I agree that oil, gold, whatever markets will be valuable for the bitcoin economy. But as they introduce a single point of failure, they should be kept outside of the bitcoin protocol. What is wrong with creating trade contracts, signing them with your PGP key and establishing a web of trust between traders? This approach can be extended upon in a bottom-up manner, it can use bitcoin as a currency, but it will still not be able to damage bitcoin security.
What is wrong with contracts, PGP keys, and webs of trust? The problem with them is they are hard to explain to Grandma. It's much easier to tell Grandma, "See, you bought some bitcoins, but you can store them as USD, Euros, gold, oil, . . . "
It is also hard to explain bitcoin's technical details to grandma. Maybe even more than public key crypto and webs of trust. This is what the client software is supposed to abstract away, and this can also be done for out-of-chain contracts etc.
I think there is nothing wrong with creating distributed infrastructure to trade gold, oil, currencies etc., but I don't think it belongs into the block chain. The value of bitcoins can be verified by every peer in the network, and I think this is what makes bitcoin so powerful. Tradable values based on currencies or commodities can only be securely verified by a relatively small subset of the network, and therefore introduce security issues not otherwise present, while still requiring resources from the whole network.
I disagree with the recent populism targeting at artificially stabilizing the bitcoin currency. Bitcoin will stabilize itself like any other currency when we establish a prosperous bitcoin-backed economy. For this to work, the most important next step will be merchants growing up and providing services or goods for real BTC prices instead of constantly adapting their prices to the exchange rates. After that, the market will stabilize the price by itself (and probably lead to an even more stable currency than what certain national currencies currently are due to the governments becoming more and more indebted).
I hope you are right that bitcoin will eventually stabilize. However, price volatility favors speculators at the expense of people who just want to use bitcoin to engage in commerce or store value. The assertion that bitcoin will stabilize may be true, but it can't be proven. I'd rather have the protocol provide stability for the people that want it, and transfer the volatility to the speculators who want it.
New technology is always more volatile than established business tools. But I think there is a good chance for the current bitcoin implementation to fly for quite some time - sufficiently long to use it for business.
Moreover, I do not think your recommendations can prove stability, either. In fact, they take away a core characteristic of bitcoin that could be a base for its stability (once the business volume using bitcoin grows). No stable currency as of today is valuable simply because you can trade it to another currency, or a commodity. This kind of stability can only be backed by one or more individuals who can ensure the possibility to trade it for whatever they propose. Once the resources of these individuals are exhausted, you reach the limits of this kind of stability. True value of a currency comes from the vast range of goods or services that can be bought using that currency. So, every member of our community who starts doing business using bitcoin provides his share of the stability we all want.
I do think it is an interesting idea to have similar currencies with some other characteristics (for example a different algorithm to manage the amount of coins {which could, in theory, also be backed on commodities etc.}, or using different crypto algorithms), but I think they should have their own block chain and network so we have security through redundancy, rather than a single block chain that becomes so complex that no one can ensure it is robust enough to sustain attacks. Still, I assume the original bitcoin might still be the one that will turn out to be superior.
But I also think it is too early for this to be built. It will be interesting once there is enough freely available software to setup exchanges, do algorithmic trading etc., so users don't have to care about all the virtual currencies manually.
Please do also note that I cannot be bribed with 0.1 BTC or whatever in order to write something that pleases someone else. I have my own plans on doing bitcoin business, and I have found that there are people in the community who agree with what I do because I received BTC donations both anonymously and by prior agreement. I am always open to new collaborations with people from the bitcoin community, but I will not engage in business which is easily recognizable as being bound to fail.
Please don't be insulted if I offer to pay you for your post
The payments are kind of a gimmick to spur conversation on a topic that I am really really interested in.
Well, the way I read your offer, I got the impression that just posting here might make me look like I just do that because of the offer. But I actually enjoy to discuss with people who wish to take bitcoin to its next level (as I do). Even if we have rather different ideas. I think we all can only learn from good discussions. If you wish to send coins, I'm also fine with that, but my primary goal is to be a responsible member of the bitcoin community who provides his thoughts for others to read them.
