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Briefly On Volatility

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Avatar for tula_s
Written by   21
1 month ago (Last updated: 1 week ago)

What can be done to reduce the bitcoin volatility?

  1. stablecoins

    a) fiat/commodity backed (USDH https://www.honestcoin.io/)

    b) BCH backed (PSF http://psfoundation.cash/)

    c) hybrid (45% USD, 45% XAU, 10% BCH)

    d) non backed, algorithmic

  2. contracts

  3. smoothing out the inflation schedule

    • easy to implement

    • little to no downsides

    • helps only with the long term volatility (the 4 year boom/bust cycle)

  4. transferring part of the price volatility to hashrate volatility

    dynamic mining reward based on price trend:

    • price going up = more coins released

    • price going down = less coins released

    • the 21 million BCH limit stays the same

    • the inflation curve stays roughly the same

    • helps only with the short term volatility

  5. transferring the price volatility of money to price volatility of the backing asset (bank stock)

    • there is no other asset an illegal digital central bank can back the money it issues with, other than its stock

    • income of such a bank comes from transaction fees and issuing stock

    • price of money going up = more money printed (to satisfy the growing consumer demand) & correspondingly more backing stock put into stability fund (pushing the price of the stock up and price of money back down) - a stock buyback

    • price of money going down = money bought from the market with the stock in the stability fund (and/or newly issued stock) (pushing the price of the stock down and price of money back up)

    • hard to do - requires the stockholders to realize that bitcoin is a (decentralized) central (i.e. money issuing) bank and BCH is its stock and so far also its consumer facing product (the money) at the same time. Which is what causes the volatility - BCH is not (yet widely adopted as) money, it is stock of a startup bank. So it will possibly never have the required stability of money (and therefore never widely adopted as money) and these two functions can (and possibly will have to, eventually) be separated.

    • solves both short term (absorbed by stability fund) and long term volatility (transferred to stock volatility)

  6. more adoption of BCH as money

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Avatar for tula_s
Written by   21
1 month ago (Last updated: 1 week ago)
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Comments

Awesome! Great and wonderful article it is really educative that everybody will gain something from it. Thanks @tula_s

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3 weeks ago

Amazing! Gracias por ilustrar las ideas de la volatilidad.

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1 month ago
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