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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2009052 times)
BldSwtTrs
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October 19, 2014, 09:16:34 AM
 #14021

For those who want a decentralized, trustless, gold backed digital currency

What..
It's not gold backed. All BitAssets are backed by BTSX.

At the endgame it will allow to speculate and hedge without counterparty risk. People will also be able to earn interests on their savings while having their purchasing power store in any asset of the economy they wish, without counterparty risk. But yeah, it's just a fad.

bitBTC is not backed by btsx... you can buy bitBTC without btsx and get back out after earning interest... if you want to "short" bitBTC you need collateral in btsx to ensure you have sufficient margin to cover a loss.
You create a bitAsset  (including bitBTC) by shorting it (assuming there is someone willing to take the opposite side by buying it). And in order to short it, you need to collateralize some BSTX within the blockchain.

But to buy a bitAsset you don't need a collateral, it's only the person who is shorting who brings the collateral on the table.
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October 19, 2014, 11:29:25 AM
 #14022

When bitshares was just starting I spent hours proving on this forum why it wouldn't work.  I think things have changed since then based on my input I hope..  For example the original formulation had no oracle.  Goldshares was supposed to track gold just because of its name.  But at that time the devs were not really capable of doing a theoretical analysis of the system to prove it would work.  So I STRONGLY recommend you do your own diligence or hire someone who can before putting value in the system.
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October 19, 2014, 11:48:24 AM
 #14023

I just love this slow grind  higher.

Sneaking out the door...

You done jinxed it Wink
cypherdoc
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October 19, 2014, 12:26:20 PM
 #14024

I just love this slow grind  higher.

Sneaking out the door...

You done jinxed it Wink

Told ya. They key off me.

Cheap coins.

edit:  this one took less than 1 min. Grin
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October 19, 2014, 12:48:21 PM
 #14025

I just love this slow grind  higher.

Sneaking out the door...

You done jinxed it Wink

Told ya. They key off me.

Cheap coins.

edit:  this one took less than 1 min. Grin

Wee!  there you go Pruden!

HeliKopterBen
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October 19, 2014, 12:49:01 PM
 #14026

For those who want a decentralized, trustless, gold backed digital currency

What..
It's not gold backed. All BitAssets are backed by BTSX.

At the endgame it will allow to speculate and hedge without counterparty risk. People will also be able to earn interests on their savings while having their purchasing power store in any asset of the economy they wish, without counterparty risk. But yeah, it's just a fad.

The way it reads it would seem that there is a systemic counterparty.  Also significant complexity risks.  

For example, When and if an asset fails, it is redeemed in the Bitshares used as collateral.  These Bitshares may then be sold, driving the Bitshares price down, possibly causing another collateral failure in a different asset, and so on.  Once it starts, there will likely be a rush to the exit and cause cascading, yes?
You cant short below 10% of the median price feed

It remains to be seen how the system will react to volatility.  A 50% move in price in 1 hr or less could result in more assets available to be sold than there is a counterparty to cover.

Counterfeit:  made in imitation of something else with intent to deceive:  merriam-webster
hdbuck
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October 19, 2014, 12:51:48 PM
 #14027

I think it has something to do with what the thinking was at the time... no human is smart enough to see that many steps ahead or even care about tha tmany steps ahead.. in general people are dumb. especially those in power who didn't study math or don't understand basic logic (alot of them)... they do whats best for them at the time. So at the time there was a scare for war.. and knowing that they wouldnt be able to fund it.. they had to get off the standard so that they can print money to fund a war if it happened. Didn't France ask for their gold at the time and that pretty much precluded the event since they couldn't satisfy their request without pretty much using most of their stash?

yup Charles de Gaulle went to NY with warships to claim our gold back, in the mid 60s.
As opposed to germany, which still failed at doing so lately: http://www.bloomberg.com/news/2014-06-23/german-gold-stays-in-new-york-in-rebuff-to-euro-doubters.html

FED is a gigantic gold blackhole. They hate gold as it is the only thing that value is not fully compressible. It is somehow the last rempart before their fiat paper domination system.
They hate it, but they control it.. so that's that.

But then bitcoin came along..
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October 19, 2014, 04:36:44 PM
 #14028


Yes.

It might be interesting to note that this process started to accelerate when Nixon took the dollar off gold.

Sound money is peoples money.


This is a very interesting chart. It begs the question "Why?" Why has inequality steadily increased?
I think the reason is that in an unbounded monetary system the people who have first use of new money benefit the most. They benefit because the inflationary impact of the new money does not appear immediately. So banks, big business which get priority on loans, and the wealthy who can leverage their assets do so before the inflationary impact occurs. Ordinary people are using the new money after the inflationary impact. For the middle class this is a financial death of a thousand cuts.

The gold standard was weak long before 1971, so the chart reflects this, but the trend goes ballistic in a fully fiat system. Cue Supertramp, because this is the true crime of the century.

Great point. But it's been going on much longer than the past century.
Melbustus
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October 19, 2014, 04:45:14 PM
 #14029

For those who want a decentralized, trustless, gold backed digital currency

What..

...You will always be able to exchange one bitgld for one ounce of real gold.


Similar to how this was supposed to always be redeemable for real gold?



...that is, until the guys in charge of the gold vault said they weren't gonna do that anymore.




Who is in charge of bitshares?


Doesn't matter. The point is that there necessarily has to be some centralized management of the physical to virtual connection somewhere, be it the guy at the gold vault, or an Oracle (or set of Oracles) providing a price feed.

This is not really a problem with Bitshares so much as "backing" is simply a stupid idea to begin with.

I perhaps shouldn't say "stupid"; it was a somewhat reasonable stopgap for a century or so, but now we can do credible digital scarcity natively, so the backing hack (and monetary use of PMs) is no longer necessary at all.

Why the hell are we trying to replicate the folly of backing in the very blockchain idea that fundamentally makes backing unnecessary?

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
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cypherdoc
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October 19, 2014, 04:55:05 PM
 #14030

For those who want a decentralized, trustless, gold backed digital currency

What..

...You will always be able to exchange one bitgld for one ounce of real gold.


Similar to how this was supposed to always be redeemable for real gold?



...that is, until the guys in charge of the gold vault said they weren't gonna do that anymore.




Who is in charge of bitshares?


Doesn't matter. The point is that there necessarily has to be some centralized management of the physical to virtual connection somewhere, be it the guy at the gold vault, or an Oracle (or set of Oracles) providing a price feed.

This is not really a problem with Bitshares so much as "backing" is simply a stupid idea to begin with.

I perhaps shouldn't say "stupid"; it was a somewhat reasonable stopgap for a century or so, but now we can do credible digital scarcity natively, so the backing hack (and monetary use of PMs) is no longer necessary at all.

Why the hell are we trying to replicate the folly of backing in the very blockchain idea that fundamentally makes backing unnecessary?


yep, he's got it upside down.

the concept is a total anathema to what this whole thread has been arguing in the first place.
BldSwtTrs
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October 19, 2014, 05:06:59 PM
 #14031

For those who want a decentralized, trustless, gold backed digital currency

What..

...You will always be able to exchange one bitgld for one ounce of real gold.


Similar to how this was supposed to always be redeemable for real gold?



...that is, until the guys in charge of the gold vault said they weren't gonna do that anymore.




Who is in charge of bitshares?


Doesn't matter. The point is that there necessarily has to be some centralized management of the physical to virtual connection somewhere, be it the guy at the gold vault, or an Oracle (or set of Oracles) providing a price feed.

This is not really a problem with Bitshares so much as "backing" is simply a stupid idea to begin with.

I perhaps shouldn't say "stupid"; it was a somewhat reasonable stopgap for a century or so, but now we can do credible digital scarcity natively, so the backing hack (and monetary use of PMs) is no longer necessary at all.

Why the hell are we trying to replicate the folly of backing in the very blockchain idea that fundamentally makes backing unnecessary?
Blockchain doesn't make backing unecessary. Are you really thinking that blockchain technology end the need to make credit?
If I put some BTC to collaterize an IOU that I issue in exchange of funding, then that IOU become a lot more valuable on the free market.

Blockchains allow digital scarcity. Digital scarcity gives value. In order to back something you need someone valuable.
So the only logical conclusion you can make is that blockchain tokens are great to back promises. And the usefulness of making promises won't go away with Bitcoin.
BldSwtTrs
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October 19, 2014, 05:13:28 PM
 #14032

For those who want a decentralized, trustless, gold backed digital currency

What..

...You will always be able to exchange one bitgld for one ounce of real gold.


Similar to how this was supposed to always be redeemable for real gold?



...that is, until the guys in charge of the gold vault said they weren't gonna do that anymore.




Who is in charge of bitshares?


Doesn't matter. The point is that there necessarily has to be some centralized management of the physical to virtual connection somewhere, be it the guy at the gold vault, or an Oracle (or set of Oracles) providing a price feed.

This is not really a problem with Bitshares so much as "backing" is simply a stupid idea to begin with.

I perhaps shouldn't say "stupid"; it was a somewhat reasonable stopgap for a century or so, but now we can do credible digital scarcity natively, so the backing hack (and monetary use of PMs) is no longer necessary at all.

Why the hell are we trying to replicate the folly of backing in the very blockchain idea that fundamentally makes backing unnecessary?


yep, he's got it upside down.

the concept is a total anathema to what this whole thread has been arguing in the first place.
Cypherdoc you think Bitcoin will replace gold, right? Me too.

What gold was use for? Backing stuff...

So you should think in the future BTC will be used to back stuff too. So this is not an anathema to think a blockchain token is useful to back various things.

The only anathema from you point of view is to use another digital scarce token than BTC to back something, but it appears that BTC cannot be collaterized in its own blockchain so there was a need to make another blockchain to allow the features that Bitshares makes available.
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October 19, 2014, 05:45:11 PM
 #14033

BitsharesX is perhaps the most interesting distributed asset ledger I've seen so far.  Unlike everything else, it does actually require backing in the form of BTSX.  However, this is also its weakness.  If there is ever a run on BTSX and the price drops, the system will not allow people to sell their undercollateralized as less than the price peg specified by the oracles.  Of course, it should be possible for people to put up this cheap BTSX as collateral to short more of the bit asset into existence, which should help stabilize the falling BTSX price plus recolateralize the asset.  However, the risk is that nobody steps up in a crises.  There should be a profit motive though, so it may work out.  We'll just have to see how it goes when the eventual price drop of BTSX happens.  If the system makes it through that, I think it will quickly rebound with a new found level of trust, and could potentially provide a means of trading almost any asset digitally with the same speed and low cost of bitcoin.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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sidhujag
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October 19, 2014, 05:52:39 PM
 #14034

When bitshares was just starting I spent hours proving on this forum why it wouldn't work.  I think things have changed since then based on my input I hope..  For example the original formulation had no oracle.  Goldshares was supposed to track gold just because of its name.  But at that time the devs were not really capable of doing a theoretical analysis of the system to prove it would work.  So I STRONGLY recommend you do your own diligence or hire someone who can before putting value in the system.
ya I remember that.. and oracles are used now to feed price which filters shorts by not allowing shorting below 10% medium or buying about 10%.. so it keeps a band. The black swan type event is what it tries to avoid.. but its probably the best solution I've seen so far.

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sidhujag
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October 19, 2014, 05:55:49 PM
 #14035

For those who want a decentralized, trustless, gold backed digital currency

What..

...You will always be able to exchange one bitgld for one ounce of real gold.


Similar to how this was supposed to always be redeemable for real gold?



...that is, until the guys in charge of the gold vault said they weren't gonna do that anymore.




Who is in charge of bitshares?


Doesn't matter. The point is that there necessarily has to be some centralized management of the physical to virtual connection somewhere, be it the guy at the gold vault, or an Oracle (or set of Oracles) providing a price feed.

This is not really a problem with Bitshares so much as "backing" is simply a stupid idea to begin with.

I perhaps shouldn't say "stupid"; it was a somewhat reasonable stopgap for a century or so, but now we can do credible digital scarcity natively, so the backing hack (and monetary use of PMs) is no longer necessary at all.

Why the hell are we trying to replicate the folly of backing in the very blockchain idea that fundamentally makes backing unnecessary?


The world won't change overnight... so you have backed assets with price feeds... until you don't. It's called the network effect. Both sides must adapt not just one.

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October 19, 2014, 05:59:38 PM
 #14036

Bitsharesx is an eco system... that allows you to create assets, some are backed by a peg and some are not.. freely traded. The ones backed by a peg (costing about 300k btsx right now)
what do you mean by this?  is this a 1x fee or something?
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are meant to be tracked via a feed fed in through the delegates, which gets itself around security issues of POS (Delegate-POS is the algo name). Which Larimer/Buterin seem to agree is the best one moving forward away from POW.

still amazing to me Buterin raised all that BTC yet doesn't even have this fundamental strategy resolved yet
Quote

Anyways one of these assets backed by pegs is the bitUSD which is meant to track USD so a price feed is fed in(how many USD each BTSX is worth on an average of exchange price feeds) so to keep bitUSD trading at roughly $1, and thus people can trade btsx for bitUSD and vice versa knowing that they are essentially going to and from USD because you will be able to trade bitUSD back to USD at some time (for legal reasons this was left out until third parties come along and offer this service which are regulated as money transmitters).
you hope they come along
Quote
Another one is bitBTC which tracks BTC... so you can go to and from BTC to BTSX.. same way as going from USD to BTSX and back.. however BTC <--> BTSX. The idea is that many businesses can use bitUSD to offer services to customers and be able to transfer these bitUSD across the chain quickly and efficiently without having to pay fees , and use the built-in bitshares privacy features for annonymous transactions etc etc you get the picture...

There are 101 oracles (and more lining up as backups incase of some going down) doing this feeding and yet it is a more decentralized model than bitcoin (in the way of large concentrated mining pools).
i'll disagree with this.  just b/c there might be larger #'s of delegates doesn't mean they're more decentralized.  many could be owned by same individual.  i don't believe voting necessarily solves this either b/c it sounds like that could be gamed.
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These oracles or delegates get paid to sign blocks as a job. Because of this there is incentive to provide this service.. as it is profitable to do so at these prices.
of course there is incentive.  no work needs to be done.  just get the votes from either your buddies or already vested interests in the POS system then get paid to simply sign blocks.  sounds like centralization to me even worse than Bitcoin mining. btw, i think there's a chance we've seen the last time a miner gets to 50% of the network hashrate as we're getting commoditization of hardware with 10x lower prices to the small miner.  this is good and could reverse the swing of the pendulum back towards increasing decentralization as a result.  the other evidence this is happening is the hashrate is leveling off and we could be stuck at 14nm ASICS for a few years.  that's a good thing.
Quote
.  

this is an insider club from the outset In order to become a delegate you must set up a delegate as yourself and get voted to become an official bitshares delegate.. people have to beleive in you and there is an in-chain voting mechanism used to figure out who are qualified to become delegates based on popularity of votes (there are obvious safe-gaurds to avoid people from getting them selves voted in easier).

so how can this be successful in the long run? there is a tremendous incentive to own several delegate nodes. insider club=ponzi scheme.
Quote

It is meant to work in conjuction of a currency as bitUSD is doing.. and bitBTC... it is not meant to work as a currency itself as the chain is used for mor ethan just a tx ledger for payments (breaking satoshi's golden rule)... however if thought about in another way that it works in partership with bit coin.. in that bitcoin may be used as a currency and bitshares may be used to issue assets/stocks/companies that operate within clearly defined rules without corruption then it makes sense on where to draw lines between bitcoin and bitshares... and IMO it is aptly named in that regard.. bitshares for share issuance and bitcoin for coin transactions and spending.

can u explain how the btcx interface with the BTC blockchain?  is it using the 40 byte op_return and for what purpose?
Quote
You might ask why would I transfer my BTC to bitBTC? Well the incentive is that you get paid interest by holding, through a decentralized solution. If you hold atleast a few months then it is in the range of 10-15% per year right now.. better than any bank.
since eventually the original BTC needs to be paid back along with BTC interest, how does the system continue long term as BTC doesn't inflate?
Quote
It is the only true form of interest payment for bitcoins because you hold your keys.. while all other solutions cause you to send BTC to someone else thus the keys controlling your coins change... in this method you hold your bitBTC keys the same way you hold your BTC keys and essentially earn interest over time... the interest is accumulated fees that people who "short" bitUSD and other assets pay.. you can go long and short bitUSD and other assets just like any other market... market makers and arb bots do this to make money off the spreads and liquidity.. and the holders of the assets win by collecting fees.
holding bitBTC privkeys is not the same as holding BTC privkeys. be careful.
Quote


Other fees that are paid are used to burn coins to reduce the total overall supply so anyone holding anything in btsx will become more valuable over time.

at the very best then it sounds like someone would just want to hold btsx as its supply will be decreasing.  the whole thing sounds dicey to me.  none of these overlays will take off until Bitcoin itself is solidified and accepted as a bonafide currency/money.
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October 19, 2014, 06:07:27 PM
 #14037

still amazing to me Buterin raised all that BTC yet doesn't even have this fundamental strategy resolved yet
First things first.

Ethereum house needed to make sure they were fully stocked with herbs.
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October 19, 2014, 06:22:10 PM
 #14038

the other thing about Bitshares is that you have to assume btsx will gain and keep any value at all.  why would it?

1.  it isn't money
2.  it has no network effect
3.  do ppl really want to trade all these overlay assets on top of the blockchain?  it could become quite costly depending on how high a price BTC attains and how high a tx fee might go.
4.  if Bitcoin's destiny is to become a world reserve currency that supports and disciplines (maximum 10x leverage) the existing fiat system, there would never be a need for Bitshares.
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October 19, 2014, 06:23:56 PM
 #14039

is this real?



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October 19, 2014, 06:46:00 PM
 #14040

the other thing about Bitshares is that you have to assume btsx will gain and keep any value at all.  why would it?

1.  it isn't money
2.  it has no network effect
3.  do ppl really want to trade all these overlay assets on top of the blockchain?  it could become quite costly depending on how high a price BTC attains and how high a tx fee might go.
4.  if Bitcoin's destiny is to become a world reserve currency that supports and disciplines (maximum 10x leverage) the existing fiat system, there would never be a need for Bitshares.
For 1 and 2 people could have said the same thing about Bitcoin in the early days. Rome wasn't build in a day.

3. The transaction fees on Bitshares doesn't depend on the Bitcoin one. The DPOS system scale very well, cost of transaction will not be an issue.

4. These are all problems which are not solved by Bitcoin :
- hedge and speculate without counterparty risk
- earn an (rather high) interest rate without counterparty risk
- diversify one wealth (you will be able to keep X% of you wealth in wheat with BitWheat, Y% in JPY with bitJPY, Z% in GOOG with bitGOOG, etc.) while being government-proof since the purchasing power remain in the custody of a blockchain.

And if BitAssets are useful then BTSX will have value because you need BTSX to create BitAssets.
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