gistfile1.txt

Idea: Digital commodity that acts as a source of credit and currency exchange.

Bitcoin already provides a good way of creating a chain of digital transactions that can't easily be faked. This kind of transaction could be tied to something more elaborate. Among the possibilities, a distributed system for generating currency in a manner that is similar to a loan against collateral.

1. Alice generates a hard hashes against genesis block containing her public key.
2. Bob (and everyone) verifies that they are indeed hard and against the genesis block.
3. Alice sends Claire a transaction signed with her public key.
4. Bob verifies that the transaction is signed by someone with Alice's (i.e. the hard hash solver's) public key.

So far, I'm describing bitcoin. However additional rules can be added to enable conversions like this:

5. Claire turns a unit of her old currency into a new one.
6. Bob sees that Claire no longer has the unit of old currency, and has a unit of the new currency. He assigns a backing factor of 1:1.
7. Alice solves a hard hash against Claire's new currency. Now there are a total of 2 units in that new currency.
8. Bob sees that Alice now has a unit of the new currency. He assigns a backing factor of 1:2.
9. Alice turns a unit of the new currency into 1/2 unit of the old currency.
10. Bob sees that the currency only has 1 unit. However it is only backed by 1/2 unit of the old. The ratio stays the same.
11. Claire turns 1 unit of the new currency into 1/2 unit of the old currency. It's less because she was paying Alice to make her currency verifiable.

This is just an example of what is possible.