Silk Road forums

Discussion => Silk Road discussion => Topic started by: Proudhon on July 07, 2011, 12:48 am

Title: Silk Road Credit--- Solution to BTC price problem?
Post by: Proudhon on July 07, 2011, 12:48 am
So I had an idea I thought I would run buy you guys. Suppose The Silk Road staff sells credit to be used on silk road instead of BTC. A customer would buy this credit using Bitcoins at the current market value (plus any fees that staff desires/needs for this service.) The credit can be denominated in a more stable currency such as dollars/euro/pounds etc. Staff can then dump them into (for example) one big Mt.gox account and convert them into US dollars. The money can just sit there at a value pegged to the dollar instead of fluctuating wildly. The customer can then use the Silk Road credit to buy from vendors (with the normal escrow system already in place but with credit instead of BTC.)

Once the vendor get the credits they can cash it in at the new exchange rate, and get bitcoins back that are equivalent to the dollar value of the credit. This way It doesn't matter how much the value of bitcoin changes in the time it takes for the order to ship and the funds to be released----- the vendor will get a quantity of bitcoins equal to the price AT THE TIME OF CASH IN.

I suppose a probable drawback is that this may involve more attention/typing work for Staff.
However, I think that this can be offset by the fact that Silk Road can gain revenue buy selling Store Credit at a certain premium(easier to do more work if you are getting paid...). Also Staff could limit the sale of store credit to certain days of the week or whatever.

Also IDK what this would involve in terms of coding and how much of this process could be automated.
Any Ideas ladies and gentlemen? Pro's or Con's?
Title: Re: Silk Road Credit--- Solution to BTC price problem?
Post by: BitShuffle on July 07, 2011, 01:10 am
Yet another who wants Silk Road to be as convenient and as stable as Wal-Mart...

- Bit
Title: Re: Silk Road Credit--- Solution to BTC price problem?
Post by: deniedwings on July 07, 2011, 01:48 am
Essentially what you are saying is that when you buy something and put the money in escrow SR will sell your bitcoins for $$ and after the funds are to be released by escrow SR will buy BTC back and then transfer them to the seller.  Its a good idea, however mtgox has already said they will cooperate with money laundering investigations and there can only be a relatively small number of mtgox accounts that would churn through that much buying and selling day after day after day.   It would be pretty suspicious.  Hopefully the price stabilizes.
Title: Re: Silk Road Credit--- Solution to BTC price problem?
Post by: kingsandman on July 07, 2011, 01:50 am
ok man, first of all silk road would never want a central mtgox account with all of those funds in it, they wouldn't want a central account period.

just about any vendor you turn to these days, are accepting things like pecunix, liberty reserve, all of which fluctuate in price. the exchange rates also fluctuate in price. bitcoin is no exception.

the coding overhead for which you are asking might require some major changes to the whole system.. not sure SR feels like doing that.. however:

420med4u posted a similar topic, and his idea might have a good standing. here's my interpretation (from a coders perspective.)

-the seller can be give the option to specify a 'target price' when he puts an item up for sale.
-to account for fluctuation, SR will add a certain value onto the price, which probably will be calculated using 2 things:
 a) the current price in bitcoins
 b) the total for the item in question (bigger price, bigger adjustment)
-the buyer will buy using the full price as listed on SR
-escrow, when releasing the funds, will release the 'target price' to seller, and '(total listing price - target price)' back to the buyer.


this sounds a lot simpler to add. what are your thoughts?
Title: Re: Silk Road Credit--- Solution to BTC price problem?
Post by: RedRocket on July 07, 2011, 03:10 am
420med4u's idea is brilliant....good brains...
Title: Re: Silk Road Credit--- Solution to BTC price problem?
Post by: Mitanox on July 07, 2011, 11:30 am
Another option is to make your prices so high as a seller that you can survive it if the price of btc goes down like 50% ;)
Title: Re: Silk Road Credit--- Solution to BTC price problem?
Post by: ketuvim on July 07, 2011, 02:30 pm
this will not work at all.  now the risk is simply moved from the seller to SR.  SR would have to maintain a (large) float of btc while keeping most of the funds in cash to avoid liquidity problems when the value of BTC ebbs and flows.