Who likes Karma coin ? You are probably semi-interested in the least if you are reading this right now. I recently read an article about how Karma is back in the BTC trading pair rather than just KARM/LTC. Also the article spoke of forking it off so others can build on the protocol or something. They call it a working sidechain, switch to x11 algo. Well i dont understand everything about that, though it does make it unique and sound a lot like Bitcoin. The most interesting part of the informative update was this:
“Additionally, Karmx will be a mathematically-controlled 1-way peg that introduces pricing stability into the Karma ecosystem during its PoW period. Karma will be sent to the sidechain, exchanged for Karmx at a rate commensurate with the price of gold (or a composite or equity with greater stability, such as the DJIA; open for debate)”
Well I'm officially in the debate. Because this is a complicated idea and requires diligence. Peg a crypto to a precious metal ... hmmm ? Sounds like a good idea huh ? NOT !!
Gold is extremely
volatile
Although gold is very rare causing a historical price performance that defies all. Its the last thing you want to peg a crypto to. First of all Im currently doing research on the inverse correlation between the price of BTC and GOLD. YES to the naked untrained eye many would look at the chart and think that BTC and GOLD are going up together. They are not. I found a negative correlation going back to early 2013 that shows BIG money may be coming out of gold and moving into Bitcoin. In my opinion this is the main cause of the negative correlation and responsible for more than 1/2 of it. Its not perfect at about .75. Sometime they both trend sideways to slightly higher together, but the big moves lead each other by approximately 6-36 hours in advance. I'm not the only person who sees this inverse-correlation. Peter Schiff CEO: Euro Pacific Capital http://www.europac.net & Euro Pacific Precious Metals, a respected investor and known gold bug ( someone who loves gold like they love their mom. The guy has a debit card made of gold blocks that break off in 50 USD chunks for Christ's sake) announced earlier this year he will sell gold for bitcoin... you heard me. I think he saw the relationship, and now he is exasperating it. A few years ago I've also harnessed a trading strategy in which I would short gold at peaks. When gold hits a 52-week high 3 days in a row, you simply short and wait. The strategy works well and when gold falls all the sellers come out of the wood works and cripple the price for 3 to 6 months. I've stopped utilizing this strategy due to poor tracking in the 'short-gold' ETF's.
Gold also has the potential to be overvalued. It doesn't have many uses. Many value minded people think Bitcoin has more value than gold because of the platform and its uses (and ability to make change to the 8th power). A look at the definition of what makes a good currency also makes BTC appear to have more value than gold.
- Portable – can fit in a pocket
- Lightweight
- Nonperishable – won't rot
- Strong and durable – won't crush, rip, crack, break off, or bend out of shape
- Can get wet without being ruined
- Can be produced in standard sizes so that any two pieces are identical
- Can be marked or made in different sizes to show different values
- Can be easily stacked or stored
- Cannot be forged, adulterated, or thinned to lessen its value
- Supply is large enough to be available to everyone
- Supply is limited enough to preserve its value
- All users believe in its value and agree to trade with it
- So as you can see Bitcoin fits more of these attributes than gold. And about pegging KARMA to the DJIA ?? Heavens NO ! the DOW JONES INDUSTRIAL AVERAGE !! You'd be safer pegging it to corn. If it were up to me I would not peg a crypto to an equity because cryptos have the potential to outperform all equities by 1000's of %. To prove my point the Wiklevoss' are doing the opposite. They are going to peg an ETF to Bitcoin to capture the potential of a crypto in an equity. Picking an asset to peg a crypto to is tricky and requires a lot of diligence. If someone told me " its already been decided, were gonna peg it to something" then I would strongly recommend choosing Silver or Copper rather than gold. Copper reflects real growth and building in the economy. Silver is in between. Not as rare as gold but has more uses than gold. Almost as volatile as gold, but the risk is to the upside. I would peg it to the DBA and Silver 1/2 and 1/2. The DBA is the powershares agriculture index. It tracks the price of grains ans such. That way KARMA will take into account the inflation that hurts our wallets the most, but isn'
t counted in the govt. numbers........ FOOD. ;)
I have no position in Gold or the DBA. I own about 150,000 KARMA and plan to buy more in the coming months. I also own some POT coin and mine Bitcoins in my spare time.
