Bitcoin Forum

Hi,

i want to hear opinions about the trustworthiness of the above named coins since i'm searching an alternative to NuBits, that i used till now to hedge against a falling bitcoin price. To protect my value. Though in the last price rise of bitcoin i noticed that the liquidity bot, that creates the buy and sell orders on the exchanges, simply did only create small orders on the buy side. Which means i could not exchange my nubits to bitcoins. Which means they lost their pegging to the USD for me then.

That's why i search alternatives. I was told some coins in this thread here: https://bitcointalk.org/index.php?topic=1211057.new#new and on another place but i would like to hear opinions about how trustworthy these 4 suggestions are.

Thank you!

Trustworthiness of the Bitshares dev's is not an issue.  They don't hide behind computers and have been very active over the years at conferences.  They even hold weekly mumble sessions you can jump on and ask questions etc...

The 2.0 wallet just came out and with that will be bugs and issues so use it accordingly.  OpenLedger provides a nice Bitshares on/off ramp especially with their nano debit card.  Overall it's a great solution where you can trade other chains such as BTC without having to trust a 3rd party exchange with both sides of the bet.

I will add, research yourself such as GitHub repositories to get an idea how much effort is going into these projects. 
https://github.com/bitshares (BTS 1.0 had 8311 commits, BTS 2.0 so far has 1046 commits.  Shows you how active they are)
https://github.com/cryptonomex <--creators of bitshares that are also creating specialized chains for the music industry etc... 

Thanks for your insight into bitshares. So how does the pegging to 1usd work? Will bitshares 2 always have that value? How is that value establisheD?

It is complicated. This explains it better than I can: https://bitshares.org/technology/price-stable-cryptocurrencies/

Some links to start reading.  These cover 1.0 however 2.0 just improves upon all of this.  Lots to read and comprehend, it will take more then a day!

http://bytemaster.github.io/article/2014/12/18/What-are-BitShares-Market-Pegged-Assets/
http://bytemaster.github.io/guest/2014/12/22/How-BitShares-Works/
http://bytemaster.github.io/article/2015/01/01/How-to-create-a-stable-decentralized-crypto-currency/

His blog in general is a great source of crypto information.  http://bytemaster.github.io/all/


2.0 specifically:
https://bitsharestalk.org/index.php/topic,16744.0.html

I trust BitUSD. Coinousd can be transfered to BitUSD. I notice some exchanges accept BitUSD deposit.

TetherUSD is a USD token stored on the Bitcoin blockchain. You do have to trust that they aren't going to run away with the USD in their bank account that backs it.

It'd be nice if they wrote an Android app version of their wallet.

I checked out coinoUSD on poloniex but it seems they have a huge spread there and no volume. So they are useless for me.

Bitshares 1 seems to be run on poloniex, will they update on version 2 soon??

TetherUSD is used on plo directly but the orderbooks are too thin to exchange really there. And i don't see a full relation to the US-Dollar.

I wonder if bitshares 2 are really better and bitusd? Where do they trade best and what is the insurance on bitusd that they can back the value and don't run with the backing?

At the moment it looks to me like only nubits have the low enough spread and good enough filled orderbooks to use it. Though not really in times of crashes or fast rising prices.

Poloniex upgraded to bts 2.0 last month.  Have you read any of the links I posted above or checked out the wallet?  The links will answer your questions on what "backs" BitUSD, BitBTC, and all the BitAssets.  Check out the hosted wallet by OpenLedger https://bitshares.openledger.info/

Well, TetherUSD is treated the same as USD on Bitfinex, so that's a positive.

He didn't, take note he is running a signature campaign.

BitUSD has been more liquid in my use than Tether.  I love the elegance of Tether, but there is simply too much spread on their books where I trade to make much profit.

I wanted to check out bitshares but then i was told that it must be an error that bitshares is worth $1 always. I checked the prices on poloniex and it really doesn't look like a bitshare, you say it is version 2, is worth something like that, nor there is a inverse connection to the bitcoinvalue. The bitshares are only worth some K satoshis. So i don't see where the connection is. Besides, only one side of the orderbook seems to hold enough coin value to make it possible to exchange a reasonable amount of btc to a USD fiat replacement.

Or is there a better place with higher volume? And it seems poloniex doesn't have bitusd, i can't find it at least.

I have read the first link but i don't get it yet. There is no fiat or so backing it. It all is based on trust and believe in the value of bitusd. That sounds risky since i don't see how it can be secured that way. Through the shorters? So value in shorts are rising when price of bitusd sinks, so the total value of the currency remains stable or something like that? Though i don't see how those who hold bitusd can trust that the bitusd price can not crash. They should have nothing from shorts becoming worth much then.

Here an interesting post: https://bitcointalk.org/index.php?topic=1237187.msg12895069#msg12895069

So bitUSD really have no volume? http://coinmarketcap.com/assets/bitusd/#markets

If true then this would mean that you can't effectively use it, though you mentioned, or i read it somewhere, that it somehow is possible to buy and sell even though no offer exists. I wonder if that can be healthily done without risks.

coinmarketcap not updated yet after BitShares 2.0 release.
BitShares developers will provide to coinmarketcap new data source for internal BitShares markets soon and when you will see BitUSD volume. But meanwhile you can check BitUSD volume in BitShares 2.0 online wallet: https://bitshares.openledger.info

coinmarketcap also doesn't count CCEDK BitUSD volume:
https://www.ccedk.com/bitusd-usd

Keep reading, it honestly takes time to wrap your head around BitShares. 

At a high level you can think of BitShares as an options exchange where instead of being settled in USD, its settled in BitShares.  So when buying wheat on the market your not actually going to take delivery of wheat, your only betting on the value (up or down).  BitShares however goes further as someday merchants may accept bitUSD, BitEuro etc... thus has fantastic potential.

In fact i mostly need a fast trade when i held bitcoins and they start to crash. I then try to get my value into a stable cryptocurrency. And those are mostly artificially held at a price connected to fiat.

I'm not sure that i can follow your explainations about why they should be hard to sell or buy. I mean as long as the price is not very volatile you can fast buy and sell nubits. I did not see a difference there.

I would need to create an account there. Can you tell me the volume and can you agree with the hard to buy part bitcoinsatan explained?

I mostly use these coins to protect me against a falling bitcoin price.

Why not use futures to protect against a fall in the bitcoin price?

Futures are very liquid and designed for hedging; I like to use 796 exchange where they have no fees to hedge and speculate.
In addition, you can typically sell the future at a price higher than the spot rate and make an arbitrage between spot and futures markets; all it takes to make a profit is the patience to hold until expiration and enough margin to protect yourself from volatility. There is sometimes a counterparty risk on the futures exchanges though.

To create account you just need specify user name and password, no additional info like e-mail, and it's cost 0.
Last days, BTS/USD trading volume 3000-11000$ per day, BTS/CNY: 0-39000 CNY, BTS/GOLD: 0.3-1 troy ounce .999 fine gold, BTS/SILVER: 0-196 troy ounce .999 fine silver

USD pegged crypto are badly needed.  But there's no support from the bigger exchanges. 

Sebastian, consider plain FIAT

Yeah, but it would suck holding that in an exchange.

You can store fiat at Uphold; it is the world's leading cloud-based money platform formerly known as BitReserve.

Counterparty backed USD tokens are not dependent on crypto price. They can be sold exactly at $1 if counterparty plays honestly and does not use partial reserves.

Check out coinomat.com site to easily exchange coinoUSD to BTC or BTC to coinoUSD.

Counterparty risk is well known. I just do not understand where did you get this idea that crypto USD should be hard to buy or to sell. I show you that with coinoUSD it is easy to buy and to sell.

You are asking "can you sell any quantity of non-smartcoins for exactly $1?". You can sell any amount of coinoUSD for exactly $1. It will take some time though while hot wallet is being refilled for really big orders.

bitAssets replace counterparty risk with systematic risk. On the one hand, you don't rely on a centralised entity which can get hacked, but on the other you have to play by the rules of the system, which is susceptible to black swan events and other systematic risks.

They do not have enough altcoin market share to get interest  ;D There are a lot of altcoins around, which are not so popular  ;D

Like I mentioned above, Bitfinex supports TetherUSD, and treats it just like USD. Someone just needs to develop an Omni-token supporting Android app (though wallet.tether.to does work on mobile), and an Omni-token supporting desktop wallet. It'd also be cool if we could hold TetherUSD on a Trezor.

Because you have to trust the exchanges with your value then. I would like to take my coins into my own wallet. Then i only would need to trust the coin itself.

I traded on 796.com too once. But the support was nonexistant. Which drove me away. I believe another problem was the spread in orderbook. Too low volume so that it was hard to close positions with a profit. I now, if i do it at all, trade cfd on okcoin.com. It is the best place for leveraged bitcoin trading i found so far.

Fiat means you have to hold it on an exchange. Which is, we know, very risky. And if you push fiat from and to your bank account then this is very slow. Means when bitcoin is rising you need days to put it on an exchange. At that time the price already might drop.

It's better if it is possible to act fast and don't have to trust the exchange to not get hacked or being run by scammers.

Hm, sounds still like it is not very much. I wonder if the orderbook is filled enough at all to exchange a couple thousand USD worth. Nubits on poloniex have 88k volume per day. plus the other exchanges. but even then it is only usefull because they artificial create buy and sell walls you can buy into.

Sounds good for protecting against a bitcoin price crash. Though it still would be a costly thing when you would have to pay a premium to go back. Or to go into bitusd again. You only can sell them when you bought them before. So i don't know if it makes much sense.

You still would have to trust the platform that you get your fiat out when you want to, right?

Lets say $1000 already should be a problem when i see the orderbook for coinousd. And in the case you need it you want to exchange fast because most probable the bitcoin price is crashing at that moment.

You could just convert your fiat right back to bitcoin at Uphold. You would probably need a verified account. As far as trust goes, you can read about their blockchain and ledger technology; I personally have no problem in trusting a bank that is operating with a full reserve.

By the way, 796 has much better volume and features nowadays. There is still the risk of socialized profits, but it is much smaller with their insurance fund.

Black swan event is much more possible that the risks you described.

You are forgetting that price for bitassets is being fed by limited number of nodes based on centralized exchange prices. Attacker could counterfeit price feeds, or crash prices on thin orderbook for a short period of time (with leverage trading), or take node operators hostage.
You do not need to invent some catastrophe to see a Black Swan on BTS.

Me personally is scared to create bitUSD since I do not know how my collateral is safe from margin called. I can make 200-300% collateral but how can I know that we won't see 1 day flash crash or some exchange will go Gox and price feeds will not be relevant.

Don't forget that black swan event can happen for every commodity and fiat currencies as well.

Isn't bitUSD force liquidated into BTS during a black swan? And you're calling the people who create bitUSD gamblers?

Call me naive, but I am not worried about a black swan incident. I recently started using Bitshares' decentralized for all my trading for the smartassets that have volume or pricefeeds (minus the coins that aren't trading on there that I am also interested in.) I am 50% in Bitcoin 25% in Silver and 25% in Gold.

I am bearish on BTS at the moment, but think it has great potential as a decentralized derivative exchange. Once adoption and thus volume picks up it will be quite wonderful. The in-wallet gateways are a very nice addition.

There's always Coinapult Locks. An account to lock your bitcoins to USD is actually built right in to the Mycelium wallet now. There are drawbacks to using it, but such is the case for the alternatives here.

I think it is a bad idea to peg and asset to USD, but it can be helpful too to exchanges and money transmitters.

However it will be hard to maintain the peg.

Coinapult looks like it would be a similar risk like simply exchanging bitcoins to fiat on an exchange and letting it lie around there. If the website goes down then the value is gone.

I tend to believe that the possible ways to lose your value are lower when holding a coin on your own wallet. Then the only risk is that the issuer goes down.

The thing with Mycelium looks similar or is it possible that you control your coins and even would be able to get your value out in case mycelium as a company goes down? Or would the backed value vanish then?

It is a good idea for bitcoiners but probably risky for those offering it. Though the demand is there definitely so offers are there too. So far i believe that the liquidity providers of nubits still earn from providing liquidity. It's not that they lose money by doing so. And they survived some crashs till now. I think there is a risk but the longer they survive the lower will it get i think.

I've read that they're working on the capability to hold your own private keys by way of a token of some kind. However, the tricky thing is that even if you do hold such a token, say it's stored as TetherUSD, well, for any such redeemable value that is stored off chain, there's still a trust factor involved -- you must trust that the issuer's off chain value storage (a bank account, a vault) doesn't disappear or get mismanaged. In that case, you control the private keys, but you're still out of luck.

Yes, that's why i think it would be best to chose a coin and coin storage with the least needed trust as possible.

So far nubits still look the best, even though it is not perfect, especially when bitcoin is volatile.

If they hedge properly then its no risk. They get money from comissions.