NuBits are operating as a fractional reserve.

[Hyena]

This is further proof that the collateral backing nubits has been sitting as bitcoin, and has thus been severely hit by the 33% fall where thousands of bitcoin was dumped on the "trusted" custodians.

NUBITS IS INSOLVENT, THEY OPENLY ADMIT THIS.

NUBITS = FRACTIONAL RESERVE

Do you even know what proof is? the peg is maintained with US dollars. there are exchanges that have NBT/USD trading pairs and that's where the peg is originally maintained. The NBT/BTC traiding pairs are just some random internet people doing arbitrage.

[1713858852]

1713858852

[1713858852]

1713858852

[1713858852]

1713858852

[1713858852]

1713858852

[vlight]

Do you even know what proof is? the peg is maintained with US dollars. there are exchanges that have NBT/USD trading pairs and that's where the peg is originally maintained. The NBT/BTC traiding pairs are just some random internet people doing arbitrage.

Where are those exchanges?  

[Hyena]

Do you even know what proof is? the peg is maintained with US dollars. there are exchanges that have NBT/USD trading pairs and that's where the peg is originally maintained. The NBT/BTC traiding pairs are just some random internet people doing arbitrage.

Where are those exchanges?  

https://nubits.com/exchanges
for example:
https://www.ccedk.com/nbt-usd
https://www.ccedk.com/nbt-eur

[Sentinelrv]

I'm not completely up to date on the NuBits forum, but from what I understand Jordan Lee designed NuNet to have zero counterparty risk and zero reserves. They're trying to create a market for liquidity providers, lots of people that will end up providing their own money for liquidity operations. Again, I'm not completely up to date, so try checking out the forum and make up your own mind. Check Jordan's post here about reserves...

https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126

[FandangledGizmo]

OK in the beginning I thought this here is an interesting subject, but now I understand that its yet another thread where one community member of a coin bashes on the community of another coin. Really sad, because the general topic is really worth debating. So thanks for not having a good discussion here, I'll consider other sources to get my info.

The thread is a bit loud for my liking & is also using the NuBits flaw to pump BitUSD which I don't like.

The facts are true though.

Many BitShares supporters are quite familiar with pegged assets and the systems behind them, because we've had to study them to confidently invest in BitShares. So we could say nothing and watch alt-coiners most likelt lose their money or we can prsent the facts and try to warn them.

http://bytemaster.bitshares.org/article/2015/01/14/A-New-Perspective-on-NuBits/

http://bytemaster.bitshares.org/article/2015/01/15/Is-Fractional-Reserve-Banking-a-Ponzi-Scheme/

https://bitsharestalk.org/index.php?topic=13355.0

I'm not completely up to date on the NuBits forum, but from what I understand Jordan Lee designed NuNet to have zero counterparty risk and zero reserves. They're trying to create a market for liquidity providers, lots of people that will end up providing their own money for liquidity operations. Again, I'm not completely up to date, so try checking out the forum and make up your own mind. Check Jordan's post here about reserves...

https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126

It baffles me people don't understand the risk of zero reserves.

His argument for not having reserves is false...

Some seem to think that 100% reserves are desirable and equate to solvency, while others (including myself) wish to avoid the use of reserves altogether to avoid counterparty risk

BitShares is able to provide an average of circa 300% collateral for BitUSD without counterparty risk.

[clout]

Do you even know what proof is? the peg is maintained with US dollars. there are exchanges that have NBT/USD trading pairs and that's where the peg is originally maintained. The NBT/BTC traiding pairs are just some random internet people doing arbitrage.

Where are those exchanges?  

https://nubits.com/exchanges
for example:
https://www.ccedk.com/nbt-usd
https://www.ccedk.com/nbt-eur

http://coinmarketcap.com/currencies/nubits/#markets

there's no volume in the nbt/usd market on ccedk. the only markets are nbt/btc. i don't think its even close to 0% reserve theres not enough btc on the market, but they certainly have taking losses from their btc holdings. the proof is the trade data...

[toast]

I'm not completely up to date on the NuBits forum, but from what I understand Jordan Lee designed NuNet to have zero counterparty risk and zero reserves. They're trying to create a market for liquidity providers, lots of people that will end up providing their own money for liquidity operations. Again, I'm not completely up to date, so try checking out the forum and make up your own mind. Check Jordan's post here about reserves...

https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126

Indeed, I did not understand that Jordan and co did not consider liquidity providers' funds as reserves. I think OP's point still tands if you replace the term "reserves" with the appropriate word. I wish OP was less inflammatory though.

[siameze]

I never really got the concept i guess tho I see a lot of their posts on r/cryptocurrency. I kind of want to *break away* from fractional reserve and pegged currencies.

[Hyena]

I never really got the concept i guess tho I see a lot of their posts on r/cryptocurrency. I kind of want to *break away* from fractional reserve and pegged currencies.

Me too. But you must understand that nubits are not hard pegged. The shareholders can decide what buy/sell walls they maintain. The voting is decentralized and you can do that with the private keys of your nushares. Should USD collapse, the nushareholders would probably set some other (more reliable) peg.

The mere function of the peg is to reduce volatility by mutually agreeing on what the price should be. The term "fractional reserve" in the context of nubits does not make any sense. NuBits does its best to maintain the price of 1 NBT at the desired value in a decentralized manner. There is no central point of failure since there is no giant vault of assets backing the whole thing up.

The whole idea behind NuBits was to separate store of value function from the currency function. Currency should not be volatile and nushareholders do their best to keep volatility away from nubits. It is for their interest to fulfill the promise because if nubits succeeds there will be more dividends paid to the shareholders.

[FandangledGizmo]

I never really got the concept i guess tho I see a lot of their posts on r/cryptocurrency. I kind of want to *break away* from fractional reserve and pegged currencies.

Me too. But you must understand that nubits are not hard pegged. The shareholders can decide what buy/sell walls they maintain. The voting is decentralized and you can do that with the private keys of your nushares. Should USD collapse, the nushareholders would probably set some other (more reliable) peg.

The mere function of the peg is to reduce volatility by mutually agreeing on what the price should be. The term "fractional reserve" in the context of nubits does not make any sense. NuBits does its best to maintain the price of 1 NBT at the desired value in a decentralized manner. There is no central point of failure since there is no giant vault of assets backing the whole thing up.

The whole idea behind NuBits was to separate store of value function from the currency function. Currency should not be volatile and nushareholders do their best to keep volatility away from nubits. It is for their interest to fulfill the promise because if nubits succeeds there will be more dividends paid to the shareholders.

The argument they're selling you that there is no central point of failure because there is no vault of assets backing the whole thing up is brilliant!

That's like a gold vault telling you they've removed centralized risk because when you give them your gold they spend it on hookers and blow and then say 'Look! There's no gold in the vault! No centralized risk!'

Don't worry. We'll maintain the value of your deposit by agreeing what it's worth and maintaining a buy and sell wall because it's in our interest to do so   (Hint: It's only in their interest to do so while new money is coming in.)

(Their argument of not being able to provide reserves without centralized risk is also more balderdash because BitShares is able to provide an average of 300% collateral without centralised counterparty risk/central point of failure.)

[ThomasVeil]

NuBits does its best to maintain the price of 1 NBT at the desired value in a decentralized manner. There is no central point of failure since there is no giant vault of assets backing the whole thing up.

How am I then guaranteed that I get my USD back when things go bad? Just hope that someone feels like and is capable of upholding the promise?

Bitshares at least has the promise to work as long as their currency doesn't drop more than 60% quickly (and not too many people bought into it).

[Hyena]

The argument they're selling you that there is no central point of failure because there is no vault of assets backing the whole thing up is brilliant!

That's like a gold vault telling you they've removed centralized risk because when you give them your gold they spend it on hookers and blow and then say 'Look! There's no gold in the vault! No centralized risk!'

Don't worry. We'll maintain the value of your deposit by agreeing what it's worth and maintaining a buy and sell wall because it's in our interest to do so   (Hint: It's only in their interest to do so while new money is coming in.)

(Their argument of not being able to provide reserves without centralized risk is also more balderdash because BitShares is able to provide an average of 300% collateral without centralised counterparty risk/central point of failure.)

Yes, it is brilliant. No, it's not like gold vault telling you what you just said. About your hint, you just destroyed your own argument with it. It's in the interest of any shareholder to keep new money coming in, that's the point. That's why the shareholders won't run away with the money. Your line of logic assumes that a treasurer would run away with the money they look after. So why aren't all the security guards and treasurers running away with the money they guard? Answer that question and you will see the problem in your statement.

How am I then guaranteed that I get my USD back when things go bad? Just hope that someone feels like and is capable of upholding the promise?

Bitshares at least has the promise to work as long as their currency doesn't drop more than 60% quickly (and not too many people bought into it).

How are you guaranteed that you will live till tomorrow to spend your USD? You're not guaranteed because no one can guarantee it. Even the companies that "guarantee" you stuff are not guaranteed to actually guarantee you what they promise.

So, you are not guaranteed anything, anyway. NuBits at least has the promise to work as long as the majority of shareholders agree to keep that promise. NuShareholders aren't just some random internet trolls who speculatively bought into nushares early on. They are trustworthy people who have shown skills and intent to develop and maintain NuNet. The beauty of this is that NuNet really is an autonomous (anonymous) decentralized global organisation (and it pays dividends, yay!).

[JordanLee]

There are too many errors in the OP to take the time to correct individually. It is obviously an attempt to create FUD with the intent of increasing the market cap of a competitor.

If you are actually interested in understanding the situation please take a look at what I posted here about reserves and fractional reserves:

https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126

So the only mechanism there to support nubit price if it starts falling is to NBT to NSR burn (equivalent to inflating NSR to buy back NBT), which is in the process of being implemented.

I respect toast for his attempt to be accurate and fair, but what he says here is misinformed. The Nu network provides six tiers of liquidity, with redundant liquidity provider custodians ensuring there is no failure, even temporarily. What toast is referring to is our sixth tier of liquidity, our last line of defense. When tier 1 liquidity is exhausted for a particular redundant liquidity provider custodian, tier 2 liquidity is promoted to tier 1. Similarly, if tier 2 becomes exhausted for a specific liquidity provider, it is replenished from tier 3, and so on. There has never been a need to use our fifth tier of liquidity (interest rates) or six tier (NuBit burning). Our liquidity operations have shown no signs of stress at all in recent days. As far as I know, there has not even been any need to replenish any subset of tier 1 liquidity with tier 2 liquidity. Here is an outline of our liquidity operations:

https://discuss.nubits.com/t/finalized-evolution-of-liquidity-operations/618

As toast implies, tier 6 has not been implemented yet but is expected in the next release that includes a protocol change (0.6.0). The post linked to above is a recently passed motion and is not all implemented yet. Still, the bottom line is out network currently provides five tiers of liquidity (soon to be six) , but in recent days the first tier is all that has been utilized.

The OP is free to try to induce a panic to sell NuBits if he wishes. If he succeeds it will just be an opportunity to demonstrate the deep buy support that we can bring to market.

[Shuai]

There are too many errors in the OP to take the time to correct individually. It is obviously an attempt to create FUD with the intent of increasing the market cap of a competitor.

If you are actually interested in understanding the situation please take a look at what I posted here about reserves and fractional reserves:

https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126

So the only mechanism there to support nubit price if it starts falling is to NBT to NSR burn (equivalent to inflating NSR to buy back NBT), which is in the process of being implemented.

I respect toast for his attempt to be accurate and fair, but what he says here is misinformed. The Nu network provides six tiers of liquidity, with redundant liquidity provider custodians ensuring there is no failure, even temporarily. What toast is referring to is our sixth tier of liquidity, our last line of defense. When tier 1 liquidity is exhausted for a particular redundant liquidity provider custodian, tier 2 liquidity is promoted to tier 1. Similarly, if tier 2 becomes exhausted for a specific liquidity provider, it is replenished from tier 3, and so on. There has never been a need to use our fifth tier of liquidity (interest rates) or six tier (NuBit burning). Our liquidity operations have shown no signs of stress at all in recent days. As far as I know, there has not even been any need to replenish any subset of tier 1 liquidity with tier 2 liquidity. Here is an outline of our liquidity operations:

https://discuss.nubits.com/t/finalized-evolution-of-liquidity-operations/618

As toast implies, tier 6 has not been implemented yet but is expected in the next release that includes a protocol change (0.6.0). The post linked to above is a recently passed motion and is not all implemented yet. Still, the bottom line is out network currently provides five tiers of liquidity (soon to be six) , but in recent days the first tier is all that has been utilized.

The OP is free to try to induce a panic to sell NuBits if he wishes. If he succeeds it will just be an opportunity to demonstrate the deep buy support that we can bring to market.

So.. you're not actually going to provide any proof that you're still solvent beyond mentioning a bunch of tiers? "look man, we have SIX WHOLE TIERS of liquidity, we're never gonna run dry, trust me I'm a cryptographic expert".

https://www.youtube.com/watch?v=D_imtRPCKCg The fact that you allowed a video like this to be created, which doesn't even mention that there could possibly be any risks to the peg, is downright criminal. Also do you have anything to say about the legal status of these various "tiers"? It's starting to look like you're saying that NuBit is actually a fiat IOU since these tiers are apparently super safe and can be brought to demonstrate deep buy support for an arbitrary amount whenever needed. Do you think that's legal without AML?

[noerc]

Very interesting input from both sides (except Shuai, who didn't provide anything good to this thread except creating it). I think if both systems survived the last BTC crash then this is already a good sign that both teams are on the right track. In my very personal opinion, a working dynamic liquidation processor sounds like a more elegant solution than having locked/dead money. Elegance of course doesn't justify vulnerabilities ...

The particular tier levels of liquidity in NuBits in fact seem to show some effect - however, as nice as it is that tier 5/6 were never required, it also means that there is no large scale field test of those levels as of yet.

[Pheonike]

So what you are saying is that in the end, we have have to trust some secret guys behind closed doors to do the right thing. Sounds like another system I heard of, the FED. Luckily everyone trust the FED to do the right thing?!?

[Shuai]

It's in the interest of any shareholder to keep new money coming in, that's the point. That's why the shareholders won't run away with the money. Your line of logic assumes that a treasurer would run away with the money they look after. So why aren't all the security guards and treasurers running away with the money they guard? Answer that question and you will see the problem in your statement.

Was MtGox going under in the interest of Mark Karpeles?

If it wasn't, then how it could it possibly have happened? Could it be... Because he was incompetent and became insolvent, like the "trusted" custodians?

[ThomasVeil]

So, you are not guaranteed anything, anyway. NuBits at least has the promise to work as long as the majority of shareholders agree to keep that promise. NuShareholders aren't just some random internet trolls who speculatively bought into nushares early on. They are trustworthy people who have shown skills and intent to develop and maintain NuNet. The beauty of this is that NuNet really is an autonomous (anonymous) decentralized global organisation (and it pays dividends, yay!).

Thanks for the answer. I'm surprised to hear that "trust us we're good guys" is considered the right strategy for a crypto.

[Sentinelrv]

So what you are saying is that in the end, we have have to trust some secret guys behind closed doors to do the right thing. Sounds like another system I heard of, the FED. Luckily everyone trust the FED to do the right thing?!?

Absolutley not. All shareholder discussion is available publicly on our discussion forum...

https://discuss.nubits.com/

There is nothing secret going on behind closed doors. In fact, this is the beauty of NuShares. Anyone around the world can participate freely and openly and help make decisions on behalf of the network through their voting power. What you can trust, is that if NuShareholders mess up in any way that causes the failure of the peg, they will lose their investment. This ensures that shareholders are very careful when making decisions about the network and voting.

[FandangledGizmo]

The argument they're selling you that there is no central point of failure because there is no vault of assets backing the whole thing up is brilliant!

That's like a gold vault telling you they've removed centralized risk because when you give them your gold they spend it on hookers and blow and then say 'Look! There's no gold in the vault! No centralized risk!'

Don't worry. We'll maintain the value of your deposit by agreeing what it's worth and maintaining a buy and sell wall because it's in our interest to do so   (Hint: It's only in their interest to do so while new money is coming in.)

(Their argument of not being able to provide reserves without centralized risk is also more balderdash because BitShares is able to provide an average of 300% collateral without centralised counterparty risk/central point of failure.)

Yes, it is brilliant. No, it's not like gold vault telling you what you just said. About your hint, you just destroyed your own argument with it. It's in the interest of any shareholder to keep new money coming in, that's the point. That's why the shareholders won't run away with the money. Your line of logic assumes that a treasurer would run away with the money they look after. So why aren't all the security guards and treasurers running away with the money they guard? Answer that question and you will see the problem in your statement.

Vaults work on a re-occuring storage cost model, they are sustainable without new gold coming in. They have security systems in place, abide by stringent laws and submit to regular audits. In the event that a vault is unprofitable and needs to close, everybody can in theory recover their gold. However they, like exchanges, still carry large centralized risks and the custodians often do take the money and run or engage in risky trading/other practices that result in the loss of customer funds.

Blockchains with their decentralized ledgers and decentralized systems of control allow you to verify your funds or collateral are accounted for and secure, so are arguably an improvement over even a centralized gold vault.

NuBits however, unlike a gold vault doesn't have the assets available to allow a large percentage of people to redeem their NuBits for $1 & without new money coming in, their current system will collapse. Their blockchain doesn't transparently allow you to verify the collateral/assets are there or secure either. NuBits is essentially the worst of both worlds for anyone holding NuBits but the best of both for the people you buy NuBits from as the majority have a great level of anonymity unlike centralized counterparts running similar systems.