Re:Enter 'petro': Venezuela to launch oil-backed cryptocurrency
by repsilat on Sunday December 03, 2017 @09:55PM
(#15841160)
They can set the prices with a simple standing offer to buy and sell at a given rate.
If the Venezuelan government will sell anyone one oilcoin for a barrel of oil, nobody would buy one for more. If the Venezuelan government will buy an oilcoin for one barrel of oil from anyone, nobody would sell one for less.
They almost certainly won't be freely exchangeable to this degree, but there is no problem with price controls in theory.
Re:Enter 'petro': Venezuela to launch oil-backed cryptocurrency
by mlevental on Monday December 04, 2017 @05:58AM
(#15843002)
you're assuming no one would undercut or overbid them. exactly the point is there's no intrinsic reason to assume that
Re:Enter 'petro': Venezuela to launch oil-backed cryptocurrency
by tlrobinson on Monday December 04, 2017 @06:38AM
(#15843159)
Why would anyone sell an oilcoin to me for less than a barrel of oil when they could sell it to the government for more? (and vice versa)
Re:Enter 'petro': Venezuela to launch oil-backed cryptocurrency
by drcode on Sunday December 03, 2017 @09:56PM
(#15841164)
If you want to fix the price of a currency between (for example) $0.95 and $1.05, you simply offer to sell to anyone at $1.05 and offer to buy from anyone at $0.95. As long as you don't go bankrupt, you can keep doing this and pretty much guarantee the price will never exceed that range even on other market, or people will simply arbitrage the excess away.
Look at US treasury bonds: the US can adjust the interest rate on them, but it's the market (dealers holding auctions, etc.) that actually sets the price of them. If everything else is a bad investment (like during the 2007 recession), people will actually buy the likely-negative-yield treasury bonds at a premium, because they need to stick the money somewhere and everything else looks to have a worse NPV. As such, the market value of any security can exceed the value of its call option.