Quote:
Originally Posted by Mat Cauthon
That doesn't really work though. How can you build the peg into the protocol without trusting some third party?
everything relies on a third party...the foundations that create and manage these things are third parties (fairly dysfunctional ones at that), we need banks and credit card companies (3rd parties) to move money onto exchanges (more 3rd parties) to convert our money to something representing a digital asset...but but but you aren't even on the blockchain yet...you are just using a custodial account where the for-profit exchange acts like a bank (without safeguarding regulations). when you finally move it to the wallet (provided by 3rd party) the transaction is facilitated by miners (3rd parties and fairly centralized). we're putting our trust in a few parties here
a peg is simple...it just matches circulating currency with whats in USD reserves held by reserve providers, and there could be many reserve providers for a single currency peg blockchain and they could compete for the service not much differently than miners do today. its just another group that needs to be rewarded for their services.
people seem to think a peg is more active than it is...it should not be. you dont change circulation based on current price...you make sure circulation equals whats on reserve, thats it. If there is a discrepancy...the arbitrageurs jump in to make an instant profit and return the coin to parity. anytime you see a peg 5% below its value. just buy it, it will get back to parity