That’s how you and I may feel, but most of the world does not. Ignoring the fact that currently practically every company accepting Bitcoin uses a third-party service for instant conversion to fiat after purchases is foolish. Let’s not ignore reality here.
The fact is that currently the Dollar and Euro are a lot less volatile than any crypto-currency out there, and companies know that. Yes, deep down the fiat system is rotten and will probably collapse in the not so far future, but until the hyper-inflation will truly start, most of the world will keep using fiat.
Fiat-pegged SAFE currencies could get a ton of companies and people on board that are no crypto-converts yet. Look at this as a utility that could greatly assist in the world’s fiat-to-crypto transition.
‘Safe’ in SafeDollar is just a reference to the SAFE net of course. It’s pretty obvious that if there’s a peg to the US Dollar that SAFE won’t be protecting the SafeDollar from US Dollar (hyper)inflation. Besides, the name was just an example, it could be named something completely different.
The existence of fiat-pegged SAFE currencies does not detract from the value of SAFE or SafeCoin in any way. Their exchange-to-fiat value is in fact backed by the value of SafeCoin. If anything, that only adds to the value of SafeCoin.
EDIT: I should also note that there’s no fractional-reserve banking here. It’s full-reserve “banking” with an extra marge of 10%.
I’m very interested in NuBits, Bitshares BitUSD etc, as when a model is developed that successfully creates a crypto-currency that is pegged to another asset (in this case USD and other fiat currencies), it’ll be possible to use the same mechanism to create counter-inflation versions of fiat currencies, e.g. peg to 2014 USD. This will simply be done by restricting supply growth so the currency appreciates at a rate that offsets fiat inflation & maintains a stable real value.
Who wouldn’t want to hold savings in a currency that is protected against inflation? This would be the most stable, and best money ever!
Pegged crypto-currency and user issued assets are very interesting developments in the crypto-currency world, and if it’s possible to build versions of these on top of the Safe network, there would be some significant benefits, including:
potentially far lower / no transaction fees
instant confirmation with no / very low double spending risk
I wonder if it will be possible to simply build systems like NuBits or Bitshares on top of the Safe network? Would the cost of using these in terms of safecoins for Safe network usage be lower cost than transaction fees on the NuBits network / Bitcoin trtransaction fees?
I’m surprised how many people here don’t see the value in a currency being a stable store of value, or maintaining the value of another currency unit that is very widely used for payment & pricing. People can choose how much of their holdings to keep in crypto-currencies that are a stable store of value, or in ‘deflationary’ crypto-currencies like Bitcoin & SafeCoin.
Basically, YES we should try to have a SafeUSD, SafeEUR etc, and SafeUSD-2014, SafeEUR-2014 etc. They would be awesome, and they may just be a port of NuBits / Bitshares onto the Safe network.
One of the most important requirements for these pegged coins is a reliable data feed to make the SAFE network aware of the current exchange rate. The SAFE network needs this to trigger margin calls at the correct moments.
My idea is to adapt the ShellingCoin concept, where Farmers are the voters, and instead of rewarding them for a consensus vote with any currency, they are rewarded with a Vault Reputation increment instead. An additional option could be to also punish with a Vault Reputation decrement if they vote against the consensus. Using Reputation rather than SafeCoin is beneficial, since this system would not drain SAFE’s SafeCoin reserve supply which is used to balance SafeCoin storage cost and farming rewards. A reputation modifier is also far more valuable to a Farmer than a small one-time SafeCoin reward.
Farmers could be given the opportunity to vote related to whenever they successfully farm SafeCoin, which ensures a random distribution among a population that has a considerable stake in the SAFE network. A minimum reputation level could be required to participate in the voting. This is in essence a type of proof of stake mechanism. If necessary, the weight of a vote could be modified by the current reputation of the farmer in question.
Next question is how and where the votes are stored and how the consensus value can be derived from the vote data. I haven’t given that much thought yet, but I guess it’s obvious that the Kademlia close groups handle this for the farmers. Perhaps the consensus value could be decided after every X amount (let’s say 100 for now) of votes cast, after which the reputations of the farmers can be adjusted based on whether they voted with or against consensus. An important requirement is that farmers cannot see what the other farmers voted until those 100 votes are in. The Kademlia close groups could only signal/store a notification that their farmer voted, and only publicize the value of the vote after all required votes are in.
Why couldn’t the Safe network host blockchains and applications for mining / wallets (probably proof of stake)?
I’m assuming such an application would be needed for something like NuBits to work on the Safe network, hence the possible need for some kind of transaction/usage fee for use of Safe network resources (papaid in SafeCoin).
That sounds like a great way of getting a user-submitted data feed (for exchange rates etc). As long as you would lose reputation at a faster rate than you can gain it, your incentive to provide good data would be high. This is probably the toughest challenge in creating a stable crypto-currency, but it sounds like this suggestion would work well.
That could also make farmers too afraid to participate at all. The reward alone is already an incentive to provide correct data, since a higher reputation directly translates into higher farming SafeCoin rewards. I’m not sure we should include punishment (perhaps only for repeat offenders or big outliers), I just mentioned the punishment as an option to consider.
