[Announce] Project Quixote - BitShares, BitNames and 'BitMessage'

[klee]

Ponzi schemes have a precise definition in economics. I explain the definition in the other thread.
I also show that bitshares meet the definition of ponzi in a pure BTC economy.

Bitshares is also a ponzi in the real world economy as well, but using the definition to demonstrate this is more complex. Not all bitAssets are necessarily ponzis, but it is very easy to show that bitBTC are a ponzi.

Ok, let's say it is (don't have the appropriate background to argue with you lol) - can you tell me how I can benefit from it before it collapses?
Now THAT would be an interesting post from you

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[bytemaster]

Ponzi schemes have a precise definition in economics. I explain the definition in the other thread.
I also show that bitshares meet the definition of ponzi in a pure BTC economy.

Bitshares is also a ponzi in the real world economy as well, but using the definition to demonstrate this is more complex. Not all bitAssets are necessarily ponzis, but it is very easy to show that bitBTC are a ponzi.

Ok, let's say it is (don't have the appropriate background to argue with you lol) - can you tell me how I can benefit from it before it collapses?
Now THAT would be an interesting post from you

I second that!  I am still trying to figure out how to profit from this so called ponzi!

[bytemaster]

Ponzi schemes have a precise definition in economics. I explain the definition in the other thread.
I also show that bitshares meet the definition of ponzi in a pure BTC economy.

Bitshares is also a ponzi in the real world economy as well, but using the definition to demonstrate this is more complex. Not all bitAssets are necessarily ponzis, but it is very easy to show that bitBTC are a ponzi.

Ok.. now that you have conceded that Not all BitAssets are ponzis...  let me try to elucidate something for you.

Lets assume that 100% of all BTC were locked away in some private network behind the great firewall of china and that no BTC could ever leave china.   This is of course an unrealistic case, but it will help prove my point.  Within china there is a market for BTC and its value is well known.

Back in the United States someone wants to speculate on BTC but they can never acquire it due to the great firewall.    So they create a prediction market and take bets with their friends about which way the value of BTC will move in china.  At the end of the day all positions are paid off in USD. Anyone on the long side of the bet sees profits/losses as if he were actually holding BTC against Dollars, the short side sees the opposite.  Thus all profits / losses are transferred between these two parties an no BTC ever entered the equation. 

The supply and availability of BTC is not a factor in the effective operation of BitBTC because all trades are settled in BitShares... the only thing the participants get is a derivative asset who's return is highly correlated with the price movement of BTC.

I can show the source of every profit, loss, and dividend in my system and it is 100% transparent.   What ponzi scheme can be 100% transparent and still find any kind of success in the market?

[charleshoskinson]

Well it's obvious that we have some sort of super complex master plan as you can clearly see by Cunicula's calculations:



OMG, THE MATH IS OBVIOUS GUYS!!!! We have created perpetual motion machine that will destroy all the worlds markets. I mean just look at these interest calculations:



And this research paper is the final straw:

http://mic.sgmjournals.org/content/139/10/2495.full.pdf

That's the key to the ponzi, they are hiding the money in the helicobacter stuff. I'll be doing an interview about it soon:

http://www.southparkstudios.com/clips/155237/al-gore-is-super-awesome

[bybitcoin]

It seems the proposed corpus fails due to a fairly trivial structure property I hadn't considered. I was busy building a bounding argument for generating p1,p2 and r off of a given n and hadn't even considered that they are either both congruent to 1 or 3 creating the obvious problem (4k1 +1)^r + (4k2 +1)^r cannot sum to a number that is divisible by 4. Feels pretty idiotic on my part honestly.

Don't worry these kinds of mistakes are too common for busy minds, and frequently happens to all of us once in a while again and again
Wish a good fortune for your current project  

[charleshoskinson]

You have to admit though that it would have been cool to have such an M. Pretty slick proof.

[td services]

The green chalkboard above looks like one I saw in the TV series Fringe.

[becoin]

The supply and availability of BTC is not a factor in the effective operation of BitBTC because all trades are settled in BitShares... the only thing the participants get is a derivative asset who's return is highly correlated with the price movement of BTC.

I'm not saying it is a ponzi, but such a derivative asset is not correlated with the price movement of BTC (in China) because you can't transfer BTC (the underlying asset) in and out of China. There is no point of making exchange rate arbitrage if there is price difference as there is no way you can pay your BTC loss in China by transferring BTC from the US and there is no way you can transfer your BTC profit out of China to use BTC in the US. There is no incentive for such a market. Don't forget that market will be about USD/BTC, not BTC/USD. Thus trading result will always be in BTC, not in USD and with no connection between the Chinese BTC and American BTC  you can not ensure liquidity between those two markets at all. This is why they will be completely different asset classes!

Prediction market is another name for gambling, or if you use the word derivative, for option market. In options (as well as in gambling) the buyer's loss is limited to the premium they pay when they purchase put or call option. There is always expiry date for every option after which all liabilities if any are settled. There is no expiry date for BitShares as a financial instrument as you didn't specify the cut-off date for dividend. If you want to continue down this path you have to introduce obligatory and enforceable settlement for BitShares in certain moments. Derivatives always have expiry date! On the expiry date they have to be marked-to-market and arising profit/loss for transacting parties settled.

[cunicula]

There is no expiry date for BitShares as a financial instrument as you didn't specify the cut-off date for dividend. If you want to continue down this path you have to introduce obligatory and enforceable settlement for BitShares in certain moments. Derivatives always have expiry date! On the expiry date they have to be marked-to-market and arising profit/loss for transacting parties settled.

They cannot allow this because then you need to confiscate the bitBTC from 'savers' and leave them holding bitshares.

Forced settlement would ruin the whole ponzi. Not going to happen.

[bybitcoin]

You have to admit though that it would have been cool to have such an M. Pretty slick proof.

Yes it would have been a Mr. pretty proof had it worked that way!
By the way are you planning to launch at this coming October? And if not, then what's your schedule plan?

[charleshoskinson]

Yes it would have been a Mr. pretty proof had it worked that way!
By the way are you planning to launch at this coming October? And if not, then what's your schedule plan?

We have to build the communication and identity management backend first with a secure and easy to use client alongside a good wallet to store the funds. Keyhotee will be released with the ID and communication system in beta in November and the wallet beta will released in December.

The Keyhotee trading system, the data visualization and BitShares backbone will be released in stages starting with the first release in march to April of next year and then every two-three months thereafter until the quality and economic alignment makes sense for the scale we are trying to accomplish.

As we are rebuilding the blockchain and the PoW from scratch there is a lot of stuff like CoinJoin and Ultimate Blockchain Compression that we have been studying for integration into the finial BitShares design and we'll be as proactive a possible in announcing these innovations when they are ready for testing.

[giantcrab]

Now I believe everyone can agree that if this were a real bank and the bank stock has a non-0 value that each and every transaction would be valid and 'safe'.   The USD note's from the bank would have a market value of about 1 USD and the purchasing power would be defended by the bank which would honor its IOUs.   There should be no doubt that the USD would track real USD even though the bank never had any USD on deposit, only offsetting ledger entries and collateralized loans.

There are many difference between here the bank and Bitshare system, the bank issued USD notes with nominate price and it will honor its IOUs, but how about BitUSD? Its price will be solely determined by the market force and how can you say it will track the real USD?


I don’t think BitUSD can track real USD only because of market force unless some connection between BitUSD and real USD is built, market is such a world that many factors have impact on BitUSD/USD exchange rate, most probably the BitUSD/USD exchange rate will behave like bitcoin/usd rate –it will go up and down without a stable equilibrium. 

In another word, why should BitUSD track USD and BitGold track gold? Can their name lead to a market consensus?

To enable BitUSD track USD, market makers is needed at the early phase, the market maker can do something like to sign a contract with some estore to purchase their BitUSD at a proper price, or even provide futures contracts to stabilize the price of BitUSD, some time later when a stable connection between BitUSD and USD has been built the market maker can escape and we can still expect the track relationship remains.

[cunicula]

Now I believe everyone can agree that if this were a real bank and the bank stock has a non-0 value that each and every transaction would be valid and 'safe'.   The USD note's from the bank would have a market value of about 1 USD and the purchasing power would be defended by the bank which would honor its IOUs.   There should be no doubt that the USD would track real USD even though the bank never had any USD on deposit, only offsetting ledger entries and collateralized loans.

There are many difference between here the bank and Bitshare system, the bank issued USD notes with nominate price and it will honor its IOUs, but how about BitUSD? Its price will be solely determined by the market force and how can you say it will track the real USD?


I don’t think BitUSD can track real USD only because of market force unless some connection between BitUSD and real USD is built, market is such a world that many factors have impact on BitUSD/USD exchange rate, most probably the BitUSD/USD exchange rate will behave like bitcoin/usd rate –it will go up and down without a stable equilibrium. 

In another word, why should BitUSD track USD and BitGold track gold? Can their name lead to a market consensus?

To enable BitUSD track USD, market makers is needed at the early phase, the market maker can do something like to sign a contract with some estore to purchase their BitUSD at a proper price, or even provide futures contracts to stabilize the price of BitUSD, some time later when a stable connection between BitUSD and USD has been built the market maker can escape and we can still expect the track relationship remains.

Giantcrab is 100% correct. It delights me to see a voice of reason.

[bytemaster]

Now I believe everyone can agree that if this were a real bank and the bank stock has a non-0 value that each and every transaction would be valid and 'safe'.   The USD note's from the bank would have a market value of about 1 USD and the purchasing power would be defended by the bank which would honor its IOUs.   There should be no doubt that the USD would track real USD even though the bank never had any USD on deposit, only offsetting ledger entries and collateralized loans.

There are many difference between here the bank and Bitshare system, the bank issued USD notes with nominate price and it will honor its IOUs, but how about BitUSD? Its price will be solely determined by the market force and how can you say it will track the real USD?


I don’t think BitUSD can track real USD only because of market force unless some connection between BitUSD and real USD is built, market is such a world that many factors have impact on BitUSD/USD exchange rate, most probably the BitUSD/USD exchange rate will behave like bitcoin/usd rate –it will go up and down without a stable equilibrium.  

In another word, why should BitUSD track USD and BitGold track gold? Can their name lead to a market consensus?

To enable BitUSD track USD, market makers is needed at the early phase, the market maker can do something like to sign a contract with some estore to purchase their BitUSD at a proper price, or even provide futures contracts to stabilize the price of BitUSD, some time later when a stable connection between BitUSD and USD has been built the market maker can escape and we can still expect the track relationship remains.

BitUSD will track USD in the same way as prediction markets track any arbitrary concept.  I recommend you study how prediction markets, derivative markets, or 'side-bets' work in practice.  Every actor in the market has financial incentive to tie BitUSD to USD by 'betting' on where the future consensus will move.  The only logical way to bet is to assume everyone else will eventually bet with with consensus toward USD.

No market makers are ever needed.  In fact, there is no need for BitUSD to ever be exchanged with USD for the system to have value.  Think on this last point a bit and you will gain many insights.

[charleshoskinson]

There are many difference between here the bank and Bitshare system, the bank issued USD notes with nominate price and it will honor its IOUs, but how about BitUSD? Its price will be solely determined by the market force and how can you say it will track the real USD?

This is a valid concern, but seems to have been addressed by academic examination:

http://forecastingprinciples.com/files/Berg_Nelson_Rietz_2007.pdf

http://hanson.gmu.edu/promisepredmkt.pdf

http://www.econstor.eu/bitstream/10419/33261/1/510931871.pdf

The core idea of the BitShares exchange is to create an environment where one can establish a global price for an asset, commodity, idea or venture in relation to a store of value that is divorced from politics or geography. Once these stores are convertible to fiat or other cryptocurrencies, then from historical inference, we project prices will track well.

I don’t think BitUSD can track real USD only because of market force unless some connection between BitUSD and real USD is built, market is such a world that many factors have impact on BitUSD/USD exchange rate, most probably the BitUSD/USD exchange rate will behave like bitcoin/usd rate –it will go up and down without a stable equilibrium.  

But can we place legitimate credence on the
accuracy of FX prices, which are determined solely through competition in a play-money market game? To an extent, yes. We find that FX prices strongly correlate with observed outcome frequencies

http://artificialmarkets.com/am/pennock-2001-science.pdf

In another word, why should BitUSD track USD and BitGold track gold? Can their name lead to a market consensus?

Yes. Simplicity is simply the best answer here. The name and market consensus about the concept in question should be sufficient.

To enable BitUSD track USD, market makers is needed at the early phase, the market maker can do something like to sign a contract with some estore to purchase their BitUSD at a proper price, or even provide futures contracts to stabilize the price of BitUSD, some time later when a stable connection between BitUSD and USD has been built the market maker can escape and we can still expect the track relationship remains.

You may be right about bootstrapping via market makers and this is something we can explore via data from the testnet when available. BitShares- like bitcoin- is an experiment that we are very excited to conduct and learn from. We are working with an algorithmic trader on Wall Street and a quant from England to both design tests and interpret the data generated. We will also be offering bounties to see if actors in the testnet can compromise the integrity of our system.

The key is to understand the goal first, which is using the technology inspired by Bitcoin to create a prediction market based pricing engine for anything that is global and divorced from the concerns of nations. We think BitShares as written represents a very good start towards that goal, but it will require a lot of effort to systematically test and deploy a polished, academically vetted product.

[cunicula]

The only logical way to bet is to assume everyone else will eventually bet with with consensus toward USD.

Until they don't and the ponzi collapses. In the meantime you will manipulate the price to bait in new fish.
Just give it up. You've been found out.

[cunicula]

Ugh. Don't let him sidetrack you with this prediction market crap. It is a red herring.

[charleshoskinson]

Ugh. Don't let him sidetrack you with this prediction market crap. It is a red herring.

Cunicula, Prediction markets are the core of the entire concept of BitShares. How can we ignore it? You've been arguing for weeks in both English and apparently Chinese about the fine details of an unimplemented system and when we discuss the actual purpose of the system you tell people to ignore it? Come on man. Just give it a rest already.

[cunicula]

Ugh. Don't let him sidetrack you with this prediction market crap. It is a red herring.

Cunicula, Prediction markets are the core of the entire concept of BitShares. How can we ignore it? You've been arguing for weeks in both English and apparently Chinese about the fine details of an unimplemented system and when we discuss the actual purpose of the system you tell people to ignore it? Come on man. Just give it a rest already.

The core concept is issuing interest-bearing BTC-denominated debt. There is no cap on accumulation of debt in the system.
This only ends one way, and it is not with your debt notes trading at parity with BTC.

[charleshoskinson]

Lol, ok you tell me what I'm building.  Some people are truly unique.