Quote from: tomwoods on April 11, 2013, 09:43:34 PM

Quote from: Impaler on April 09, 2013, 01:18:52 AM

Quote from: dacoinminster on April 08, 2013, 07:27:40 PM

Additional protocol layers will be built on top of bitcoin which will provide stable currencies pegged to dollars, gold, oil, or anything else your heart desires. Think about how HTTP is built on top of TCP/IP. That is how we will build new, stable currencies on top of bitcoin.

Further more it would be doubly impossible to do this if BTC is still floating against the dollar because you would creating a triangle, lets assume you want to maintain a BTC/Gold peg you now have 3 exchange rates, BTC/Dollar, Gold/Dollar which float and BTC/Gold which is pegged. This immediately creates potential for an arbitrage if either of the floating rates shifts without a commensurate change in the other. Take the present massive rise in BTC/Dollar, Gold/Dollar hasn't shifted at all and if your BTC/Gold peg had been in balance before it is now totally out of which and a person can profit hugely by converting BTC->Dollar->Gold->BTC and they will have multiplied their wealth hugely while draining the wealth of the peg maintaining entity. This is why the original gold standard failed.

This is finally the conversation I wanted to see here at bitcointalk.

Help me figure this out: So what if you peg BTC to an index? Call it BTC/Sht, that is, pegged to the price of sh*t you can buy with it.

You take the price of gold, the price of gold, food, gasoline, potatoes, dollars, yen, everything.. and take into account fluctuations, so that if one item starts varying, it has less influence on the index, to avoid manipulation.

Then you make the process of entering data and participating in the calculation of this index a new way to mine (that way ASICs miners aren't the only ones who get to participate in the process of generation of new bitcoins)

Quote from: cbeast on November 22, 2011, 04:50:45 AM

I don't really see the need for a decentralized exchange if we have a Pricecoin that monitors price of Bitcoin (and possibly other fungible commodities) and algorithmically analyzes price fluctuations, then exchanges would be used for trading, but not leveraged speculation and HST. I think it would boost price confidence and utility of cryptocurrencies.

This additional protocol layer could serve this function.