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stevenzeiler

Instagold Digital Commodity

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Modern computer ledgers use cryptography to enable highly secure digital commodities to faciliatate global real-time transactions. While bitcoin provides perhaps the most secure digital asset on the planet its value is highly volatile and therefore inappropriate for several classes of transactions that require additional predictability in terms of purchasing power.

Despite bitcoin being the most secure and liquid digital commodity most similar crypto systems exhibit many of the features that make bitcoin great such as cryptographic keys that verify ownership and digital signatures enable transactions. Other systems introduce counterparty risk in order to maintain purchasing power for holders of the commodity at some peg to a real-world entity.

Instagold is an all-digital commodity designed to carry the purchasing power of gold bullion by maintaining liquidity between instagold and bitcoin, and between instagold and physical gold bullion. Instagold aims to prove that money is a socially-shared phychological construct wherein people assign value to a particular controllable item.

The instagold cryptographic commodity version alpha is tracked on the Ripple global consensus ledger as XAU issued by the ripple account rfYJPE1o9sWypZPhEKZtpAyA36DbCQLYgY, with the goal of 1 XAU equivalent to the price of delivery for one one-ounce of us gold eagle coin.

Use the ripple charting software to follow the market for instagold. Currently a market of two instagold is maintained and anyone can contribute to the market and trade instagold by using a ripple-enabled trading client. Instagold will serve as a building block for digital economies to root their value in gold, the world’s most highly trusted money throughout history.


Of course there are incredible challenges to building an always-on digital commodity that is based in the value of gold, including counterparty risk, high availability, privacy and market integrity. Advances in decentralized software development will continue to expand the possibilities in the realm of digital commodities, and instagold is positioned to take advantage of future improvements in technology to enhance its offering and maximize the experience of using money across the world.

Here is the original blog post: http://stevenzeiler.tumblr.com/post/133383924889/instagold-digital-commodity

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So there's no actual gold, just an IOU where you promise to maintain an order of at least 2 XAU on the books trading against bitcoin at the price of delivering a gold eagle. Why at the price of delivery if there is no delivery?

What happens when bitcoin has its next pump and thousands of instagold holders all want to convert to bitcoin at once?

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30 minutes ago, Roborovskii said:

Is this a market making fund pool between BTC.XXXX and XAU.XXXX that pays out in gold IOUs?

No, think of it as an IOU that's pegged to gold but instead of redeeming it for an ounce of gold you can only redeem it for an ounce of gold's worth of bitcoin.

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2 hours ago, brianwalden said:

No, think of it as an IOU that's pegged to gold but instead of redeeming it for an ounce of gold you can only redeem it for an ounce of gold's worth of bitcoin.

Is not his is how ETFs work? They are not actually pegged to commodity, they follow index.

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3 hours ago, yvv said:

Is not his is how ETFs work? They are not actually pegged to commodity, they follow index.

Someone who knows how ETFs work can answer that. If @stevenzeiler is running this thing, isn't he betting that bitcoin will outperform gold? Otherwise when people redeem their IOUs he'll have to pay out more than they paid for them.

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3 hours ago, brianwalden said:

Someone who knows how ETFs work can answer that. If @stevenzeiler is running this thing, isn't he betting that bitcoin will outperform gold? Otherwise when people redeem their IOUs he'll have to pay out more than they paid for them.

Not if he can buy and sell large amounts of gold on gold market. He would not redeem his IOUs for gold directly, but instead guarantee that he has enough bitcoins to buy them back at a price of gold. He would not even need to deal with physical gold but instead trade gold futures or other assets backed by gold. When the demand on his IOU is high and a price goes higher than the price of gold, he would go to futures market, and buy a large chunk of gold futures, and issue more IOUs driving the price down. When a lot of people want to cash out and drive the price of IOU below the price of gold, he would sell his futures, and bought his IOUs back "pegging" the price back to gold. He would make profit buying at discount and selling at premium. And people who believe in gold would benefit from keeping their savings in an asset which closely follows gold price in a super cool cryptographic ledger. When somebody starts doing this in ripple (or other ledger),  it will rocket up to the moon.

Edited by yvv

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