Using Ethereum to transmit CASH?

Correct me if I'm wrong here, but it seems like one of the many, many opportunities Ethereum offers is the ability to transfer cash.

Person A creates a colored coin called "One U.S. Dollar Equiv." and sells it to Person B in exchange for $1 worth of BTC.
Person A also creates a contract to hedge against downside risk in BTC prices, by guaranteeing the Person C (who receives the coin from Person B) will redeem the "One U.S. Dollar Equiv." colored coin for *exactly* $1 worth of BTC, no matter what the BTC price happens to be at the time of redemption.

This alone could be groundbreaking! One of the things "average joes" dislike about crypto is the instability of prices. Your average guy on the street wants $800 today to be worth $800 tomorrow. Not $750, and not $850. But exactly $800. If Person A creates a unique colored coin which embodies the exchange rate at the time of issue (let's say $800 for 1 BTC) and that coin (being a colored coin) can be tracked through the blockchain, no matter who ends up with that coin or when they end up with it (Person C, let's say), the colored coin is "programmed" to give back exactly $800 worth of BTC, no matter if BTC is worth $10 per coin or $10,000 per coin at the time of redemption. Person D, let's say, has agreed to be the counterparty to such an offer. When Person A sets up the contract, Person D knows that bitcoin prices could collapse, but they could also skyrocket. So he accepts the downside risk in exchange for the upwards potential (he believes that when Person C goes to redeem the coin, BTC prices are likely going to be greater than $800, so he will make a profit).



  • FreddyFenderFreddyFender Member Posts: 39
    Colored coins could be levied in batches of hedged upward/downward/neutral and seek balance through arbitrage of daily funds. reconciling the losing coin hedges and covering with winning bids, although the temptation is to always hedge upward, therefore creating pressure to "cheat" with fudged numbers. Ethereum could also provider the clearinghouse that everyone shares and prevent the fudging upward threat.
  • HammerHammer Member Posts: 20
    Yes, theoretically its possible. Would like to hear more comments from devs about this possibility
  • celticwarrior72celticwarrior72 Member Posts: 83
    This would probably require some kind of gateway system to get cash into and out of the network.
  • spencerspencer Member Posts: 2
    edited February 2014
    Why is this better than using a service like Coinbase / Bitpay? The transaction fee might be lower. Is that so revolutionary?

    Also, we're still talking 100% digital -- not cash, ie paper.
Sign In or Register to comment.