Quote from: dacoinminster on August 04, 2011, 02:26:21 PM

morpheus,

While pondering this topic this morning I suddenly realized there is a fatal flaw in your plan as stated. I'm very sad to have to point this out, because I really want something like this to work because it is so beautifully simple.

Your plan to destroy coins will not work as stated. You are right that destroying coins will give people incentive to not transfer them between wallets, but they will simply sell whole wallets loaded with coins instead. Once some people start doing this, anybody transferring the normal way will be at a disadvantage, and everyone will have to start doing it, then *poof* you completely lose all control over reducing the coin supply.

Personally, I have to return to pondering the hideously complex ideas in my proposal for the second bitcoin whitepaper for now, but I'm hoping you have a good answer for this because I liked your idea better.

I don't have a great answer for this problem, but...

If someone wanted to sell 100 Stablecoin this way, they would have to create a new wallet and put 100 Stablecoin in it. If they did this while the price of Stablecoin is low, then they would have to pay the higher transaction fee. Thus solving the problem in this case. If they moved the coin while the price was high, they wouldn't have to pay the transaction fee, but they could just sell the coin for a profit instead. The only way this would work is if they bought the coin when the price is low, then moved the coin into separate wallets when the price is high, then sold the wallets when the price is low again. Not only is this complicated and risky, but the initial purchase would pay the high transaction fee.

An alternative to the above is if someone bought a bunch of Stablecoin at some point and doesn't care about selling exactly 100 coins. They could sell their entire wallet at once with some random number of coins inside. The problem with that is, the receiver couldn't pull the coins out of the wallet without paying the high transaction fees. The receiver would have an incentive to hold the wallet until the prices come back up. He could then sell the coins at a profit and may not have to worry about the transaction fee. Again this encourages hoarding which would drive the price of Stablecoin back up.

The big issue is an exchange like Mt Gox. If there were an exchange like Mt Gox which held all of its Stablecoin in a wallet and let people buy and sell on its open market, then the price of Stablecoin would be independent of transaction fees. Of course, anyone who bought a bunch of Stablecoin while the price is low would not be able to pull it out of the market without paying the transaction fee. This again would encourage hoarding which would drive price back up to the fair market value.

There may be issues in practice, and the transaction fee/miner reward may have to be adjusted at times. I still think it could work and I'm slowly working on an implementation.

If anyone has any info on creating your own bitcoin chain, let me know. I'm looking for a tutorial if one exists. Or maybe a tutorial could be added to the bitcoin wiki.