That's a bad idea. Imagine the monero price goes up. You'd get a cycle where nobody would buy stuff from a service like this. Then price is lower than the listed price, you get stuff cheaper than itst worth. What this does is move the volatility to product demand instead of currency exchange rate. It doesn't stabilize anything.
this post was submitted on 02 Feb 2024
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I do see your point, but my whole thought is that people want to see stable prices for things, which this would do. As far as people buying more when spot is below there would be reserves and a reserve limit where sales would be totally cut at that limit.
I would not like to pay $5 for a big mac today and tomorrow it costs $7 instead. That would be incredibly annoying. At least this way, you would know exactly what the price was.
it needs organic stability and you're also comparing the stability with fiat.
Probably best way to have stable crypto is to have the crypto inherently provide some kind of service, something like filecoin. In that case value of crypto would be closely tied to memory/storage price.
@RealBot @mister_monster How about the “service” of being a trustless censorship-resistant privacy-respecting currency?
That seems like a usecase in itself that doesn’t require anything more.
I dont understand what service you would give or get from that.
Something like filecoin, you can provide storage or buy storage without need for some external exchange. Because it is basically "baked in" the crypto (or should be, i am not completely sure it works that way).
Ok yeah, sure.
But just being currency isn't enough for currency to be stable. So i dont see how that should affect its stability. The major reason why regular currency is stable is because it is already widely used.
What's the use case of dollars besides currency? Euros? Yuan?
They're stable because they're used. Are they really stable? Or do they appear stable because you get paid a set rate an hour in them? When prices are going up at the store, are they stable? When the price of computers goes down, are they stable? Is what stability they have a natural occurrence of their widespread use, or the result of central bank manipulation?
Sure, they are not perfectly stable, there is always inflation (sometimes more, sometimes less).
But its not as volatile as crypto. In last 24h difference between monero high an low is ~2% (which isnt terrible by itself but on a longer period its larger difference) and regular currency effectively has almost no volatility in 24h period.
Acording to google 1 year inflation was ~3.4% for dollar. (so probably diff hig low is just a bit higher) Difference between monero 1 year low an high was greater than 20%. So monero is something like 6 times more volatile. (and i am not talking about inflation, but volatility)
So its not exactly the same situation regarding stability.
OK but this 20% volatility is priced in dollars. This isn't price, this is exchange rate between USD and XMR if you treat XMR as a currency. Which one is the unstable one? Well, we call the one that is less often used as unit of account unstable. But prices of goods in the unit of account, in this case dollars, is not stable. Do you understand what I'm trying to tell you? All currencies are free floating. There is no "stable" currency. Inflation is a rough aggregate measure of prices, it's not uniform. Price of food goes up, price of computers go down, you do some math based on the size of those industries and some wonky tricks and you get a number that you call inflation.
You can't get a currency without volatility. All you can do is have market depth to absorb price changes, like you said, USD is less volatile because it's more widely used. Volatility is a measure of risk, and in fiat, the risk is priced in because it's guaranteed to devalue, it's no longer risky to hold dollars, you already know you're going to lose capital. Also the risk that a central bank can devalue your currency without warning is understated and this creates market distortions. If the inevitable outcome of hyperinflation were taken into account there would be much more volatility. Most fiat currencies are more volatile than XMR.
Inflation is a type of volatility. Inflation is just volatility with guaranteed downtrend in value. I'll take volatility to inflation any day.
But that only guarantees safe one way transaction. If that is all you want thats ok.
But for safer transaction you want something like smart contracts. So you can actualy know you are gonna get what you buy for example.
Without some kind of smart contracts you are actualy relying on exchanges (so in reality it isn't really trustless).
Does monero have some kind of smart contract mechanism? In which case I am talking nonsense😂.
Not interested in such a service but I encouraged to hear people want to see stability. I think the more businesses we get that operate frequently with XMR the more stability we will see.
Most definitely. Getting them is the frustrating part though.