How to get rich with IOUs
1. Bob asks Alice for one trillion dollars.
2. Alice writes Bob an IOU for one trillion dollars.
3. Bob sells one trillion dollar IOU on the internet.
This. Yes, I realize that it's sarcasm (duh!). But it summarizes pretty well the problems that BitShares has. Let me expand a bit on the problems I have with it:
1) Pegs. Countries try to peg currencies all the time. Central banks with trillions in reserves try to maintain the pegs. Yet every now and then pegs still collapse, because nobody is larger than the market. How does BitShares "solve" this problem? They force those who bet against you to put up 200% collateral. Okay. Explain it to me again how is it going to prevent the peg from collapsing if in a thinly traded market the majority of players panic and say "screw the collateral, I'm out of here"? And, if that was such a magic solution, why don't the established exchanges use it? I mean, stock exchanges require only 50% collateral to trade on margin and currency and commodity exchanges require anything between 1% and 80% collateral.
2) Counter-party risk. Risk does not disappear, it can only change form and shift around. BitShares' position seems to be that "there is no counter-party risk because the risk was offloaded to many counter-parties". Okay. And the sub-prime mortgage risk was packaged into AAA-rated securities and sold off all over the world (including to clueless pension funds in Norway). Explain me again how that prevented the sub-prime collapse?
3) Decentralized trustless exchange. I am sorry, but you cannot have that. The moment you want to convert your electronic tokens into cold, hard cash, you have to trust someone particular. Localbitcoins? You have to trust them to hold your money in escrow, or you have to trust somebody you've never met to fulfill their promise of giving you money or bitcoins. OpenBazaar? You have to trust a notary to resolve the dispute correctly. Not to mention that the moment a conventional bank is involved, you lose any anonymity.
1) Central banks pegging works different: "An open market mechanism is typically used, where the central bank of a country remains committed at all times to buy and/or sell its currency at a fixed price in order to maintain its pegged ratio and, hence, the stable value of its currency in relation to the reference to which it is pegged. " (
http://en.wikipedia.org/wiki/Fixed_exchange-rate_system)
The bitAsset peg works like a prediction market or a CFD market that pops out fungible pegged currencies. You can read about it here
http://bytemaster.bitshares.org/article/2014/12/18/What-are-BitShares-Market-Pegged-Assets/By established exchanges, do you mean that centralized exchanges could provide a pegged currency too. They could if they would use blockchain technology. If they don't then such a pegged curency is just a debt like USD is anyway. Maybe I didn't get your point though...
2) Risk doesn't vanish, that is true. Read about it in the link I provided above.
3) You are right again, you have to trust the gateway as described in the OP. But you only have to trust the gateway for as long as the process takes to convert your bitusd or your bitbtc into usd or btc. You don't have to trust any particular company or individual for the vast majority of the time (while you are trading or waiting for an opportunity to trade).
