Quote from: blogospheroid on April 23, 2013, 06:02:35 AM

Right now, people say that a lot of their coins are in cold storage, but we have no way of verifying the same. They can appear anytime in the nearest exchange and drive down the price to whatever the market will bear at that time. So stablecoin needs to have a way of clearly placing coins in cold storage in plain sight, with clear indicators that during the next few hours, days or so, more than X number of coins or Y percentage of coins, simply cannot be traded. Thus, not only is the money supply (M1, is it?) in plain sight, but money placed in short term and long term locked coins (bonds?) is also in plain sight.

To what real end? Something I've learned over going through the process of doing the whole stable currency idea is that you can't brute force the price to some acceptable spot, you've got to let it run free a little. Your view here is colored by bitcoin's heavy one-sidedness that comes along with its currency distribution scheme, and I think your fears would have very little place in a currency where the supply of new money was not so heavily restricted.

If hoarders hold back in an attempt to increase the price, minters create new currency for a profit and bring the price back in line. Hoarders are no better or worse off, though the value in the economy has arguably increased (hoarders chose not to revert back to fiat). Any rash of selling below the cost to produce coins is a lot less likely, because everyone has an idea what currency can be created for. It's a braking mechanism. Bitcoin's cost to produce tends to move with the price of bitcoins; a stable currency's cost to produce should try remain as stable as possible. So while bitcoin can lose or gain hundreds of % in a day and market movers can take advantage of fear, anyone manipulating a stable base cannot take advantage of that fear.

PS - An interesting side effect of the Decrits proposal, where people purchase 1 year shares for a meaningful amount of currency and receive a portion of transaction fees as payment for helping to secure the network, during periods where there is mild inflation due to whatever reason, buying shares for a small but guaranteed return will temporarily lock money. Periods where price inflation is experienced are even more beneficial times to purchase shares because the tx fee is a percentage of each transaction. Thus, inflation = more fees. It encourages temporarily removing money from the economy, and this locked money is an easily verifiable thing and part of normal network activity.