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Ask HN: Is there room in alt currency for...

4 points by curiousquestion ↗ HN
With all the "red tape" surrounding alt currencies, do you think there's room for "alt currencies" which technically only behave as a "tranfer" mechanism? In other words, if the alt currency was tied to the value of US Dollar, then folks who used it could simply use it as a mechanism for transferring the value reliably to someone.

This, I assume, would also open room for innovation since existing alternative currencies which are supposed to behave and be traded exactly as real currencies are also regulated as currencies. Perhaps governments couldn't regulate such a "currency" since its properties are far different than real currencies.

12 comments

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bdr
How would you peg its value to the dollar? How would this be better than PayPal?
dllthomas
Hm. One possibility for pegging that's unavailable with any sort of real good, is to change the money supply by simply scaling the value of all accounts automatically. Of course, probably not something that will actually work, just interesting that a genuinely online currency seems to afford possibilities that are genuinely impossible with physical goods/currencies.
natdempk
Value could be pegged to the dollar by having a set number of premined coins with 0 available for mining with these coins given out for dollars. The creators could then hold onto all of the dollars they receive for the coins, as a way for people to cash out at some point in the future to ensure its value. Maybe a design that would allow only the creators to mine new coins, but everyone in the network to verify them could work. I do not know if such a thing currently exists.

It would be better than Paypal in that after initial issue to users it would be somewhat decentralized. The downside is that you have a central agency basically maintaining the value of the coin, so that if they run away with part of the monetary backing, the whole thing probably goes bust.

JoachimSchipper
Anything that allows drugs dealers, terrorists and pedophiles to run wild is going to get regulated. Anything that doesn't isn't anonymous, untraceable, etc. That's the fundamental problem; even if you were to out-lawyer the people making the laws, that would only stop them until they could make a new law. (Optimistically.)
curiousquestion
What about real currency isn't anonymous? If (god forbid) someone took $100 in cash to a pedophile and bought pornography, how is this traceable in the existing system?
JoachimSchipper
Drugs dealers do work mostly with cash, but it has significant downsides - actually meeting your dealer/customers is much more dangerous and much more likely to get you caught than Silk Road ever was. Also, note that people are using less and less cash. At least where I live, this is significantly because of the untraceability of cash: shops reduce the risk of robberies by taking payments in electronic forms as much as possible, so they offer discounts and convenience - and customers respond.
curiousquestion
I think our world views may differ. For example I believe that corruption / illegal activities don't stop because you're using a traceable monetary system.

And we probably also will disagree that non-traceable monetary systems are difficult or impossible to monitor illegal activities from. Simply the fact that the transactions happen over the web likely makes it easier for law enforcement to get a hold on what types of transactions are happening within something like Silk Road.

Media makes us think Silk Road was not monitored or that it was somehow immune to law enforcement. I disagree whole heartedly.

curiousquestion
I'm even thinking (outside the box here) that one could say "This is worth 1 USD, and is to be used only for purposes of transferring value between accounts". Rules-based system where everyone participating in that particular ecosystem is participating based on the rules set forth by the coin. It's obviously not supply / demand, but since technically it's never used for anything but transfer of value, you're simply creating a mechanism by which people can avoid transaction fees (ie. PayPal, and name your current cc processor).
curiousquestion
I think the trick would be to try to ensure the "mining" of the coin ended up such that the cost to mine the coin cost approximately $1USD. So in the end someone who has this particular coin spent approx $1 in electric / other to produce / mine it.
curiousquestion
Even if the cost to mine the coin ended up being slightly more than $1USD, over time as the coin is transferred multiple times to multiple people, the value increases due to the fact that there are no transaction fees.
amalag
Lookup ripple, lot of overlap with what you are talking about.