Bittokens is that Bittoken/fiat value would be universally fixed.

Yes, but it will change in future. If everyone will start using cryptocurrency, the money transfers will become anonymous. Imagine that your employer payed you salary in Bitcoin. You then bought a pack of milk for 750 sat (+200 sat tax). Viola!
Bittoken on the other hand will always force you show your ID because you have to deal with fiat

alexanderisora wrote: ↑

February 13th, 2018, 5:46 am

Yes, but it will change in future. If everyone will start using cryptocurrency, the money transfers will become anonymous. Imagine that your employer payed you salary in Bitcoin. You then bought a pack of milk for 750 sat (+200 sat tax). Viola!
Bittoken on the other hand will always force you show your ID because you have to deal with fiat

A completely crypto economy may be ideologically attractive, but not sure governments will allow it, as transparency is a big factor, to detect money laundering and tax evasion. As long as crypto is a moderate part of the economy, as has been up till now, governments have looked the other way, but as usage is growing we are already seeing the clampdown, and more legislation is on the way.

Luit wrote: ↑

February 14th, 2018, 8:30 am

alexanderisora wrote: ↑

February 13th, 2018, 5:46 am

Yes, but it will change in future. If everyone will start using cryptocurrency, the money transfers will become anonymous. Imagine that your employer payed you salary in Bitcoin. You then bought a pack of milk for 750 sat (+200 sat tax). Viola!
Bittoken on the other hand will always force you show your ID because you have to deal with fiat

A completely crypto economy may be ideologically attractive, but not sure governments will allow it, as transparency is a big factor, to detect money laundering and tax evasion. As long as crypto is a moderate part of the economy, as has been up till now, governments have looked the other way, but as usage is growing we are already seeing the clampdown, and more legislation is on the way.

It's a matter of faith.
While some governments take Bitcoin as a danger, Japan aims to become the cryptocurrency Mecca and gives us faith to meet bright decentralized future