Thursday, July 13, 2017

What does a coin exchange and S&L have in common?


A coin exchange is that same entropy maximizing local sort and match. The coin exchange should share currency risk, trade book uncertainty in the perfect system.  A very small, but finite risk.

Now, let that risk be larger, run a lower precision pit. You will get an S&L by any other n
ame, with flow typically always loan to deposit.   Just change the names, and write a sorting algorithm that has an inverse, the even money algorithm, thus making a neutral coin issuer, or a bound money market.

One can get sophisticated, separate price variance from trade book uncertainty.  All the same, really, matching two flows, congestion management.  Just remember, no time bets.

Running in  negative territory

Run your standard pit as a branded bitcoin side chain, and go ahead, issue extra coins. Legal as long as it is part of the operational pit boss contract, it has an even money bet, after priced for asymmetric queues. No worse than the risk taken from an S&L issuer. Outside risk is bound, generally to one price variance. So, BofA issues Btc undr its own wallet, let's everyone use it via the BofA S&L pit.  There might be as much as 5% more bitcoin under the side chain than verified in the  block chain.  No problem, just supply the even money trading bot. On bankruptcy it is musical chairs.

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