New York State Approves Two Dollar-based Cryptocurrencies (engadget.com) 95
Today, New York approved the first digital currencies that are tied to the US dollar, called "stablecoins." From a report: These cryptocurrencies avoid the price volatility of their brethren by being pegged to stable assets. The digital currencies in question, from Gemini Trust Company and Paxos Trust Company, are available to trade on their respective exchanges. The Winklevoss twins, who rose to fame with a lawsuit suing Mark Zuckerberg for stealing the idea for Facebook from them, have become major players in the cryptocurrency world. They are behind Gemini Trust Company. The currency is pegged to the US dollar on a one-to-one basis; the company will hold US currency that corresponds with all issued Gemini dollars at a bank eligible for the FDIC's pass through insurance.
I'd buy that for a dollar (Score:2)
how do they solve the double-spend problem? (Score:5, Insightful)
The key to bitcoin is that it solves the DOuble spend problem. Of course it's solution is very electrically expensive. But it's that expense that creates a prohibitive barrier to deter double spending. The consequence of that is that is either fees or inflation (by mining) is absolutely required for bitcoin to work in a distributed system.
You can avoid the extremely high fees that deter doubkle spending if you want to give up the distributed blessing system. In that case you just have a central clearing house that a"promises" no double spends because only it can control the ledger. It can then use it's monopoly instead of a cost barrier to insure each coin is spent once.
by giving up on mining then, the transactions can then become fee based and for a low fee.
But then that's the same a visa or mastercard or for that matter a personal check.
most people associate crytptocurrency with distributed ledgers. not central clearing houses.
It sounds like this is just exactly another clearing house with a ledger that is weakly harder to alter over time than a conventional ledger.
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If a certain 'currency' is 'spent' 'just once' how (Score:3)
If a certain 'currency' is 'spent' 'just once' how the heck is it a currency ??
No currency is spent just once. Think of the journey of a dollar. It is spent by customers and received by your employer to pay your paycheck. It is spent when you go to the store to buy a box of toothpaste, where it is spent on employees, inventory, real estate, utilitiies, insurance. And the mop heads and detergent to clean up after someone made a mess in the bathroom. The manufacturer of the toothpaste spends the dollar to buy the cardboard box, have the box printed, have the toothpaste tube made, have t
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Re: how do they solve the double-spend problem? (Score:2)
No most people compare crypto currencies with how much money they can make overnight.
They compare it to short term gains not using it for transactions.
I can't go some where and spend a crypto coin. Businesses won't take them people won't take them as you can't spend them, and the value bounces faster than venezula dollars.
That isn't a good investment, it isn't good for anything.
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That is like saying the Europe isn't a real currency because it's not spendable in the United States where you live. I spend crypto currencies every fucking day. It took 40 years for credit cards to see widespread acceptance. It's been less than 10 years for crypto currencies. Give me a break.
Here is a short list of places I regularly spend crypto currencies: Wilder Automotive, 101 Local Goods, Little Zoes Pizza (they also have a separate business that is a food truck also), Dr Drower Dentistry, Thirsty Owl
Expense of mining is leading to insecurity (Score:2)
1. Its not the expense of mining that protects the integrity of the blockchain. It the distribute nature of the miners that protects the blockchain, the consensus of what the correct transactions are. The "work" in proof of work based system is merely how the mining rewards are randomized.
2. The expense of the work required for mining is actually making bitcoins less secure, increasing the risk of a manipulated blockchain. This expense has led to the development of ASIC based
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Definitely Interesting points, but I am not sure I agree with the fix. Once commercial interests got interested with big money, I don't think you can fallback to the open anonymous community approach. IE the concept of miners protecting their own bitcoin interest was more the theory, the groupings of for profit miners isn't going away with big money still moving.
The computing power and network power is now grouped into these coordinated block of miners, they will likely be ready to jump into any crypto wor
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Two flaws in your comment.
1. Its not the expense of mining that protects the integrity of the blockchain. It the distribute nature of the miners that protects the blockchain, the consensus of what the correct transactions are. The "work" in proof of work based system is merely how the mining rewards are randomized.
I used to think that was true. Turns out it's not. it's entirely the expense that prevents the double spend. Here's the proof.
take a network as distributed as you like. It has a certain total compute capacity. Now go out and rent amazon servers with four times that capacity. Spend some coins, wait for the confirmation, collect your services. Then take the old ledger before the coins were spent, add in the next transaction that followed your epoch. The the next one. And recompute a new block chain w
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Two flaws in your comment.
1. Its not the expense of mining that protects the integrity of the blockchain. It the distribute nature of the miners that protects the blockchain, the consensus of what the correct transactions are. The "work" in proof of work based system is merely how the mining rewards are randomized.
I used to think that was true. Turns out it's not. it's entirely the expense that prevents the double spend. Here's the proof. take a network as distributed as you like. It has a certain total compute capacity. Now go out and rent amazon servers with four times that capacity ...
Your argument is flawed. Take a network where the compute capacity is sufficiently concentrated that a 51% cartel can be formed from existing miners. The expense is irrelevant. Basically you are erroneously focused on a side effect, expense. The core condition is having a sufficiently sized and distributed network that the compute capacity necessary is not replicable. This is also an issue of difficulty, expense is a possible side effect of difficulty. You conflate the side effect, expense, with network siz
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With a high degree of certainty. They have the contractual obligation to pay you back (within the law, money laundering or anti-terrorism measures etc might get in the way) and they have a trustworthy third party certifying they have the assets to pay everyone back. They have some counter party risks a bank won't have though, the Ethereum network could be compromised for instance.
Still, chances are good.
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This isn't for buying groceries.
You can only transfer real dollars electronically if both parties have access to dollar denominated bank accounts in institutions that are recognized by SWIFT or the American bank routing system. This excludes most of the world. Even for those able to transact, fees will eat up much of the money for international transactions.
It is also difficult to use real dollars for transactions that involve contract escrow or counter-party risk. A blockchain makes those much easier.
Ju
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Having more than 10,000 dollars cash is a legal liability.
Cops steal about 5x the amount burglars do, year after year after year.
But this particular crypto currency is too legitimate. Likely tracked by the god damn IRS.
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Just depositing the 10k$ is going to be an issue. Best just to keep it private.
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Credit cards indemnify you against counterparty risk and to a large degree your own stupidity along the way, banks do too to some extent (when my card got skimmed I got my money back for instance). With crypto if your computer/phone gets owned or you deal with a fraudster, you're fucked.
Gemini has some delay to let them stop someone cashing out, but that's unlikely to be used for civil disagreements. That's just for when government is at their doorstep.
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This isn't for buying groceries.
No, you use ID for that.
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Credit card fees can be expensive for some industries (porn) and cryptocurrencies avoid some of the regulatory burdens for money transfers. For as long the financial regulators let them get away with it any way.
Not that the user experience of cryptocurrency is nearly ready for mainstream use yet.
Then what's the point? (Score:1)
The point? (Score:1)
Interest free loans to a couple of rich dudes? :O
Sure I'll jump right on that
I see no mention of a USE for it yet........
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Coupons and casinos. (Score:1)
Then so are coupon companies like GroupOn and the ones printed in newspapers or given out at stores and casinos with their chips.
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It's still coining money even if the value is set to the dollar.
So do you "coin money" when you write a check?
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No, but I'm coining a few pounds of primo 'hemp script' in the backyard right now.
Good for all debts...
Re: Aren't they all dollar-based? (Score:5, Informative)
There's a difference between 'tied to the dollar' and 'dollar denominated'.
'Tied to the dollar' means the winkle-crypto-coins will forever be worth one dollar, 'dollar denominated' means as the value fluctuates it's value in dollars rises and falls, encouraging speculation.
There will be no valuation fluctuation in Winkle-crypto-coins, no incentive to buy them as an investment, unlike bitcoins.
The point of this is what, exactly? (Score:5, Interesting)
So say I want $10,000 in one of these Winklevoss crypto-currencies I give them $10,000 in cash, they deposit the $10,000 in a bank, and I have the ability to spend $10,000 as a crypto currency?
How do the Winklevoses cover operating expenses? Am I paying a fee on top of my $10,000? Are the people I give these crypto coins to accepting less than 100 pennies for each crypto coin I give them?
How is this different from a pre-paid debit card?
Re:The point of this is what, exactly? (Score:5, Funny)
> How do the Winklevoses cover operating expenses?
They'll make it up in volume. https://www.nbc.com/saturday-n... [nbc.com]
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Re:The point of this is what, exactly? (Score:4, Insightful)
How do the Winklevoses cover operating expenses?
Float [wikipedia.org].
You are giving them an interest free loan of $10k.
They can make money by investing it.
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Exactly. I'm really not sure how this is supposed to be "new" or "innovative" in a way that makes anyone want to use it. Sure, you can use "that thar newfangled blockchain" but most people don't care how the money is stored, as long as it can be spent. What companies are going to want to use this when there are plenty of other payment methods that are widespread, they work well, and there isn't the risks of things like losing your "wallet" and having no recourse.
This screams of a solution in search of a
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How do the Winklevoses cover operating expenses? Am I paying a fee on top of my $10,000? Are the people I give these crypto coins to accepting less than 100 pennies for each crypto coin I give them?
It seems pretty clear to me that they are going to have transaction fees. Fun fact: this is how credit cards make their money.
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They don't make money on the crypto; they make money on the people daytrading and parking their money in a stable coin to avoid volatility between trades via various fees. Right now, the biggest issue for me, as a crypto trader, is ETH, BTC etc can quickly erode the gains of my trades. Say, buy $shitcoin with $ETH, ride it up 10-20-30%, sell for $ETH. Now we have to worry wtf $ETH is going to do, so I transfer $ETH back to gemini and sell for $vinkelcoin, paying the .05% or whatever. now I don't give a shit
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How is this different from a pre-paid debit card?
Transactions on cards are catagued, with your name on them, by the banking industry (I assume you're savvy enough to infer the privacy cost, so I won't go into that). Past that, said banking industry can -- whether for their own reasons or because they're mandated to by legal dictum -- preclude you from spending your money the way you want; want to spend it on tech from some country that has a squabble with the US, or an outright ban? You can't.
That's what's different. The above doesn't apply to crypto
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until it does and now there is a perfect paper trail... assuming you were trying to avoid the said ban.
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eh, I can buy a prepaid gift card from the major credit card companies with cash
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A new kind of counterfeiting? (Score:4, Informative)
A 51% attack against this cryptocurrency would be a direct substitute for counterfeiting US dollars.
Still, the incredible inefficiency of a blockchain makes it far too inefficient to justify its use at any meaningful scale. Visa has a digital currency that is 1:1 with the US dollar, and it's a helluva lot more efficient.
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Visa has a digital currency that is 1:1 with the US dollar, and it's a helluva lot more efficient.
Good luck buying heroin with your Visa card.
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Good luck buying heroin with proxy dollars.
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You're thinking of the inefficiency of Bitcoin
Second, third, fourth, nth generation cryptocurrencies, and even fully revised version of the underlying blockchain technology have already been developed that are vastly more efficient but far from the mainstream awareness and adoption of Bitcoin.
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They all suffer from the problem to some extent, even if Bitcoin is particularly bad. As with hashing algorithms, there's some conflict between efficiency and security with a blockchain.
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A 51% attack against this cryptocurrency would be a direct substitute for counterfeiting US dollars.
A 51% attack doesn't let you spend bitcoin you don't own. It merely lets you reverse some of the recent transactions. Creating bitcoin or spending bitcoin you don't have still can't be done, though.
Interesting ... (Score:2)
'blockchain' (Score:2)
That's Weird! (Score:2)
I thought most two-dollars were taken out of circulation. Maybe this is what the government is doing with all of them?
It's about time for a two-dollar crypto-currency! (Score:2)
Now you can tip strippers with crypto!
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Just swipe your card through 'the slot'. Reader is in a piercing.
A digital pegged currency - so what? (Score:2)
If the Republic of Rurethenia holds its foreign exchange reserves in US dollars, it could 'peg' the Rurethenian rasbucknik as being one dollar times a given coefficient. A country might do such a thing so it can have national pride in its own rasbucknik, with the King's face on it, and have it circulate internally at a fixed rate in dollars.
This proposal is for the same thing, but digital and crypto. The question is, why? The convenience of digital trade in real dollars is well established. If you want anon
Blockchain Loan (Score:3)
How to make this way more interesting ... (Score:2)