Thursday, December 5, 2013

Enhance Bitcoin with an artificial central banker

Simple, connect bitcoin miner technology to billion prices project and put in your adaptive filter. The miner technology can trade on the currency markets, keep its currency on a standard, observable, digital account. Bitcoin would earn a seigniorage account, which everyone can see, in real time. The seigniorage account is nothing more than the residual error in the adaptive filter. I know a dozen signal programmers who could rig this up. Make it a PHD project.

Anyone can do this, there is no technology or legal barrier. Make private bots, public bots which trade adaptively to some indices of interest.

What about accumulated fiat?

The adaptive monetary filter would be trading paper against the billion prices, keep the dollar stable, essentially. The artificial banker would be more accurate, and as humans inflate their currency, the artificial banker would accumulate currency in its old style account.  The artificial banker would want to erase this money, but how? It is tied to a standard bankers account, and the artificial banker induces moral hazard when it is known the paper account is to be erased. Hmm...

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