Re: First WEB credits transaction today!

Hi all,

On May 6, 2013, at 10:07, Melvin Carvalho <melvincarvalho@gmail.com> wrote:

> On 6 May 2013 15:46, Nathan <nathan@webr3.org> wrote:
> Melvin Carvalho wrote:
> On 6 May 2013 15:26, Kingsley Idehen <kidehen@openlinksw.com> wrote:
> 
>  On 5/5/13 5:42 PM, Melvin Carvalho wrote:
> 
>     Nathan and I were playing around with the ripple.com interface today
> and we discovered that you can use it to issue web based currency based on
> your ripple address.
> 
>  We succeeded in getting a trust line going got a transaction into the
> ripple ledger at entry 627613.  Since ripple requires a 3 letter ISO we
> decided to use WEB.  Though through the magic of JSON LD I think this can
> be converted to a URI.
> 
>  So what it means is that any URI can issue WEB credits.  Tie the URI to a
> ripple boostrap via
> 
>  <> foaf : account <ripple:r38363268...>
> 
>  Which is generally an IFP.  Note that the ripple bootstrap is just for
> convenience, you can layer on more trust.
> 
>  Then use that account to issue a genesis block for how many credits you
> wish to issue.
> 
>  Then record transactions out of band and use ripple to process netting as
> necessary.
> 
>  You will be the steward of your own credits.  Whether they are worth
> anything or not, will be up to the market!  Enjoy! :)
> 
> Wow!
> 
> Talk is no longer cheap :-)
> 
> 
> Thanks :)
> 
> The only thing that I havent worked out how to do is to destroy the account
> key after issuing a finite and fixed supply.
> 
> You could use a notary to do this, I suppose.
> 
> But how do you know you can trust the notary?
> 
> You don't, and you don't issue a finite number, in fact you don't issue any more than you can afford.
> 
> You fix the price instead. Such that one WEB is always equal to one USD.
> 
> Then each person can issue WEB credits backed by them, but they have to be willing to redeem WEB credits backed by others. So I can send Kingsley one WEB credit, and he can redeem it for $1USD with Melvin, because we all trust each other.
> 
> If you scale this up, then gateways (like bitstamp, mtgox, btce etc) will no doubt trust each other, and trust their users, if a user deposits $100USD with them, then they have 100WEB to spend anywhere which has a trust path.
> 
> Currencies which change in value are no good, we need one which has a fixed value in order to make money fluid in, out, and over, the web.
> 
> I think that makes sense.. Melvin?
> 
> I think people find a fixed supply reassuring.


That's an awesome experiment, but I don't think that a fixed supply is reassuring.  In fact, economists think the opposite.  Fixed supplies lead to deflation.

See, for example, this well-researched article in The Atlantic [1], where the author says:
[[
In other words, Bitcoin has a massive deflationary bias. Its money supply is mostly fixed, but the menu of things it can buy is growing. The same amount of money chasing more goods means money will be worth more. Or, put another way, prices will fall in Bitcoin terms. 

And that's why it's not a currency, and won't be one until it has a central bank.

Deflation is toxic for any economy, but particularly for an alternative one like Bitcoin. No matter what kind of currency we're talking about, deflation causes hoarding -- why buy something today if you can buy it for less tomorrow?
]]

Regards,
Dave
--
http://about.me/david_wood

[1] http://www.theatlantic.com/business/archive/2013/04/bitcoin-is-no-longer-a-currency/274859/


> 
> I thought the market would decide the value of your WEB credits, rather than pegging it to the dollar.  You could of course offer a dollar to buy back your IOUs in the market place.
> 
> Maybe if you wanted to write USD IOUs you would just use USD and people would try and work out how much they trusted you to pay it back?
>  
> 
> Nathan
> 
>