Is it Possible to Peg Fiat to a Crypto Token?

Is it Possible to Peg Fiat to a Crypto Token?

Many in the Bitcoin world have wanted to emulate the success of fiat currency's stable unit of account. Projects such as Bitshares have proposed doing this with ...


What's up, party people? Chris DeRose here, community director of the Counterparty Foundation, and today I'm doing a video from HackMiami. It's a small regional conference we have here in South Florida set up for all kinds of hackers. White hat hackers I think is the primary focus, I think. You never know with these things. Behind me is the introductory booth here and it makes for a nice backdrop for some Bitcoin questions. So today's question was brought to us by Rizorian, I think, is how you pronounce your name.

You know who you are. Thanks for the question. And the question is this: Is it really possible to peg currencies to Bitcoin by way of side chains, or colored coins, or... It was kind of left undefined from there.

So is it possible to peg currencies? And I think that it's a complicated issue that really needs to be discussed in some probably different terms than you're expecting. So first of all, do I think it's really possible? I don't really know. I would guess that it is possible to a very small degree or to a very risky degree. And certainly we see that happening right now with BitShares. BitShares is trying, I guess, this infamous experiment right now of simulating the dollar price with their currency. And that whole issue is probably the subject of an entire video in and of itself.

I would highly encourage you to look at Preston Byrne's videos or articles on the matter. He did some excellent stuff there. But I think that this kind of gets into the nature of what it is to actually hold any tokenized resource. In a world where you have a simulation of a dollar and there's similarly a basket of dollars, it begs the question, which one is more valuable to you? And for me I'd rather have the basket of dollars as long as it's auditable and/or insured and it's held by a reserve that I can trust than the simulated dollar. And I think that that's probably the path that we'll be going in the future. I think that we'll be seeing a lot of banks, probably very traditional banks offering things like dollars and whatever other securities they have in custody, being held with a high degree of auditability and security controls and insurance and things like that.

I think that that's a very useful model. You would expect that in that world, if there's a simulated price, there wouldn't be any reason to use that simulated price so that price would probably be lower than the real thing at that point, but then that would reflect the risk in actually having what is a simulated asset versus a real asset. So I don't think that it's that possible, probably. I will say that we saw in the banking industry these very complex financial products, derivatives, contracts that were meant to do things like this in some capacity. And those were very competent experts that were working on these problems. And I think even in many of those cases, they blew up in their face.

So I think that if it is possible, it is probably something that would not be solved by many of the people in the Bitcoin community or probably be solved by people in the finance community. And it probably won't look like anything that you are really looking forward now is my guess. But I don't know, time will tell. There's a lot of people working on the issue, so there's certainly been some ingenuity in the field before. But we'll find out as the rest of you, and..

. Oh, we've got mobman over here! mobman! mobman, why don't you get on camera? mobman, why don't you introduce yourself? I'm mobman. You can look him up online. That's probably enough said, right then and there. mobman, what do you think about Bitcoin? It's crypto-currency. What's to think about? There's probably a lot more opinions in that brain than he's expressing if I had to guess.

It's a big brain. There's a lot of good stuff in there. It's only on one cylinder right now because we're at the HackMiami conference, so it's like, "Oh my gosh." We're going crazy, we got drinks, and you missed it because you're on the camera. We're on Bitcoin TV over here. Hey, why don't you say goodbye to Rizorian for me? Bye, Rizorian.

Rizorian, I think that answered your questions. If you liked this answer... Hey, you're not going anywhere. We're not done with you.

If you liked this answer and you have some questions of your own, why don't you tweet me on Twitter? @derosetech is my handle. Leave your questions below and subscribe to the channel. Later, party people. Later, party people? Later, party people. Later, party people. If you got this online, you can edit shit.