Enhancing UTXO cryptocurrencies with "Gold Coin Proof"

Started by RickyChhajed, Aug 31, 2022, 01:56 AM

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RickyChhajedTopic starter

One approach to stabilize cryptocurrency values is to link them to regular currencies or physical commodities, but this centralizes the system and requires trust in the issuer.

Tether, for example, took years to reveal its reserve collateral and even then only a small portion was in cash. Users are also unsure how to resolve disputes with Tether, which has the ability to ban/block users. Despite these issues, stablecoins like Tether remain popular because they can be traded on crypto exchanges and blockchain platforms.

Another approach to stabilizing cryptocurrency values is through volume adjustable tokens like Ampleforth, which adjusts the number of tokens in circulation based on their price target. However, this can be difficult for users to understand and use effectively.

A newer solution is the concept of dual loop cryptocurrencies, such as BitBay's Dynamic Peg technology. This system uses two loops - one for trading and one for stabilization - to keep the value of the currency stable without relying on any external peg.

Overall, while there are benefits and drawbacks to each approach, the search for a stable and decentralized cryptocurrency continues.

BAY is a Proof-of-Stake (v3) cryptocurrency that uses additional features to stabilize its value without relying on external pegs. Every satoshi has a sample number that determines its liquidity and cannot be changed. There are reserve and liquid coins, with the Peg Index determining which coins are which. Liquid coins can be used for transactions, while reserve coins are slower-moving.

Users participate in mining/staking and can vote for inflation, deflation, or status quo. An attacker would need to capture 51% of the coins to manipulate inflation/deflation. While it's a new approach to stabilization with investment opportunities, there are entry difficulties since it's a pilot project. However, it is a full-fledged cryptocurrency with bitcoin script, multisig, and locktime.


The TON cryptocurrency of the Durov brothers has a mechanism to combat volatility through a reserve fund, but its manual mode is unreliable. Many stable coins are pegged to the dollar, which poses the question of whether cryptocurrencies should be tied to fiat. It may be better to tie them to a commodity basket or to energy. Possession of cryptocurrency could give the right to receive energy directly by compensating for payment for electricity or gasoline at a specific rate.


The limitation on the amount of money in cryptocurrencies when using the proof of work approach leads to an increase in complexity, ultimately leading to the impossibility of issuing new coins and higher transaction fees.

This approach may not be suitable for the new financial system, but a generational change could overcome this limitation. The number of transactions per second is growing, and the approach still has a lot of room for growth.