Project Invictus Vs. Project Holy Grail

[jimbobway]

Right now there seems to be two efforts that I know of working on a P2P Exchange.  It seems like Project Holy Grail is much further along than Project Invictus.

Project Invictus: https://bitcointalk.org/index.php?topic=229315.0
Project Holy Grail: https://bitcointalk.org/index.php?topic=225954.0

I just wanted to hear your thoughts about why Project Invictus would succeed over Project Holy Grail or vice versa.

Project Invictus is still working on gathering requirements with little or no direction in coding.  The lead seems to tackle the problem from a business perspective.

Project Holy Grail already has bounties in place for the coding of the exchange with screenshots of some of the GUI components.

What I really want to know is why the lead of Project Invictus will succeed over project Holy Grail, since the latter has a larger head start.  Are you there?

[1713428019]

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[1713428019]

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[bytemaster]

Project Invictus just formed Invictus Innovations, Inc and is very well capitalized.   I am the CTO and have just started full time development and we are in the process of looking to hire the best tallent in the Bitcoin community for 2 or 3 more full time positions.    If you have skills and experience in C++ / bitcoin please contact me.

At the moment we have 3 people working on this full time and have an order of magnitude more funding than Project Holy Grail.     We will be making more announcements in the near future with multiple product releases scheduled over the next 6 months.

[greBit]

Does Project Invictus include the creation of the Bitshares alt-coin, or is this separate?

Is there a mailing list / irc chat room for the project? or is it in stealth mode?

cheers

[bytemaster]

We are not trying to operate in stealth mode.  We have been working 80 hours / week in planning, etc.   

The latest white paper is here:

https://docs.google.com/document/d/1RLcjSXWuU9vBJzzqLEXVACSCdn8zXKTTJRN_LfoCjNY   and we would like as much help / feedback from the community as possible.

We have registered our domain names and are looking to work with the community to develop this entirely in the open.    We post here in these forums on a regular basis and collect the contact info of everyone interested in the project.   

We are looking for a good web developer / admin to setup and maintain a dedicated forum, mailing list, and website. 

In the mean time if you would like to help make this project a success we are looking for feedback on a new system to keep mining decentralized and minimized via Proof of Minimal Work.     We are paying tips to people who prove helpful.   

Anyone who wishes to be actively involved and contributing can start working with us immediately and if your contributions prove valuable and we have the capital we would be looking to hire the best, most passionate developers.    If you have something to contribute let us know!

[greBit]

So just to clarify, Project Invictus = Bitshares, correct?

[bytemaster]

Project Invictus = Invictus Inovations, Inc
Our mission is to provide decentralized solutions to centralized problems.

BitShares is one our first products out of many in the pipe.

[nomailing]

Right now there seems to be two efforts that I know of working on a P2P Exchange.  It seems like Project Holy Grail is much further along than Project Invictus.

Project Invictus: https://bitcointalk.org/index.php?topic=229315.0
Project Holy Grail: https://bitcointalk.org/index.php?topic=225954.0

I just wanted to hear your thoughts about why Project Invictus would succeed over Project Holy Grail or vice versa.

Project Invictus is still working on gathering requirements with little or no direction in coding.  The lead seems to tackle the problem from a business perspective.

Project Holy Grail already has bounties in place for the coding of the exchange with screenshots of some of the GUI components.

What I really want to know is why the lead of Project Invictus will succeed over project Holy Grail, since the latter has a larger head start.  Are you there?

You are talking about a P2P Exchange, right? I personally would not call Open-Transactions a P2P protocol, but a system of federated servers.
So in terms of P2P-Exchange I would say Project Invictus is more likely to succeed. But obviously it's a matter of opinion if you define federated servers as P2P...
If you want to argue that OpenTransactions is decentralized, so it is sort of P2P, then I would say that this is at the moment purely theoretical reasoning. So I wouldn't say that Project Holy Grail has a larger head start. Project Invictus has a larger head start because it builds on top of a similar P2P protocol like Bitcoin while OT is very different to Bitcoin and hasn't proven itself in practical applications yet.

[bytemaster]

This is why we spent so much time defining the criteria of the ideal exchange.   OT fails almost all of the criteria.

1) It is based upon trust in issuers
2) The model of broadcasting price information via BitMessage is not a valid means of establishing a market price.
3) Operating an OT server is like operating a mini centralized exchange.
4) Issuers are creating bearer bonds (illegal)
5) No dividends / financial incentive for *everyone* to use the system.

All of that said, I still believe that there is a place for OT servers as high-frequency trading hubs and *trusted* banks for digital cash.   OT needs to be marketed at current exchanges as a far more secure, audit-able, and accountable system.  If Mt. Gox or BitStamp implemented an OT api for managing your account it would be a major selling point.

[charleshoskinson]

Insert Quote
Right now there seems to be two efforts that I know of working on a P2P Exchange.  It seems like Project Holy Grail is much further along than Project Invictus.

Project Invictus: https://bitcointalk.org/index.php?topic=229315.0
Project Holy Grail: https://bitcointalk.org/index.php?topic=225954.0

I just wanted to hear your thoughts about why Project Invictus would succeed over Project Holy Grail or vice versa.

Project Invictus is still working on gathering requirements with little or no direction in coding.  The lead seems to tackle the problem from a business perspective.

Project Holy Grail already has bounties in place for the coding of the exchange with screenshots of some of the GUI components.

What I really want to know is why the lead of Project Invictus will succeed over project Holy Grail, since the latter has a larger head start.  Are you there?

When I first started Project Invictus it was with a totally neutral stance on existing projects. Our first goal was to properly define a p2p decentralized exchange whose purpose was to allow for faster and more global fiat to crypto-currency transactions without the need for trust and a better escrow system than apparent with current incumbents. So why did we want to do this? To make your Bitcoins better by reducing market volatility and significantly increasing liquidity.

So it all started with the Invictus thread and I had an opportunity to meet a lot of the brightest minds in the Bitcoin community; however, one in particular stood out as especially unique and forward thinking- Bytemaster. Daniel developed the kernel of what was necessary to accomplish my original goal and was willing to invest his own money and time in correcting misconceptions about his own designs prior to ever meeting me. That's a rare quality and it told me we could work together to transform BitShares into the system capable of what was needed.

Over the many 80 hour weeks, we've grown considerably from just a collection of hopes and ideas to a fully VC funded corporation in the state of Virginia that is now actually writing the source code to implement our new ecosystem. While we have no intention to operate in silent mode, we have to be careful about expectation management and also refine our launch strategy for this revolutionary (and it really is) open sourced protocol. Thus we'll be scare on the details for now, but both Daniel and I will be presenting our protocol and some of its source code to the world in October at C3 where we are invited speakers. Until then enjoy the whitepaper- which you'll notice has evolved quite a bit- and hang tight.

I will say a few more things before I leave:
BitShares is not an altcoin competing with Bitcoin, but rather a metacurrency to support a new kind of digital asset.
BitShares does not seek to replace conventional Bitcoin exchanges, but rather link them together and significantly enhance their functionality.
BitShares will allow for easy person to person trading similar to Local Bitcoins, but much faster and safer
BitShares is very altcoin friendly and will eventually allow other currencies like Litecoin and Feathercoin to trade without the need of a central exchange.
BitShares will be like crack for Wall Street and drive significant mainstream adoption of crypto-currencies to the financial sector benefiting all CC in the regulatory and legal spectrum.
Those that use BitShares are not to the best of our knowledge using bearer bonds or acting as money transmitters.

Stay tuned for our many bounty campaigns coming soon.

Charles
CEO of Invictus Innovations Inc.
Decentralized Solutions to Centralized Problems  

[marcus_of_augustus]

I will say a few more things before I leave:
BitShares is not an altcoin competing with Bitcoin, but rather a metacurrency to support a new kind of digital asset.
BitShares does not seek to replace conventional Bitcoin exchanges, but rather link them together and significantly enhance their functionality.
BitShares will allow for easy person to person trading similar to Local Bitcoins, but much faster and safer
BitShares is very altcoin friendly and will eventually allow other currencies like Litecoin and Feathercoin to trade without the need of a central exchange.
BitShares will be like crack for Wall Street and drive significant mainstream adoption of crypto-currencies to the financial sector benefiting all CC in the regulatory and legal spectrum.
Those that use BitShares are not to the best of our knowledge using bearer bonds or acting as money transmitters.

Wow! Sounds awesome! Like it can do anything you might want it to ...

[charleshoskinson]

Wow! Sounds awesome! Like it can do anything you might want it to ...

Which is why we obtained VC funding so quickly. Daniel really knocked this one out of the park.

[bytemaster]

We are actively seeking feedback on this thread: https://bitcointalk.org/index.php?topic=253120.msg2693133#msg2693133   

This is a new alternative proof of work system that will result in even less inflation and guarantee that mining will be even more decentralized and secure than any CPU-only algorithm could ever hope to accomplish.   

[marcus_of_augustus]

Wow! Sounds awesome! Like it can do anything you might want it to ...

Which is why we obtained VC funding so quickly. Daniel really knocked this one out of the park.

Satoshi should have presented his paper for VC funding on that logic ....

[jimbobway]

charleshoskinson and bytemaster, thanks for responding to my thread with much detail and it is greatly appreciated.  I have read most of the threads and some of the whitepaper.

Also, remember to take breaks from the 80 hour weeks.  I don't want you guys to burn out. :-)

[bytemaster]

Wow! Sounds awesome! Like it can do anything you might want it to ...

Which is why we obtained VC funding so quickly. Daniel really knocked this one out of the park.

Satoshi should have presented his paper for VC funding on that logic ....

We are benefiting from the work that Satoshi did to prove the concept of block chains and the viability of a crypto-currency as a store of value.   Without the past 4 years success of Bitcoin the idea of Bitshares and the rapid recognition of its value by VC firms would not have been possible.

Satoshi had the benefit of being anonymous... we have the benefit of funding.  Time will tell which is more valuable to living a long and prosperous life!

[bytemaster]

charleshoskinson and bytemaster, thanks for responding to my thread with much detail and it is greatly appreciated.  I have read most of the threads and some of the whitepaper.

Also, remember to take breaks from the 80 hour weeks.  I don't want you guys to burn out. :-)

This project is our passion and (for me at least) gives my life a purpose far beyond simply making money.   This is the first step of many on my journey to see freedom for all in my lifetime.

[charleshoskinson]

Satoshi should have presented his paper for VC funding on that logic .... Wink

Satoshi has over a million Bitcoins so I suspect he's doing ok That said, imagine trying to sell the Internet to a VC in 1993. This was your average customer:



Great ideas take time to mature and evolve. We are profoundly grateful to have the past four years and the resulting community to draw from. We hope we can continue the tradition of innovation and help Bitcoin and its community continue to enjoy its rapid growth for another 4 years and beyond.

[greBit]

Out of interest what are you going to be offering investors?

I saw this thread a while ago...

Some ideas that we are considering:

1) We could pre-sell CPU hours on machines that are designed to be the most cost-effective miners and the value to the investor would be not having to manage mining hardware, software, utilities, overheating, etc.   The advantage to the company is that it isn't actually selling BitShares for cash, it is selling CPU time for cash.    Any unsold CPU hours would be used by the company for its own mining.    The profits from selling CPU time could then be rolled into development.

2) We could launch a mining pool in parallel and give investors a cut of the fees from being the first/only/most trusted mining pool.

3) We could waive fees on the mining pool for investors and charge higher fees for non-investors until a competing mining pool could get set up.   The default client would be configured to use our mining pool. 

I will be following this project closely!

[charleshoskinson]

Out of interest what are you going to be offering investors?

I saw this thread a while ago...

We will have a major announcement in October and I personally will be travelling to a lot of the larger Bitcoin meetup groups around the United States to discuss both BitShares and how you can become an early adopter.

We will also be launching a website in the coming months with both a forum and a Q&A system to build a community around our ecosystem. There will many opportunities over the next 24 months to be an innovator and a supporter of what we are building.

To pull a Steve Jobs, It will be totally magical and amazing and you're just going to have to wait

[bytemaster]

Out of interest what are you going to be offering investors?

I saw this thread a while ago...

Some ideas that we are considering:

1) We could pre-sell CPU hours on machines that are designed to be the most cost-effective miners and the value to the investor would be not having to manage mining hardware, software, utilities, overheating, etc.   The advantage to the company is that it isn't actually selling BitShares for cash, it is selling CPU time for cash.    Any unsold CPU hours would be used by the company for its own mining.    The profits from selling CPU time could then be rolled into development.

2) We could launch a mining pool in parallel and give investors a cut of the fees from being the first/only/most trusted mining pool.

3) We could waive fees on the mining pool for investors and charge higher fees for non-investors until a competing mining pool could get set up.   The default client would be configured to use our mining pool. 

I will be following this project closely!

We are looking for ways to get people involved, but due to the level of interest from multiple big investors we don't currently have a plan for handling many small investors.  

Here is how I think small investors can profit:

1) Start using the network on day one and buy the bitshares as soon as the chain is launched.
2) Invest in BitShare related startup ideas / businesses.   For example, lay the ground work for the first BitStore that takes BitUSD in exchange for goods and services and work with us to launch it on day one.
3) Propose a bitshares related startup business and we may help provide seed money to bootstrap your business.  You will profit based upon the success of your initiative and we all benefit by the growing ecosystem.  

BitShares is an entire ecosystem that works with bitcoin and we will not and cannot own it all.   So make a claim on some area and go for it!

Of course, none of what I said above should be interpreted as a commitment to any particular plan on our part.

Our commitment not to pre-mine is our primary investment option for early adopters and small investors.

[marcus_of_augustus]

Alt-chain, no pre-mine, early adopters ...  shouldn't this really be posted in "Alternate Cryptocurrencies" ... Mods?

[bytemaster]

Alt-chain, no pre-mine, early adopters ...  shouldn't this really be posted in "Alternate Cryptocurrencies" ... Mods?

I think this system is much more than an alt-coin and will enable trading of BTC for fiat as well as earning interest on BTC.    It will enable you to move fiat into the centralized exchanges or purchase BitUSD with actual USD and then use cross-chain trading to buy BTC.  

So there are many aspects of this that make BitShares a meta-system rather than just a crypto-currency.   I also think this has far broader application to Bitcoin community than a 'alt-coin' does.  

For example, the name coin thread hasn't been moved by the mods.  

Alternate cryptocurrencies
Discussion of cryptocurrencies other than Bitcoin. Note that discussion of how these currencies *relate to* Bitcoin may fit in other categories.

[marcus_of_augustus]

Alt-chain, no pre-mine, early adopters ...  shouldn't this really be posted in "Alternate Cryptocurrencies" ... Mods?

I think this system is much more than an alt-coin and will enable trading of BTC for fiat as well as earning interest on BTC.    It will enable you to move fiat into the centralized exchanges or purchase BitUSD with actual USD and then use cross-chain trading to buy BTC.  

So there are many aspects of this that make BitShares a meta-system rather than just a crypto-currency.   I also think this has far broader application to Bitcoin community than a 'alt-coin' does.  

For example, the name coin thread hasn't been moved by the mods.  

Alternate cryptocurrencies
Discussion of cryptocurrencies other than Bitcoin. Note that discussion of how these currencies *relate to* Bitcoin may fit in other categories.

... so this is basically another ripple (more distributed but open source eventually when the VC's allow it) with it's own currency (bitshares) right? (From a high level view)

[bytemaster]

Alt-chain, no pre-mine, early adopters ...  shouldn't this really be posted in "Alternate Cryptocurrencies" ... Mods?

I think this system is much more than an alt-coin and will enable trading of BTC for fiat as well as earning interest on BTC.    It will enable you to move fiat into the centralized exchanges or purchase BitUSD with actual USD and then use cross-chain trading to buy BTC.  

So there are many aspects of this that make BitShares a meta-system rather than just a crypto-currency.   I also think this has far broader application to Bitcoin community than a 'alt-coin' does.  

For example, the name coin thread hasn't been moved by the mods.  

Alternate cryptocurrencies
Discussion of cryptocurrencies other than Bitcoin. Note that discussion of how these currencies *relate to* Bitcoin may fit in other categories.

... so this is basically another ripple (more distributed but open source eventually when the VC's allow it) with it's own currency (bitshares) right? (From a high level view)

We are vastly different than ripple in almost every respect.   The white paper has the complete comparison.

[bytemaster]

From white paper:

Ripple is a peer-to-peer network with its own currency (XRP) that facilitates transferring and trading or exchanging currency in any unit.    Ripple is not a trustless network, but instead a means of shifting credit through a network of friends and family.   Each individual must publish a line of credit extended to everyone they know and is at risk of default.   In our opinion, this is not a socially viable arrangement which means that most people will end up using Ripple Gateways.  A Ripple Gateway acts like a bank by accepting deposits in exchange for credit on the Ripple network.  Gateways are likely subject to all of the laws and regulations that apply to money transmitters or any company that accepts deposits.   The end result is that Ripple is not Decentralized and does not provided Limited Liability for all parties.

Furthermore, Ripple does not support shorts, call, or put options and is therefore not Diverse.   Without relying on a centralized Gateway such as Mt. Gox or Bitstamp, currency trades are not aggregated, atomic, nor passive.   

Lastly, Ripple is not private because everyone must link their Ripple identity with their real world identity in order to establish lines of credit with friends, family, or Gateways.  Ripple is currently not Open Source despite promises to change that in the future. 

Lastly, Ripple is not viral in that it offers little value that would appeal to anyone outside of the crypto-currency movement or perhaps businesses that wish to start a Gateway.

[CurbsideProphet]

bytemaster,

Perhaps you should put a link to the white paper in your signature or at least a general link to the project.  I know you've posted the link here but since this is constantly evolving, it would make it easier for those trying to keep up to date.

[fellowtraveler]

2) The model of broadcasting price information via BitMessage is not a valid means of establishing a market price.

This is not entirely accurate...

See this post on the subject: https://bitcointalk.org/index.php?topic=220603.msg2758330#msg2758330

Basically a client's "order book" is an amalgamation of the order books on the various OT servers he's using.

Most trades will happen instantly on those servers, since no Bitmessage "discovery" process is necessary in such cases.

Arbitrage should normalize prices across them all.

Using Bitmessage for discovery is only necessary for finding a new server, after which point any trades there will also happen instantly.

Also, any delays introduced by Bitmessage are a result of BM's p2p nature, but other (faster) discovery layers are also possible.

Just wanted to clarify that.

P.S. good luck on the project, looks cool.

[bytemaster]

What prevents false-bids from being published from other OT servers?

I fully recognize that within a single server the price mechanism is valid, just not sure the purpose of BitMessage aside from finding arbitrage opportunities and that would imply some kind of trading bot and the ability to rapidly move funds between to OT servers.     

[charleshoskinson]

P.S. good luck on the project, looks cool.

Thanks Chris, I really appreciate you taking the time. We'll have a technical preview available in the coming months and I'm wondering if you can find the time to come see what we've built and give us some feedback. I really value your contributions to this community with OT and respect your skills. It would be great to get some of your feedback and suggestions.

[fellowtraveler]

OT fails almost all of the criteria.

...

All of that said, I still believe that there is a place for OT servers as high-frequency trading hubs and *trusted* banks for digital cash.   OT needs to be marketed at current exchanges as a far more secure, audit-able, and accountable system.  If Mt. Gox or BitStamp implemented an OT api for managing your account it would be a major selling point.

Some more replies / comments...

1) It is based upon trust in issuers

In the case of Bitcoin and other cryptocurrencies, it will be based on trust in voting pools, with the risk distributed across pools on the client side.

In the case of gold, dollars, euros, etc you are correct that you have to trust the issuer who is holding your gold. But how else could you trade gold digitally, if there were not an issuer holding the gold? The same goes with dollars. I'm curious how you would have dollar trades without issuers.

OT has a user-centric philosophy. We cannot entirely eliminate the risk of issuers, but the idea is to distribute the risk across multiple issuers, for example, using basket currencies. I don't know how you would eliminate issuers entirely, and still be able to trade fiat and asset-based currencies digitally, but I'm curious how you plan to do so.

4) Issuers are creating bearer bonds (illegal)

I suppose this depends on the jurisdiction. But I should point out that the issuer would be fully KYC/AML compliant.

MtGox, for example, allows users to trade "dollar units" and "BTC units" that are issued by MtGox -- and MtGox allows users to withdraw those units, through a KYC/AML compliant process.

(And MtGox is still operating...)

3) Operating an OT server is like operating a mini centralized exchange.

The big difference being that OT servers are unable to forge receipts -- and with voting pools, an OT server will also be unable to steal your coins.

5) No dividends / financial incentive for *everyone* to use the system.

I'm not sure if I'm interpreting this correctly, but FYI, OT does allow you to issue stocks, and to pay dividends on those to shareholders.

What prevents false-bids from being published from other OT servers?

Currently OT allows you to create bids even when there isn't enough money in your account to cover them. (But the bid will be removed from the market automatically if it ever fails to complete a trade.)

It would be possible, though, to alter OT so that it "stashes" the funds inside the bid itself, similarly to escrow, if that is preferable.

In either case, a trade could not complete unless there were funds to back it  up.

I fully recognize that within a single server the price mechanism is valid, just not sure the purpose of BitMessage aside from finding arbitrage opportunities and that would imply some kind of trading bot and the ability to rapidly move funds between to OT servers.

I think the actual discovery process would be very rare. Most of the time your client will already have the list of servers it's using. And if its configured to perform arbitrage between any given two servers, presumably it's already created accounts on both sides.

We haven't added server-to-server wiring of funds yet, but it could be done (with or without Bitmessage) relatively easily.

We'll have a technical preview available in the coming months and I'm wondering if you can find the time to come see what we've built and give us some feedback. I really value your contributions to this community with OT and respect your skills. It would be great to get some of your feedback and suggestions.

Thank you. As you know, we are in our second round of funding and so we are extremely busy on this end, but if I get time to check it out I'd be happy to let you know my thoughts.

Good luck again.

[jimbobway]

I want to let everyone know I appreciate everyone for being civil in this thread.  I didn't start this thread to cause tension, but just to understand the parallels in the two different developments. Thanks everyone for their input.

[bytemaster]

FT,
    The difference between Mt.Gox USD and Bearer bonds is that Mt. Gox is a middle man in all transactions and can enforce KYC.   Mt. Gox does not issue bearer bonds.   If an OT server practiced full KYC regulations for all accounts and the issuer 'knows the server' then clearly OT will work and be entirely legal.   In fact, it probably offers better privacy than Bitcoin because only 3 parties know about any given transaction and only 2 parties know all of your transactions.   With Bitcoin & Bitshares once your identity is tied to an address or the address of someone you have done business with your privacy is heavily compromised.

   The problem with most traditional approaches to USD vs X trading is the expectation that the USD must be an IOU.   On Gox you are trading  Gox Owes Me USD vs  Gox Owes Me BTC  and not actually trading USD vs BTC.   The paradigm is then adopted by OT with issuers.   What only savvy economists recognize is that Gox USD != Bank of America USD != Treasuries != Paper USD and that all of these IOU's actually trade against one another based upon the time-value-cost of moving value between these different instruments.   That said, most people recognize that the value of an IOU USD from most public / trusted entities is about the same (unless Gox blocks USD withdraws)

   In all of the cases above there is a counter-party who can default either intentionally, accidentally, or through government coercion.  All that customers really care about is that the purchasing power of Gox USD is relatively stable (+/- transaction fees) with the purchasing power of BOA USD.  So if you can create a crypto-currency that achieves this relative stability against USD then it is a suitable proxy for trading actual USD.   If this crypto-currency is not an IOU backed by a 'trusted' issuer, then you have a unique and useful alternative to OT issuers.

  BitShares is a crypto-'currency' that allows users to take collateralized short positions in USD.  The collateral is measured in BitShares and the cost of going short equal to the cost of the USD you are short.   While you are short your funds are tied up along with the proceeds you received by selling the BitUSD.    This will force users to cover their short position in the future.  The loss of dividends enforces a carrying cost on the short position and a profit on the long position.

  The last ingredient is having the block-chain automatically cover the short position (via placing a bid in the market) any time the margin starts to fall.  This protects the long position (BitUSD) from losses.

  With enough participants in the market the price of BitUSD will be just as stable as GoxUSD vs BOA USD and yet there are no issuers per-say.   In theory you could claim that the shorts are the issuers, but they are anonymous and there is no need to trust them.  They cannot run with the money nor fail to redeem it.

   Lastly, simply depositing USD into an OT server does not earn me interest where as simply owning BitUSD will pay you dividends (from all trx fees in the market).  This makes it far more compelling to own BitUSD over OT USD.

   All of that said, I would love to know how we can work together to automate voting pools because I would like to have a trust-free way of transacting with BitUSD on a OT server.  This would provide a lot of privacy enhancements and help scale the transaction volume.

[charleshoskinson]

Thank you. As you know, we are in our second round of funding and so we are extremely busy on this end, but if I get time to check it out I'd be happy to let you know my thoughts.

Good luck again.

We just closed our first round of funding and it was quite substantial. I know the feeling Chris about being busy. 

[fellowtraveler]

FT,
    The difference between Mt.Gox USD and Bearer bonds is that Mt. Gox is a middle man in all transactions and can enforce KYC.   Mt. Gox does not issue bearer bonds.   If an OT server practiced full KYC regulations for all accounts and the issuer 'knows the server' then clearly OT will work and be entirely legal.   In fact, it probably offers better privacy than Bitcoin because only 3 parties know about any given transaction and only 2 parties know all of your transactions.   With Bitcoin & Bitshares once your identity is tied to an address or the address of someone you have done business with your privacy is heavily compromised.

   The problem with most traditional approaches to USD vs X trading is the expectation that the USD must be an IOU.   On Gox you are trading  Gox Owes Me USD vs  Gox Owes Me BTC  and not actually trading USD vs BTC.   The paradigm is then adopted by OT with issuers.   What only savvy economists recognize is that Gox USD != Bank of America USD != Treasuries != Paper USD and that all of these IOU's actually trade against one another based upon the time-value-cost of moving value between these different instruments.   That said, most people recognize that the value of an IOU USD from most public / trusted entities is about the same (unless Gox blocks USD withdraws)

   In all of the cases above there is a counter-party who can default either intentionally, accidentally, or through government coercion.  All that customers really care about is that the purchasing power of Gox USD is relatively stable (+/- transaction fees) with the purchasing power of BOA USD.  So if you can create a crypto-currency that achieves this relative stability against USD then it is a suitable proxy for trading actual USD.   If this crypto-currency is not an IOU backed by a 'trusted' issuer, then you have a unique and useful alternative to OT issuers.

  BitShares is a crypto-'currency' that allows users to take collateralized short positions in USD.  The collateral is measured in BitShares and the cost of going short equal to the cost of the USD you are short.   While you are short your funds are tied up along with the proceeds you received by selling the BitUSD.    This will force users to cover their short position in the future.  The loss of dividends enforces a carrying cost on the short position and a profit on the long position.

  The last ingredient is having the block-chain automatically cover the short position (via placing a bid in the market) any time the margin starts to fall.  This protects the long position (BitUSD) from losses.

  With enough participants in the market the price of BitUSD will be just as stable as GoxUSD vs BOA USD and yet there are no issuers per-say.   In theory you could claim that the shorts are the issuers, but they are anonymous and there is no need to trust them.  They cannot run with the money nor fail to redeem it.

   Lastly, simply depositing USD into an OT server does not earn me interest where as simply owning BitUSD will pay you dividends (from all trx fees in the market).  This makes it far more compelling to own BitUSD over OT USD.

I guess I would need to know more to be sure, but so far it seems intriguing. If it works (if this allows you to issue USD digitally without needing any USD issuer) then it would be great. I'm sure OT could take advantage of it.

  All of that said, I would love to know how we can work together to automate voting pools because I would like to have a trust-free way of transacting with BitUSD on a OT server.  This would provide a lot of privacy enhancements and help scale the transaction volume.

I assume it's blockchain-based. I think as long as the blockchain you are using supports multi-sig, then we could put "BitUSD" into a voting pool just as easily as putting BTC or colored coins. I'd definitely be interested in doing so, if you've managed to eliminate the issuer.

Let's say I actually have $100 cash USD -- how do I get it into the system?

Let's say I have $100 in BitUSD -- how do I get it back out into cash again?

As I said, intriguing idea so far.

[becoin]

 BitShares is a crypto-'currency' that allows users to take collateralized short positions in USD.  The collateral is measured in BitShares and the cost of going short equal to the cost of the USD you are short.

A collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan. The collateral serves as protection for a lender against a borrower's default. Users that take short positions in FedUSD are borrowers that receive BitUSD. Who is the lender that lends FedUSD?

While you are short your funds are tied up along with the proceeds you received by selling the BitUSD. This will force users to cover their short position in the future.  The loss of dividends enforces a carrying cost on the short position and a profit on the long position.

If I'm short I don't care that what I'm short of doesn't bring me dividends.

[bytemaster]

 BitShares is a crypto-'currency' that allows users to take collateralized short positions in USD.  The collateral is measured in BitShares and the cost of going short equal to the cost of the USD you are short.

A collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan. The collateral serves as protection for a lender against a borrower's default. Users that take short positions in FedUSD are borrowers that receive BitUSD. Who is the lender that lends FedUSD?

You have two people, A thinks that  Bitcoin is going UP relative to FedUSD and B thinks it is going down relative to FedUSD.   They both agree that *today* 1 BTC is worth 100 FedUSD so they both put in 1 BTC.   A essentially 'promises' B that he will buy back the BitUSD at the future price.  B trusts A's promise because the blockchain will enforce it long before A lacks sufficient funds.  The reason the blockchain can enforce it is because of the collateral. 

In this case no FedUSD actually had to change hands and no party actually had to own any FedUSD because all they did is make bets where the payout was proportional to the price change between BTC and FedUSD.  This is similar to a prediction market where the 'future outcome' is tomorrows exchange rate.

While you are short your funds are tied up along with the proceeds you received by selling the BitUSD. This will force users to cover their short position in the future.  The loss of dividends enforces a carrying cost on the short position and a profit on the long position.

If I'm short I don't care that what I'm short of doesn't bring me dividends.

Sure you do.  If you have 1 BTC paying you 10% / year.  You sell that 1 BTC into a Short position in 100 BitUSD and instead of receiving 100 BitUSD that you can spend, it is locked as collateral for your position.    Your initial condition was earning 10% / year on 1 BTC, your interim position while you are 'short' you are earning nothing if the BTC/USD price is not changing.   Therefore, there is a 10% opportunity cost and you would benefit from covering your position.

This is really no different than being short in the traditional stock market where you have to pay interest on the stock you have borrowed.  The difference is that my interest payments take the form of opportunity cost.

[bytemaster]

I assume it's blockchain-based. I think as long as the blockchain you are using supports multi-sig, then we could put "BitUSD" into a voting pool just as easily as putting BTC or colored coins. I'd definitely be interested in doing so, if you've managed to eliminate the issuer.

Let's say I actually have $100 cash USD -- how do I get it into the system?

Let's say I have $100 in BitUSD -- how do I get it back out into cash again?

As I said, intriguing idea so far.

Yes, blockchain based with multi-sig support.    

1 BitUSD will always have a market-value similar to a variable rate, interest bearing, AAA USD bond because it is fully backed by 1.5 to 2.5 times its value in BitShares held in the most secure / automated blockchain brokerage developers can code.  Therefore, you can buy and sell BitUSD via 'LocalBitShares', OTC, or any other system.    Because you are ultimately trusting the market and no BitUSD is tied to any individual, all BitUSD is fungible.  Because it is fungible it is divisible.

BitUSD is really just a hedge against price changes in the BitShare / USD exchange rate and that hedge is funded / provided by those who think BitShares are going to go up in value and are willing to bet their money on it.

[becoin]

You have two people, A thinks that  Bitcoin is going UP relative to FedUSD and B thinks it is going down relative to FedUSD.   They both agree that *today* 1 BTC is worth 100 FedUSD so they both put in 1 BTC.   A essentially 'promises' B that he will buy back the BitUSD at the future price.  B trusts A's promise because the blockchain will enforce it long before A lacks sufficient funds.  The reason the blockchain can enforce it is because of the collateral. 

Certainly, I can see the rationale behind your idea, bytemaster. But this is not a P2P exchange. Every exchange has 2 main functions - price discovery and delivery. Here I can see partial price discovery mechanism using alt blockchain. The delivery part is entirely missing.

Sure you do.  If you have 1 BTC paying you 10% / year. 

Well, then I don't have 1 BTC. I have an investment denominated in BTC having a face value of 1 BTC. The price discovery mechanism will eventually find the price of this investment instrument not the BTC itself!

[bytemaster]

You have two people, A thinks that  Bitcoin is going UP relative to FedUSD and B thinks it is going down relative to FedUSD.   They both agree that *today* 1 BTC is worth 100 FedUSD so they both put in 1 BTC.   A essentially 'promises' B that he will buy back the BitUSD at the future price.  B trusts A's promise because the blockchain will enforce it long before A lacks sufficient funds.  The reason the blockchain can enforce it is because of the collateral. 

Certainly, I can see the rationale behind your idea, bytemaster. But this is not a P2P exchange. Every exchange has 2 main functions - price discovery and delivery. Here I can see partial price discovery mechanism using alt blockchain. The delivery part is entirely missing.

Sure you do.  If you have 1 BTC paying you 10% / year. 

Well, then I don't have 1 BTC. I have an investment denominated in BTC having a face value of 1 BTC. The price discovery mechanism will eventually find the price of this investment instrument not the BTC itself!

I probably should have clarified, it my example I was using BTC in place of BTS.   There is clearly a difference between BitBTC and actual BTC as BitBTC pays dividends is and is backed by BitBTS and will have different transaction fees / etc.   

The 'delivery' is greatly simplified because instead of having to match price & location with LocalBitcoins all you really need to do is match location.   Instead of only appealing to those who want to use Bitcoins, BitUSD can appeal to anyone who wants to save USD and earn a return.  These two factors conspire to make BitUSD far more liquid on the local market than USD.

Further if you are going to do a multi-day escrow transaction involving a wire transfer then it is best to trade in BitUSD because you do not suffer exchange rate risk while your funds are in escrow. 

Through integration with Ripple we should be able to automate USD IOU exchanges for BitUSD and then allow you to withdraw your USD via BitStamp or the like. 

[Lethn]

I don't understand why people are so keen on clinging to hyperinflated paper money, especially with what has just happened in Detroit. A decentralised stock exchange I think would be entirely possible if it was just in cryptocurrencies. In fact just about anything can be possible in cryptocurrencies as long as it's all open source. The problem is though you're all trying to re-write the rulebook for paper money when central banks have it locked away in a safe under armed guard. I think it's pretty pointless, the only way you could make this work is if you found a friendly country to exchange money in, even then they are bound to come under all sorts of political pressure and maybe even embargo's etc. until they change.

Stick with precious metals and cryptocurrencies, the current system is a dying one and if they aren't going to be diplomatic with us I don't see why we should with them.

[bytemaster]

I don't understand why people are so keen on clinging to hyperinflated paper money, especially with what has just happened in Detroit. A decentralised stock exchange I think would be entirely possible if it was just in cryptocurrencies. In fact just about anything can be possible in cryptocurrencies as long as it's all open source. The problem is though you're all trying to re-write the rulebook for paper money when central banks have it locked away in a safe under armed guard. I think it's pretty pointless, the only way you could make this work is if you found a friendly country to exchange money in, even then they are bound to come under all sorts of political pressure and maybe even embargo's etc. until they change.

Stick with precious metals and cryptocurrencies, the current system is a dying one and if they aren't going to be diplomatic with us I don't see why we should with them.

Think of it more as backward compatibility to help with the transition.  While most people around here understand the problems with fiat, it doesn't change the fact that most businesses dealing with the public face exchange rate risks and that we need a transparent price discovery system.

BitShares will also handle gold, silver, oil, gas, APPL, and any other asset class.   But it will take 10+ years of unhindered growth (or perhaps hyperinflation) before people will switch to a new unit of measure from what they have grown up with.

[becoin]

I don't understand why people are so keen on clinging to hyperinflated paper money, especially with what has just happened in Detroit. A decentralised stock exchange I think would be entirely possible if it was just in cryptocurrencies. In fact just about anything can be possible in cryptocurrencies as long as it's all open source. The problem is though you're all trying to re-write the rulebook for paper money when central banks have it locked away in a safe under armed guard. I think it's pretty pointless, the only way you could make this work is if you found a friendly country to exchange money in, even then they are bound to come under all sorts of political pressure and maybe even embargo's etc. until they change.

Stick with precious metals and cryptocurrencies, the current system is a dying one and if they aren't going to be diplomatic with us I don't see why we should with them.

Very true words but in one way or another we must build the interface to the legacy financial system. Without such a bridge the disruption will be bigger than we can imagine.