Pirate v2.0: Unravelling the Bitshares Ponzi

[bytemaster]

The Long position is always paired with a short position.   

To Short BitGold you borrow it like the prior example, and then sell the BitGold you receive to the individual who goes long.   Now to cover your short position you must repurchase it from the Long.

Can you describe the long process just like the short process? It won't take you a long time and I believe it will clear the mist for many people.

The Long and Short process are the SAME the person who borrows BitGold into existence is LONG BitGold until he sells the BitGold at which point he becomes SHORT. 

Example:  If I borrow $100 from you and keep it then I have $100 in my bank and a $100 debt to you on my books.  I am long and short and thus neutral.  If I then spend that $100 I am now short because I no longer have $100 in my bank, but I still owe you $100.  The person who holds the $100 with no debt is LONG USD.

[anaikh]

The Long position is always paired with a short position.   

To Short BitGold you borrow it like the prior example, and then sell the BitGold you receive to the individual who goes long.   Now to cover your short position you must repurchase it from the Long.

Can you describe the long process just like the short process? It won't take you a long time and I believe it will clear the mist for many people.

The Long and Short process are the SAME the person who borrows BitGold into existence is LONG BitGold until he sells the BitGold at which point he becomes SHORT. 

Example:  If I borrow $100 from you and keep it then I have $100 in my bank and a $100 debt to you on my books.  I am long and short and thus neutral.  If I then spend that $100 I am now short because I no longer have $100 in my bank, but I still owe you $100.  The person who holds the $100 with no debt is LONG USD.

You don't get my point. I know Long. My point is : What is the Long process in BitUSD? You buy BitUSD by what? Flat money or BitShare?

[bytemaster]

The Long position is always paired with a short position.   

To Short BitGold you borrow it like the prior example, and then sell the BitGold you receive to the individual who goes long.   Now to cover your short position you must repurchase it from the Long.

Can you describe the long process just like the short process? It won't take you a long time and I believe it will clear the mist for many people.

The Long and Short process are the SAME the person who borrows BitGold into existence is LONG BitGold until he sells the BitGold at which point he becomes SHORT. 

Example:  If I borrow $100 from you and keep it then I have $100 in my bank and a $100 debt to you on my books.  I am long and short and thus neutral.  If I then spend that $100 I am now short because I no longer have $100 in my bank, but I still owe you $100.  The person who holds the $100 with no debt is LONG USD.

Either.

You don't get my point. I know Long. My point is : What is the Long process in BitUSD? You buy BitUSD by what? Flat money or BitShare?

[anaikh]

Either.

You don't get my point. I know Long. My point is : What is the Long process in BitUSD? You buy BitUSD by what? Flat money or BitShare?

OK, Let discuss the two cases:
1. You buy BitUSD by USD.
Where is your BitUSD ? You have to generate them first, right? And in order to generate them someone else has to short BitUSD. Is that correct? If so, and there is no market-maker, if everyone thinks BitUSD will rocket into sky and no one short BitUSD, you can not generate BitUSD !

2. You buy BitUSD by Bitshare.
What will happen to the Bitshare?

[anaikh]

Either.

You don't get my point. I know Long. My point is : What is the Long process in BitUSD? You buy BitUSD by what? Flat money or BitShare?

OK, Let discuss the two cases:
1. You buy BitUSD by USD.
Where is your BitUSD ? You have to generate them first, right? And in order to generate them someone else has to short BitUSD. Is that correct? If so, and there is no market-maker, if everyone thinks BitUSD will rocket into sky and no one short BitUSD, you can not generate BitUSD !

2. You buy BitUSD by Bitshare.
What will happen to the Bitshare?

No Reply?

[charleshoskinson]

expect one after protoshares is released. Dan and co are probably pulling their hair out right now.

[bytemaster]

Either.

You don't get my point. I know Long. My point is : What is the Long process in BitUSD? You buy BitUSD by what? Flat money or BitShare?

OK, Let discuss the two cases:
1. You buy BitUSD by USD.
Where is your BitUSD ? You have to generate them first, right? And in order to generate them someone else has to short BitUSD. Is that correct? If so, and there is no market-maker, if everyone thinks BitUSD will rocket into sky and no one short BitUSD, you can not generate BitUSD !

2. You buy BitUSD by Bitshare.
What will happen to the Bitshare?

Well, if there is demand for BitUSD then the value of BitUSD will rise VS the value of BitShares.    Demand for BitUSD creates demand for BitShares and the ultimate result of demand for BitUSD is to drive the value of BitShares up and this is why someone would Short BitUSD.  So the situation you are concerned about cannot happen.

When you buy BitUSD with BitShares... you simply trade with someone.
If the person you are buying BitUSD from is Short Selling it, then the BitShares go into escrow/collateral until the short is covered.


No Reply?

[anaikh]

Either.

You don't get my point. I know Long. My point is : What is the Long process in BitUSD? You buy BitUSD by what? Flat money or BitShare?

OK, Let discuss the two cases:
1. You buy BitUSD by USD.
Where is your BitUSD ? You have to generate them first, right? And in order to generate them someone else has to short BitUSD. Is that correct? If so, and there is no market-maker, if everyone thinks BitUSD will rocket into sky and no one short BitUSD, you can not generate BitUSD !

2. You buy BitUSD by Bitshare.
What will happen to the Bitshare?

Well, if there is demand for BitUSD then the value of BitUSD will rise VS the value of BitShares.    Demand for BitUSD creates demand for BitShares and the ultimate result of demand for BitUSD is to drive the value of BitShares up and this is why someone would Short BitUSD. Comments: I really cannot follow you. If BitUSD has a higher value than BitShares, why would I buy BitShares?.  So the situation you are concerned about cannot happen.

When you buy BitUSD with BitShares... you simply trade with someone.
If the person you are buying BitUSD from is Short Selling it, then the BitShares go into escrow/collateral until the short is covered.
So you lock 2x the seller's BitCoin and transfer 1x to the buyer? Remember you told us BitUSD is a kind of contract.


No Reply?

[markm]

Rise VS does not mean worth more than.

If bitshares are worth $100 each and bitUSD rise from $1 each to $2 each, they have risen VS bitshares, but are still not worth more than bitshares.

In fact, to create $1 worth of bitUSD requires $2 worth of bitshares, so unless there are twice as many bitshares as there are bitUSD, bitshares should tend to be worth more than bitUSD.

Bear in mind also there will need to be twice as much "worth" of bitshares as there are "worth" of bit gold, bitsilver, bitpoop, bitwhatzits, bitwierds, bitwhatevers, bitwhateverelses etc etc all put together.

So hey if I hold a shit-load of bitshares and using some of them to create some bitUSD would increase the value of bitshares why wouldn't I use a few of my bitshares to do that so the massive majority of my bitshares will increase in perceived value thanks to the usefulness and convenience of the bitUSD that I used a few of them to bring into existence?

-MarkM-

[anaikh]

It seems those guys finally gave up...

[SlyWax]

I guess this is pure speculation market.
You are not trading currency, you are trading position.

So, to buy your position, you need money, which is bitshares.
A long position = current price in bitshare.
A short position = 2 * current price in bitshare.

Then went you get out of your position you get :
Out of long = new price in bitshare ( you will win (lose if negative) : new price - old price )
Out of short = old price - new price + 2 * old price ( you will win (lose if negative) : old price - new price )

So basically bitshares are toy money to play speculation.
But you can't get the real thing,  ie you can't use your bitUSD, you can only trade them back for bitshares.
I don't know if decorrelation from real thing for trading is good or not.
But you sure loose the "backing by" aspect of it.
And since bitcoin for example is only good for what you can buy with it...

As a way for a decentralized market place, it could be good, but you still need a way to get out of bitshare (if it's not only for a funny toy), and thus need a real market to get real bitcoin. That's kind of a paradox !

[alp]

This is one of those things that will work really well until it doesn't (sort of like the subprime mortgage market).

As long as housing (Bitshares) go up in value, all is well and the underlying asset can be backed up.  But once it falls, it will ripple through the market, causing even more instability, crashing the whole house of cards to nothing.

Definitely not a Ponzi, just another bad idea that is just good enough to get attention and work for a period of time until it doesn't.

[delulo]

The result is that we avoid 99.9% of all problems with the wall street systems which ultimately attempt to replace market forces and voluntary trades with equations and computer models in a manner that market participants have no way of understanding.

As someone who has made 2,000,000 trades on Wall Street over 20 years...
And about 2,000 this week as a Market Maker in about 150 stocks...
It's completely nonsensical statements like this = pure FUD...
That often show how OUT-OF-DEPTH engineers are when trying to re-invent the Financial Markets.

Ripple is an example of this = something Reuters might have been doing in the 90s.

You guys are gonna be running elaborate simulations on a Testnet...
In order to divine information a good Margin Clerk could give you in 15 minutes.

Also, I would standardize using either 150% or 50% to address the same thing.

--------------------------------------------------------------------------

From the White Paper:

2. by a miner who enforces a margin call when the value of the backing falls to less than
150% of the value of the BitUSD....

If the miner is forced to exercise a margin call, the network assess a 5% transaction fee in order
to motivate market participants to proactively manage their margin. If the market moves so fast
that the margin is insufficient...

Many fast markets are manufactured...
So miners will incentivized to game this market to accumulate FAT fees?


 

and in https://bitcointalk.org/index.php?topic=279771.0;all  also he wrote:
"The legal requirement of SETTLEMENT on a specific date...
Whether by Delivery or Cash Settlement is what enforces futures markets.
It's not clear to anyone whether you have a proper mechanism in place.

As for bid-ask spreads... there is no such thing as "you now have".

Bid-ask spreads are a function:

(a)  market liquidity

(b)  market volatility

(c)  market manipulation

You are gonna start with very liitle (a)... and a large amount of (b) and (c).
Including rules like your 5% short closure Tax that will create massive (c).

In general, overly complex systems are designed...
To make it easy for Insiders/Experts to fleece the ordinary Lambs...
So complexity in and of itself... is a reason for skepticism."


@ bytemaster, you have thoroughly addresses concerns of canicula... But can you reply to some of the concerns of quantplus?