Quote from: Keyboard-Mash on May 24, 2014, 09:28:30 PM

Quote from: Johnny Mnemonic on May 23, 2014, 09:26:36 AM

The great thing about crypto is that there are no need for promises. Cryptocoins have proof (Proof of Work). That's far better than any promise. Proof of work is what makes gold (or any commodity money in existense for that matter) valuable. Excluding fiat, all money from the beginning of time had proof of work in some form or another. The mere presence of gold is proof that someone, somewhere, put it real effort to obtain it. Proof of work is the most basic form of intrinsic value.

A certificate is a promise that such proof exists. As mentioned upthread, this was important for trade, as paper money (promise) is much easier to carry and store than heavy gold coins (proof). However, as I already stated, promises can, and will be, abused:

Quote from: Johnny Mnemonic on May 14, 2014, 07:57:44 PM

Gold certificates are actually a great example of deteriorating value to achieve volume. Goldsmiths learned very early that they could print many more certificates than they actually had gold to back up, because such few people ever bothered to redeem them. This kind of debasement was an early form of fractional reserve banking, and one of the first steps toward ultra-high volume trade.

Again though, such a promise is unnecessary in crypto, as the proof is right there in the coin.

I get that the proof of work is in the coin, but issuing promises(bank notes) based on gold reserves was still a reality at some point. The gold miners themselves don't really get a say on whether or not the person they sell to decides to issue promise notes based on their own holdings (in order to support things like a modern present-day economy) .. other than quitting mining. If that were to become our reality, then mining difficulty would just decrease to where anyone could sustain mining and continue issuing the same amount of "gold" to be produced otherwise. We've effectively blocked our own shot on this one (in a pretty neutral way).

As far as why anyone would want to issue promises for gold/monero reserves .. I can think of a few. The total supply of Monero is limited to 184.4 billion units. Currently we use numbers as high as 1000 trillion to define deficits of "promises". One number is bigger than the other, and we got there by issuing promises. Personally I don't see any specific reason (currently) to issue promises as well, because as you say the proof of work is right there in creating the monero .. but that same proof of work was also available by the very fact you have a 99.9% gold bar of "x" weight in the first place. All I'm saying is that I can see it happening again, because people will try to fit this into a world that they understand.

Now I think I see what you're getting at. You're essentially asking, "why couldn't someone issue bitcoin/MRO certificates as a fractional debasement for the means of facilitating high volume trade?"

This is what scares me. If we aren't careful this will happen and it will be the death of decentralized crypto. Once promises begin to be issued we have a debt-based currency and we're back on track to centralized fiat. We have to bake these high volume properties into the coin or it's only a matter of time before we get "Government Cash 2.0: Backed by Bitcoin(TM)!"

This happens by means of easy credit. If people can go to banks and easily borrow tender in the form of debased Bitcoin certificates, then the certificates will take over as the primary form of trade. Then in 2071 President Nixon VI will take us off the BTC standard entirely.

I realize it's a slippery slope but my point is that these featues must be included in the currency itself, or a centralized party will eventually do it for us. The good news is that debasing a PoW crypto does not result in the same value loss as debasing fiat. We need a steadily (and infinitely) increasing money supply.