Bitcoin Forum

White Paper (http://static.squarespace.com/static/51df1ba4e4b08840dcfce197/t/5212ca63e4b0348bfd2276c6/1376963171729/BitShares%20White%20Paper%20(2).pdf)

From reading the abstract, this sounds very similar to ColorCoin.

Could you post a tl;dr summary?

Same comment as Reddit -

I know Charles (the creator) personally. Well I don't have a long history with him, I don't believe it's a ponzi scheme) I do know that he's working very hard at what he's doing.

I have encouraged him to focus on more approachable descriptions of the problems he's trying to solve, which he said he's trying to do.

I'm reading it right now, but haven't gone too far. It's not like colored coins. It seems to have a coin of its own, and the network allows miners to enforce on their own some rules that mean some people will loose or earn money. For example, you short some asset, and then the price goes up to such a point that your reserves must be depleted, a miner can do that without needing you to sign any transaction. You can't do that with Bitcoin, thus you can't do that with colored coin.

It's very interesting, I'll keep reading. :)

By the way, just a little pedantic correction: an "axiom" is a self-evident truth, something like "the shortest path between two points is a straight line". What you outline as "axioms" for your ideal free market financial system are more like "principles", "objectives" etc, not really axioms. They're not self-evident truths, they're more like something you believe should be respected/followed. And btw, good set of principles. ;-)

EDIT: Oh, and btw, keeping the pedantic observations, you might want to rephrase the "zero-sum" principle. A free-market is not a zero-sum game. When two people trade, they create value for each other. The aggregated value in the system does increase. I do understand what you mean by zero-sum in this context: you mean something like the Lavoisier principle, that is, nothing is created nor destroyed, only transformed ("transferred" in your case ;))
I would avoid the "zero-sum" expression precisely because the term is used by free-market detractors, in an misguided attempt of portraying free-markets as useless to society as a whole ("for somebody to gain, somebody else has to lose!"). They're dead wrong on that, but by saying your system aims at a "zero-sum" might give them ammunition.

BTS is only a ponzi game covered up by P2P assets & P2P EXCHANGE. But BTS assets are not created on BTC protocol.
They just wanna program a new ALT coin .  ;D
I only trust BTC protocol based virtual assets project like coloredcoin Or mastercoin

BitShare will arbitrarily limit the size of the UTxO set?
That sounds a crippling limitation to me. How can you know the good size? Just look all the discussions the maximum block size limit caused. Arbitrarily limiting the UTxO size is no different. IMHO you should reconsider that.

Charles already cut his losses and bailed on this outed scam. It is definitely a ponzi scheme.

Do you know anythjng about foreign exchange markets? Didn't think so. If you did then you would agree with me.

Alice is an escrow agent with good reputation but with an unresolved dispute that's taking some time. What's stopping her from creating escrow agent "Bob", sign and publish message saying "Alice == Bob", and then accept new transactions as Bob?

This restriction you want to apply there seems useless, and I don't think the platform should make such decisions in the name of its users. As long as unresolved disputes are public data, it's up to people to decide whether they want to use an escrow which is taking time to resolve its disputes.

You want to mimic these anti-ASIC alt currencies? Why? What's the point? This assumption that ASICs lead to centralization is false. How many thousands people are hashing right now, with ASICs?

OTOH, preventing the use of specialized hardware will give more power and profit to botnets. Even if there's never a botnet large enough to overpower the network, the simple fact that these parasites can make more profit is disgusting in itself.
Not to mention that your algo seems much more complicated (and thus, bug prone) than simply hashing with a well-known hash algo.

Anyways... your call. That's not a major problem either, I guess. I'll just keep reading.

I'm not sure I follow how you intend to track the price of arbitrary assets.

I see only two ways (which are similar when you think about it) of doing such a thing:

• Contractual backing: I, the issuer of currency C, am contractually bound to give you a certain amount of asset A in exchange for a certain amount of C. C is just a substitute for A.
• "Currency board" way: I, issuer of currency C, keep large reserves of asset A, whose price I want C to track. I sell A to buy C whenever C's price goes below the price of A ('deleting' the C bought), and I issue more C and buy more A with it when the price of C goes above the price of A

The currency board isn't contractually obliged to redeem your currency, but in the end it's as if it was doing it indirectly. And for it to be speculation-proof, it has to hold 100% reserves.

Colored-coins and OpenTransactions go the first way.
Mastercoin goes the second way, with an interesting particularity: The reserve is in Mastercoin, not in the asset whose price is being tracked. That introduces extra risks, because if the price of mastercoin goes down, so does the value of the reserve. If the reserve goes below 100%, it's subject to speculative attacks. So, in order for it to be safe, the reserve must be kept much above 100%. The great advantage is that you can track arbitrary prices in a fully decentralized, pseudonymous and transparent way. The protocol can ensure the reserve won't be stolen, how much is held in reserve is a public data, the reserves can't be seized by desperate governments etc. The disadvantage is that the one holding the reserves would be paying a high opportunity cost. Why would you put so much money aside? There needs to be some gain opportunity for private individuals to voluntary issue currencies in this scheme.

Anyways.... how exactly does BitShare sub-currencies intend to track arbitrary asset prices? I was thinking it was going to follow the Mastercoin strategy, since among your principles you list 'no-trust' and 'decentralization'. But I read the part in which supposedly you explain how BitUSD tracks the price of USD and I confess I don't get it. You talk about short and long positions, but what's tracking the price? Can somebody explain me like I'm five?

It is a ponzi. Stop trying to find a legitimate explanation where there is none. If you are interested in a legit way of doing this, look here:
https://bitcointalk.org/index.php?topic=297147.0 (https://bitcointalk.org/index.php?topic=297147.0)

The scheme used in mastercoin won't work without modification, but it is not designed as a ponzi.
Bitshares is intentionally designed to fail. You have wasted enough time reading about this piece of shit scam already.

Charles is not the creator, I am.  He helped bring in funding and bootstrap the business.    We are working with various parties to explain the concepts better.

I have throughly debunked the ponzi allocations, but Cunicula has his own solutions that violate economic laws to sell.   I would be more than happy to talk with anyone on Skype about how BitShares works, where money moves, and how it is entirely balanced.   We are working with people from wall street, and credible economists such as http://www.pecuniology.com/who.php Dr. Charles W. Evans who are far more qualified than Cunicula to analyze the system.  By Cunicula's own standards, Bitcoin is a Ponzi scheme.

It is really very simple.  BitShares is a continuous block-chain-based prediction market where what is being predicted is the value of USD relative to BitShares.  BitUSD is the long side, BitShares is the short side.  BitShares are transferred from the winner to the loser based upon which way the market moves.  All positions are voluntary and we are not a party to any position.   

No USD needs to change hands.  In fact, you could create BitMars and estimate the value of owning Mars relative to BitShares.   

This is correct. Daniel Larimer created BitShares. We first started discussing it in the Project Invictus thread in June. He's doing an excellent job and I think BitShares will be a very innovative project moving forward in the future. I'm glad I could help get them started and moving in the right direction.

i would also prefer coloredcoin Or mastercoin system rather than a new coin  ::)

Your preferences are irrelevant when Colored Coins are nothing but illegal bearer bonds subject to default and regulation and Master Coin has yet (to my knowledge) to propose a solution to fix his 'price pegging' system since he paid me 3 BTC for pointing out the fundamental economic flaws.

Lastly, for scalability purposes you NEED parallel and independent block chains.   The bitcoin transaction volume would increase by several orders of magnitude if an exchange were integrated into the current block chain with either colored coins or master coin.   Bitcoin is not prepared to handle that transaction volume.

Using the main bitcoin blockchain has its advantages, mainly being able to count with the high quality development effort/team that Bitcoin has, not to mention its strong chain security.
But it has some disadvantages too, namely the fact that you might end up having to pay more expensively for you transactions. A multi-chain approach like this BitShares also make scalability much more easier, you only need to handle the chains you wish to work with. It's an interesting approach.


As an experienced bitcoiner, you should know that being illegal doesn't prevent some things to thrive. And you might find some jurisdictions in which it would be accepted.


Currency boards do exist and do manage to keep their pegging for decades. The "only" constraint is keeping large reserves. In the case of mastercoin, these reserves would need to be quite high. But besides that, what are the "fundamental economic flaws" you see?

I was going to suggest you implement the same currency-board-like thing in your system, it would make it richer.


You don't NEED with capital letters like that. But it's a good plus to have.


I'm still trying to understand that. If I understand well, when you go long on an asset, it's basically as if you were using borrowed money to buy larger volumes of that asset than you'd be able to do with your money. If this asset goes up in price, you are able to pay your debt and also make a larger absolute gain. But if it goes down, your "reserve" will be burn out quite quickly. For ex. in a 10:1 leverage, a -10% oscillation would force your position to be liquidated so your debts could be payed.

Now back to BitUSD.... how is that a long position in USD? Isn't that a coin issued by someone? Anybody can issue more BitUSD as long as they deposit the necessary reserves in BitShares? So, let's say I believe the price of USD will go up in relation to BitShares, how do I proceed? I set aside, say, $1k worth of BitShares on a 10:1 long position and then I can issue myself 10k BitUSD? If the value of the USD goes near 10% down in relation to BitShares, miners would be able to confiscate my reserves of BitShares and destroy the corresponding BitUSD, I assume. But how would miners decide which is the "protocol-official" price of USD in relation to BitShares? Do you intend to create some price publishing mechanism like those in Mastercoin, and each BitWhatever issuers would decide which publish(er) to use?

Not anyone can issue BitUSD... the only time BitUSD can be issued is when a long and a short agree on a price.   Each posts an equal number of BitShares resulting in a short position with 200% collateral and a long position.    If the price moves against the short, the collateral will be used to repurchase the long position on the open market (all BitUSD is fungible) and the short position loses money.  If the price moves against the long position then when they sell their position they end up with less BitShares than when they started.   It would be like selling BTC for USD and then watching the price of BTC jump $30 in one week when you repurchase BTC you end up with less than you started.  

The long position maintains purchasing power equal to 1 USD, but no USD ever needs to enter the system or be held by a trusted 3rd party.

See the threads on the Momentum Proof of Work for my CPU mining algorithm.

The blockchain works like Bitcoin, a bad actor with many CPUs can only attempt a double-spend of their own funds or attempt a denial of service.  Neither of these options is profitable compared to using the same hardware for mining.   

There are no 'accounts or users' in the system and nothing depends upon reputation or trust.

Thank you for your answer.

Just bear with me a few more, please. Let me see if I got how this works.

• Mr S believes the price of BitUSD (not USD!) will fall in relation to BitShares. Mr L believes the opposite.
• They settle for a short vs long agreement. Let's suppose there's no leverage (can there be?). Let's also suppose the agreed price is 1 BTS = 1 BitUSD.
• Each one puts in 1k BTS, so a 2k BTS reserve in total, which, if I understood correctly, is the short collateral.
• Is Mr L now granted the right to issue 1k BitUSD? Would he be able to issue (X*Y)k BitUSD if the agreed price was 1BTS = X BitUSD and leverage was Y:1?
• If the price of BitUSD goes down, then MrL is already losing money as his stash is going down. But how much exactly will Mr S win? Can Mr L force the collateral to be used when selling his position? Let's say by selling his 1k BitUSD against the collateral, he recovers 800 BTS. Mr S now has 1,2k BTS, and Mr L only 800BTS. That's how it works? What happens to the sold BitUSD, goes on to circulate on the open market? There's our inflation of BitUSD? Wouldn't that make the supply of BitUSD proportional to the volume of short vs long positions made on the system?
• If the price of BitUSD goes up in relation to BTS then Mr L is already a winner as his stash will be worth more than before. The collateral of MrS would have to be sold in order to buy BitUSD in the open market you say. What happens to the BitUSD bought? Is it destroyed, to account for the previous issuance? Or is it given to MrL? The fact that the collateral was twice the money MrS had put himself would give him an advantage, unless of course we assume his leverage to be twice as large. I'm a bit lost here.

I still don't see why would the price of BitUSD track that of USD though. That would only happen if people on the open market would be willing to trade 1 USD for an amount of BitUSD that's almost always the same (no need for parity but you need a almost-fixed exchange rate), but where does this guarantee come from?
And how would BitUSD be bootstrapped? If it can only be issued when there's a long vs short position, which would be the price reference of the very first position?

Thank you for your patience.

Assumption: BitShares has non-0 value.   
Therefore there exists a ratio between USD and BitShares, lets assume the initial condition is $1 per BitShare

Mr. S Owns  1000 BitShares and believes they will go up in value relative to USD
Mr. L Owns  1000 BitShares and believes they will go down in value relative to USD

They enter a transaction on the block chain that takes 2000 BitShares as input and creates 2 outputs.

Mr. S receives a BitUSD short Position that allows him to Recover 2000 BitShares provided he buys 1000 BitUSD. 
Mr. L receives a BitUSD long Position that he owns until he chooses to sell.

Time passes and the price of BitShares vs USD goes to $2 per BitShare.  This means that Mr. S was right to short USD.  Mr. S now believes the price is too high so decides to exit his short position.  To do so he must buy 1000 BitUSD on the market which now costs 500 BitShares.    He places a bid in the market, when it is accepted 1000 BitUSD is destroyed, Mr. S walks away with 1500 BitShares and the seller of BitUSD walks away with 500 BitShares.   

In an alternate reality, time passes and the price of BitShares vs USD goes to $0.66 per BitShare and Mr. S's collateral will only cover 1500 BitUSD so a miner performs a margin call by using the 2000 BitShares held as collateral to accept the lowest ask $0.65 per BitShare and as a result Mr. S is given (say) 462 BitShares while the seller of the 1000 BitUSD is given 1538 BitShares. 

What we can conclude here is that even though no USD changed hands, Mr. L retains the purchasing power of $1000 USD regardless of which way the market moved.  Mr. S assumed the risk of BitShares going down in value, while Mr. L assumed the risk of BitShares going up in value.   By exchange risk exposure the result is the creation of an asset (BitUSD) that is market-pegged to USD.

So how do we know BitUSD will be market pegged to USD?   Because it can only be created when a long and short agree on the ratio and they have opposite incentives.  The Long wants as low a price as possible while the Short wants as high a price as possible.    How do they know that what they are trading is really a bet on USD other than the Name?   Because the market depth will establish market consensus as the bid/ask spread starts wide and gets narrower until there is enough depth that someone is willing to make the first trade.   

How do we know that the price will track?  This comes down to making a prediction about how future market participants will judge BitUSD vs BitShares and the only rational way to make this prediction is to assume future actors will bid according to the future USD vs BitShares.  The price tracks for the same reason that centralized prediction markets can price the probability of an event. 

Thank you again for your detailed explanation.


Ok, so here there's no BitUSD inflation, as the amount given to Mr. L is the same amount that will be destroyed.


Are the 1000 BitUSD destroyed too?

In this case, no new BitUSD remain. There's only BitUSD in circulation while there are open short positions. The supply of BitUSD is proportional to the amount of people willing to hold short positions in BitUSD.


This all sounds weird to me. Price is a function of supply and demand. I can understand how currency boards peg their currencies because they manipulate the supply. Here you have a supply that's linked to the number and appetite of speculators betting against the asset. Why would such a supply adjust itself to the demand in order to maintain a peg is something that goes beyond my understanding of financial instruments. I guess I'll just have to follow and see how it works out.

I keep my suggestion though: please consider implementing the possibility of setting up a currency-board-like structure in your development. You have an interesting set of features there, this one would add nicely.

Supply of BitUSD increases anytime the market value of BitUSD rises above the USD/BitShare ratio enough to motivate new shorts to enter the market.   
Supply of BitUSD decreases any time the market value of BitUSD falls below the USD/BitShare ratio as shorts cover for a profit.

As a result there is a self-regulating supply of BitUSD and the ratio used during its creation mean

Manipulating the supply of a currency is a VERY sloppy way to control the price because adjustments in supply take time to percolate through the market and reflect in prices.  In this case, the market can function with just a few players because of the tension between shorts and longs results in heavy liquidity and constant demand for BitUSD.

Dan, are you still on track for December launch after Charles left?

December with Keyhotee with ID/Mail yes.  

BitShares beta will be out Q1 if all goes well.   I have had to spend more time managing the company, legal, marketing, etc since Charles left.   Fortunately, we have people in the wings and things are picking up steam.

You will be able to start mining BitShares (but not trading BitUSD) within a month.  

if I get this right you'll just need ram/cpu to mine? would be perfect for people with shitty pcs (like mine :D)

See this thread: https://bitcointalk.org/index.php?topic=313479.msg3363346#msg3363346  for details on the Momentum Proof of Work that I am working on.

That's sweet! Where will it first be announced? Is there any newsletter or announcement to subscribe to, for both Keyhotee and BitShares mining?

You can give us your email address at http://invictus-innovations.com/contact/  and we will add you to our mailing list and send you our first news letter.

I have posted a new video regarding how BitShares works:  http://www.youtube.com/watch?v=5BV55IrZi7g   

If anyone is interested in a post explaining why BitShares is sure to fail...
https://bitcointalk.org/index.php?topic=279771.msg3339710#msg3339710 (https://bitcointalk.org/index.php?topic=279771.msg3339710#msg3339710)

I've repeated this so many times, it is much easier to post links.

Am I dumb if I do not understand this? I usually understand educating instructional videos or texts.

Sure you understand what you were talking about in the video but did you test it on an audience how clear have you managed to convey your message? Thanks.

BitShares might be made liquid this week!

https://bitsharestalk.org/index.php?topic=3812.msg47872#msg47872

Should be well worth the wait.

"might be this week", i do think we have heard that one before to be honest.
Invictus is good at pukeing out pointless tweets, attending conferences and making videos that
makes cats puke, also good at spending the AGS funds on blow and blowjobs i guess..

This week?LOL..I3 was suck with the time estimate.

https://bitsharestalk.org/index.php?topic=4480.0

Test network has been launched.  Why is everyone so harsh?  Sure they are a little late from early timelines however they are doing something no one else has done yet...  People are in support of new scam coins everyday yet BitShares is shaping up to be the real deal.

Official launch site with wallet downloads:

http://www.dacsunlimited.com/index_en.html


DPOS with 10 second blocks looks to be working as planned along with the TITAN privacy features.
https://bitcointalk.org/index.php?topic=687251.0

Hi,

I'm one of the developers behind a new app called "BitShares Checker". We ourselfs have Bitshares (duh) and we wanted to easy see how much our bitshares are worth at this very moment.
We searched on the Google Play but there was no app, so we created it ourself. We have the concept of making it super light and easy to use.

https://play.google.com/store/apps/details?id=com.igdb.bitshareschecker&hl=en

Hopefully you guys can also use it aswell :) Let me know what you guys think!