[Bitshares] bitUSD discussion

[FandangledGizmo]

Hmm. I think I will need to sleep one night or two over this. That system looks a bit fragile if you ask me.

(btw. there will be NXT backed assets shortly in the next major feature release, so, not back by reputation alone anymore.)

How is Nxt planning on doing this? I have a feeling it may be the same as BitsharesX's back up plan.. getting the average of a bunch of market data feeds.

If it is a different approach, could you explain how you guys are planning on doing it?

I think theirs isn't even that, it's just a very basic implementation of collateral to give a base value to a user issued asset.

So an issuer can lock up some NXT when they create a user issued assets which 'backs' it.

Like someone on their system can make 'Y' Asset, with a 100 total tokens and lock up 100 NXT in the beginning, then you know each 'Y' is at least redeemable for 1 NXT. Something like that.

I guess it can help seed or give some confidence in a new user issued asset or something?

[bytemaster]

It is quite entertaining seeing what people are saying about me.  As someone who believes in finding free market solutions to secure our life, liberty, and property and whom is more anarcho-capitalist than anyone I have ever met it is absolutely hilarious that I am being accused of following Helicopter Ben.



My core value system is centered around property rights and my economics are Austrian.   

The problem this thread has is that everyone is talking past each other and that is understandable given how hard it is to internalize the market mechanics and then explain what you know to others. 

The primary assumption is that there exists a crypto-asset with no counter party and a non-zero value.  IE: bitcoin, Nxt, and BTSX.

The secondary assumption is that the volatility of this asset is within some reasonable range.  200% initial collateral seems to be reasonable, but it could easily be 400% if the volatility called for it.   

Given these assumptions we then assume there are two individuals in the free market that want a "contract for difference".  Contracts for difference are well established and proven and even used in counter party.  One person is given price stability and the other is given leverage.   

If you assume the contract for difference was settled by a 3rd party price feed then it is clear how it would work.   

So given those initial fundamentals we can slowly build up to BitAssets.   The first step is to take the same contract and remove the 3rd party price feed and instead use Nash Equilibrium.  Both parties will want to exit at some point and thus have to agree on a price in the future.  Assuming they were both equally wanting to exit their position the price they would agree at would be the "fair price".   Now clearly if there are only two parties to the trade they may not want to exit at the same time.    So you allow the "long" side to sell his position to others and you allow the "short" side to cover with anyone.   

If someone wants to be a stubborn jerk and not settle then that is fine.... eventually a margin call will be triggered.   The peg will fluctuate as the relative demand for longs vs shorts settling causes the peg to have a settlement premium sufficient to motivate settlement.   

I think it is fairly clear that if there is a price feed from a trusted source that was used to enforce settlement then the system would work to the extent that you could trust the feed.   The hypothesis is that this price feed is irrelevant given a market full of speculators and market makers willing to hold until a short voluntarily covers at a fair market price.

I hope that through this perspective I have shown what the economic incentives are and how the core principles are sound.  All that remains to be seen is whether "market consensus and speculation" is enough to enforce a peg via a "decentralized price feed" or "prediction market" mechanic.  My understanding of game theory and economic incentives tells me this will work, but even if I am wrong I know that price feeds can be used as a "trusted" judge on the "smart contracts for difference".   It is an entirely different game to trust someone to produce a fair feed (or 101 someones) than to trust someone to maintain a vault full of gold.

 

 

 

[Indemnified]

Thanks for bringing some clarity to this discussion.

[devphp]

my economics are Austrian.   

Well, that's good. Except this doesn't correlate with Bitshares's decision to support the price of BTSX with the IPO funds. This is rigging of the market, not free market, and this is exactly what central banks do in the fiat world.

[bytemaster]

my economics are Austrian.   

Well, that's good. Except this doesn't correlate with Bitshares's decision to support the price of BTSX with the IPO funds. This is rigging of the market, not free market, and this is exactly what central banks do in the fiat world.

That wasn't what was going on there.  That was us making an investment decision based upon expected growth.  I know enough that you don't make money by fighting the markets.

[devphp]

That was us making an investment decision based upon expected growth.

Well, that would be like self-fulfilling prophecy then, wouldn't it? You prop up the price with the IPO funds and there is your expected growth realized in price charts

Please reconsider your decision, or you may end up being grouped in the same category as keynesian central bankers. And you can also end up being owner of a sizeable portion of BTSX (20-30%), which goes against decentralization ideals and goals.

[fuznutts]

All i'm going to say is that I am one of the biggest "conspiracy theorists" around...and after a LONG time learning about bitshares I am wholly in the camp that believes, as toast says, the "150% reserve" system they are setting up *if the peg holds* is going to piss off a lot of "elite", NWO banker types.  Why?  Because it is NOT fractional and is dictated by market forces---not an monopolistic cabal of old-world money that is the enemy of all free people

Sincerely hope people will do some reading and even attend the weekly mumble hangout that Dan has with--quite literally--anyone who wants to attend.  https://bitsharestalk.org/index.php?topic=4150.0  

Go ahead...visit...ask those tough questions in person!  Oh, and btw, anyone who attends can record and report on these sessions!

[From Above]

Please reconsider your decision, or you may end up being grouped in the same category as keynesian central bankers. And you can also end up being owner of a sizeable portion of BTSX (20-30%), which goes against decentralization ideals and goals.

a nifty little nxt whale parasite giving what they call the 'great satan on the blockchain bernanke friend' nifty hints as to what he should do and what better not LOL.  Crypto Cold War.

=)

WOW I love that CryptoEntertainment

~CfA~

[nikola384]

That was us making an investment decision based upon expected growth.

Well, that would be like self-fulfilling prophecy then, wouldn't it? You prop up the price with the IPO funds and there is your expected growth realized in price charts

Please reconsider your decision, or you may end up being grouped in the same category as keynesian central bankers. And you can also end up being owner of a sizeable portion of BTSX (20-30%), which goes against decentralization ideals and goals.

Sincerely hope people will do some reading and even attend the weekly mumble hangout that Dan has with--quite literally--anyone who wants to attend.  https://bitsharestalk.org/index.php?topic=4150.0  

Go ahead...visit...ask those tough questions in person!

Reading devphp's post here and on the NXT forum, I think he has done his share or reading about bitshares; And with every passing minute he is more and more concerned that he is about to become the buyer in the famous pizza/BTC story...

[From Above]

Reading devphp's post here and on the NXT forum, I think he has done his share or reading about bitshares; And with every passing minute he is more and more concerned that he is about to become the buyer in the famous pizza/BTC story...

hi nikola im not sure if u r new or not but 'crypto 2.0 advocates' and IN PARTICULAR the NxTsees bitches are the hardcore delusionists of the cryptoscene.  they think NXT is something like a GOD particle which is unrivaled in the universe

devphp thinks he is some kind of Crypto Halfgod Man and only THROUGH the LIGHT of Nxt can u come to the financial freedom.  i know it sounds ridiculous yes sure but this is the worldview these people have LOL

now the question is when will BiTShares guys begin to be like this too LOL

~CfA~

[TaunSew]

biTshares is another 2.0 pump as far as I can tell.  You're trying to tell us it's this popular thing but all I see is 90%+ of it being dominated by a few funds in China ~ classic pump and dump.  

biTshares people have invaded Bitcointalk and many crypto forums to try to plead people to get into the pump.    

 It's beyond ridiculous as bitassets hasn't even been released yet nor is it proprietary technology.  When the Chinese funds stop pumping then there'll be this air sucking sound, biTshares will stagnate and NXT will implement its' own collateral and pegging system if it's actually a demanded feature and not a hype speculation like anonymity was for the past four months.


Congratulations biTshares it took you months to copy NXT's asset exchange (with a few whistles added).  NXT is still the most innovative crypto.

[chryspano]

biTshares is another 2.0 pump as far as I can tell.  You're trying to tell us it's this popular thing but all I see is 90%+ of it being dominated by a few funds in China ~ classic pump and dump.  

biTshares people have invaded Bitcointalk and many crypto forums to try to plead people to get into the pump.    

 It's beyond ridiculous as bitassets hasn't even been released yet nor is it proprietary technology.  When the Chinese funds stop pumping then there'll be this air sucking sound, biTshares will stagnate and NXT will implement its' own collateral and pegging system if it's actually a demanded feature and not a hype speculation like anonymity was for the past four months.


Congratulations biTshares it took you months to copy NXT's asset exchange (with a few whistles added).  NXT is still the most innovative crypto.

Nxt is inferior to bitshares, you are really pissed off because you CAN'T copy bitshares!!





under this line you can continue with your lies, fud and misinformation you have a mission after all...
==============================================================================

[Tradingriver]

biTshares is another 2.0 pump as far as I can tell.  You're trying to tell us it's this popular thing but all I see is 90%+ of it being dominated by a few funds in China ~ classic pump and dump.  

biTshares people have invaded Bitcointalk and many crypto forums to try to plead people to get into the pump.    

1. NXT startet with 75 contributer - do you call NXT also a pump and dump?
2. If this is a Bitcointalk invasion - no country at all would lift a finger to fight this 5 guys. Makes me laughing really loud.

I think i will end this communication. I believe in the technology, but only the future will tell the outcome. If i am right i make good money, if i am wrong i loose it. That's ok for me.
"End of communication"

[TaunSew]

biTshares is another 2.0 pump as far as I can tell.  You're trying to tell us it's this popular thing but all I see is 90%+ of it being dominated by a few funds in China ~ classic pump and dump.  

biTshares people have invaded Bitcointalk and many crypto forums to try to plead people to get into the pump.    

1. NXT startet with 75 contributer - do you call NXT also a pump and dump?
2. If this is a Bitcointalk invasion - no country at all would lift a finger to fight this 5 guys. Makes me laughing really loud.

I think i will end this communication. I believe in the technology, but only the future will tell the outcome. If i am right i make good money, if i am wrong i loose it. That's ok for me.
"End of communication"

Where do you think the term  "another" came from?  Yes there are painful cyclical pump and dumps with NXT.  I don't see how BitsharesX has proven to be any different as it looks like it's a game of musical chairs for a few rich investors from China. This isn't the exact same scam as a $hitcoin but the level of manipulation here is going to burn any creditability behind BitsharesX, much like NXT has burnt many bridges.

The fact the BitsharesX people are invading all these crypto forums (you see them starting threads like on the NXT forum) just to promote their pump.

Worse of all is this pump is occurring before bitassets even comes out, which is a definite sign that this is a temporary bubble.   The guys who initiated the pump are likely going to be cashing out soon.

Reality will sit in quickly when bitAssets does actually come out and it doesn't live to the hype or the masses simply have no use for it (the amount of people buying into this pump bubble outweighs the actual number of people who are going to bother with these assets.  Which is also true for other speculative pumps that we have seen for other features in other cryptos)

[ChuckOne]

Hmm. I think I will need to sleep one night or two over this. That system looks a bit fragile if you ask me.

(btw. there will be NXT backed assets shortly in the next major feature release, so, not back by reputation alone anymore.)

How is Nxt planning on doing this? I have a feeling it may be the same as BitsharesX's back up plan.. getting the average of a bunch of market data feeds.

If it is a different approach, could you explain how you guys are planning on doing it?

Something, the Monetary System of Nxt will be missing is the pegging to real-world fiat AND has a fix initial supply of the money.

In order to express it with the words of Mike Maloney, bitUSD is currency and Nxt Money is money. I am not sure if those words do really care the assumed meaning but he certainly has a point. (I for one believe that this distinction is made up by him but his definition is useful)

So in Nxt, people can create a new currencies by locking away m NXTs and create n new tokens. Everybody can redeem the NXTs looked away proportionally to the amount of money they are willing to redeem. So, no pegging to the real-world and nobody can increase the supply and therefore rob others of their wealth.

[ChuckOne]

My core value system is centered around property rights and my economics are Austrian.  

The problem this thread has is that everyone is talking past each other and that is understandable given how hard it is to internalize the market mechanics and then explain what you know to others.  

The primary assumption is that there exists a crypto-asset with no counter party and a non-zero value.  IE: bitcoin, Nxt, and BTSX.

The secondary assumption is that the volatility of this asset is within some reasonable range.  200% initial collateral seems to be reasonable, but it could easily be 400% if the volatility called for it.  

Given these assumptions we then assume there are two individuals in the free market that want a "contract for difference".  Contracts for difference are well established and proven and even used in counter party.  One person is given price stability and the other is given leverage.  

If you assume the contract for difference was settled by a 3rd party price feed then it is clear how it would work.  

So given those initial fundamentals we can slowly build up to BitAssets.   The first step is to take the same contract and remove the 3rd party price feed and instead use Nash Equilibrium.  Both parties will want to exit at some point and thus have to agree on a price in the future.  Assuming they were both equally wanting to exit their position the price they would agree at would be the "fair price".   Now clearly if there are only two parties to the trade they may not want to exit at the same time.    So you allow the "long" side to sell his position to others and you allow the "short" side to cover with anyone.    

If someone wants to be a stubborn jerk and not settle then that is fine.... eventually a margin call will be triggered.   The peg will fluctuate as the relative demand for longs vs shorts settling causes the peg to have a settlement premium sufficient to motivate settlement.  

I think it is fairly clear that if there is a price feed from a trusted source that was used to enforce settlement then the system would work to the extent that you could trust the feed.   The hypothesis is that this price feed is irrelevant given a market full of speculators and market makers willing to hold until a short voluntarily covers at a fair market price.

I hope that through this perspective I have shown what the economic incentives are and how the core principles are sound.  All that remains to be seen is whether "market consensus and speculation" is enough to enforce a peg via a "decentralized price feed" or "prediction market" mechanic.  My understanding of game theory and economic incentives tells me this will work, but even if I am wrong I know that price feeds can be used as a "trusted" judge on the "smart contracts for difference".   It is an entirely different game to trust someone to produce a fair feed (or 101 someones) than to trust someone to maintain a vault full of gold.

Hi bytemaster,

thank you for coming over here and providing these underlying assumptions.

Besides from having problems to understand all this (not my metier - so even if I understand the terminologies one by one, understanding their interplay is extremely hard), as people pointed out tinkering with the money supply seems like the feed being the FED.

The biggest problem here is that Average Joe (regarding financial instruments) does simply not understand what you mean by short, long, margin call, Nash equilibrium, contract of difference, peg, a short covers, settlement premium, etc. etc. and now we got Average Joe relying on somebody who, first, is able to understand all of that, AND second, is even able to change the bitUSD supply.


Those two observations lead to the question what is this bitUSD asset about and where is the difference to the current monetary system we have? Because as it seems (or at least the perception is) that financial investors, speculators and banksters are misusing the current system in order enrich themselves just because they can and understand the system; whereas Average Joe does not.


Am I correct that if bitUSD is really peggable by the USD, it would allow to build an economy around that cryptocurrency much faster than with Bitcoin or Nxt because merchants can be sure to have stable prices?

[TinEye]

biTshares is another 2.0 pump as far as I can tell.  You're trying to tell us it's this popular thing but all I see is 90%+ of it being dominated by a few funds in China ~ classic pump and dump.  

biTshares people have invaded Bitcointalk and many crypto forums to try to plead people to get into the pump.    

 It's beyond ridiculous as bitassets hasn't even been released yet nor is it proprietary technology.  When the Chinese funds stop pumping then there'll be this air sucking sound, biTshares will stagnate and NXT will implement its' own collateral and pegging system if it's actually a demanded feature and not a hype speculation like anonymity was for the past four months.


Congratulations biTshares it took you months to copy NXT's asset exchange (with a few whistles added).  NXT is still the most innovative crypto.

Instead of wasting time trying to play down Bitshares here, go and try to make NEM the best it can be. In particular, see if you can implement this DPOS there, it seems better than TF.

[Afridon]

The concept of bitUSD is intresting and good but i think it won't work,so many details.

[ChuckOne]

The concept of bitUSD is intresting and good but i think it won't work,so many details.

Interesting. I think that backs up my point.

[EvilDave]

So, to sum up the situation:

BitsharesX probably is a legit operation.

The most vocal BTT/Bitshares community seems to be 3-5 new accounts plus C-f-A. (Way to go BTS!)

BTSX price (and the #3 market cap) is being propped up by using IPO money to pump it.

Hmm....still not very convinced: even if the core tech works like the best thing ever,
this kind of marketing bullshit is just gonna piss people off pretty soon.



Point from TaunSew.....maybe I should be more paranoid.

Yes it's a Cold War.  Bitshares is Chinese Communists vs the free NXT world.  NXT does not know there is a war and hence they are losing.  Who do you think has been DOSing and hacking NXT over and over?

Need to point out that, so far, NXT hasn't yet been hacked in any way that affects the core NXT technology.
All of the NXT thefts have been either basic social engineeering attacks, or weak password security.