Idea: Progeny AltCoins. Think of Bitcoin as Gold and a specifically programmed AltCoin-in-a-box as currency directly redeemable for Bitcoin held in a “Fort Knox” wallet.


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So I have this idea which I haven't seen anywhere else, and wanted to share it to see if it makes sense or not.

My understanding is that bitcoin has some issues with transaction speed (and/or transaction cost) which causes people to worry about its ability to go mainstream and establish itself as a core global currency.

What if instead of expecting bitcoin to be as practical as USD, EUR, GBP etc, we actually thought of it more like the Gold of crypto?

Back when we tied our national currencies to gold, the paper notes were meant to be literally redeemable for gold (or silver, or coin, etc). The currency was tied to a guaranteed asset.

Paper is much easier to carry around than gold. It is much more divisible (infinitely so) than gold. It is more practical in virtually every way possible – it just has no value outside of the promise it carries. It promises to be worth gold. So as long as people believe gold has value, the paper has value. And whether gold is convenient for handling transactions or not is irrelevant.

So why not use Bitcoin the same way?

We need to program a specific "AltCoin-In-A-Box" program which anyone could easily run and create their own AltCoin.

It would work like this:

During setup of the new AltCoin, the new blockchain programmatically ties itself to a bitcoin wallet, which we will call "Fort Knox". An exchange rate is chosen, for example, 1BTC = 1000 ProgenyCoins, and the setup is complete.

An interface is then made available which allows people to buy your newly created ProgenyCoins from the "Federal Reserve" of ProgenyCoin-istan. Register your intent to buy (provide bitcoin address where BTC are coming from, and ProgenyCoins address where your ProgenyCoins will go), then send 1BTC to "Fort Knox" and await the (slow, painful, horrific) BTC transaction to be confirmed.

As soon as the BTC transaction is confirmed, "The Federal Reserve" sends you 1000 ProgenyCoins. "The Federal Reserve" can produce as many of these coins as it needs to meet the BTC deposit in Fort Knox, and will only pay out ProgenyCoins for that reason. Similarly, sending ProgenyCoins to "The Federal Reserve" will allow you to withdraw BTC to a BTC wallet of your choosing.

Buying ProgenyCoins from the fed on this brand spanking new tiny blockchain which is optimised for rapid, free transactions has now given you a practical local currency to use in everyday transactions which doesn't require the bitcoin chain, but still benefits from all of the value held in the bitcoin chain. If bitcoin rises in value, so too will the value of your ProgenyCoins. And since all of these new progeny coins are being created by locking BTC up in "Fort Knoxes" all over the planet, the value of BTC is likely to increase to match the increased demand and lost supply.

Basically, the parent BTC blockchain is spawning lightweight, mostly-independent, children chains to do the transaction work for it. Hence the progeny reference. Obviously.

Considerations and Risk

  1. By making the original code for this concept a well established opensource piece of software, the "AltCoin-In-A-Box" certificate of BTC redeemability will guarantee the value of every new ProgenyCoin you encounter. Presumably the "AltCoin-In-A-Box" software could also include a generic platform which will handle all such coin-wallets in one place.

  2. Each new coin will need to gain enough nodes/miners to ensure security against attacks before people can be confident trusting them to not steal their money. Perhaps an international organisation can help provide early stage node hosting for a fee paid by the originator of the currency? (I haven't really put any thought into the incentivisation for 'mining' – I guess transactions would need a miner fee to ensure people did run full nodes?)

  3. Many more I haven't thought of, I am sure.

Thoughts?

submitted by /u/Aegist
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247 BTC

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