Creating metacoin for a decentralized exchange?

[CIYAM]

There are use cases that bitassets can fulfill that nothing else in the space is capable of atm. I wouldn't be so quick to dismiss it all as "snake oil" because you haven't taken the proper time to research it for yourself and are making assumptions instead.

You are probably unaware that Dan Larimer used to chat with me on Skype before Bitshares even existed and that I knew about this whole concept before nearly anyone on this forum.

I am not making assumptions at all - calling something xBTC that has no BTC to back it up is not what I think of as being a valid product (but again that is just IMO).

And for the record I am not claiming that it *is* snake oil but the way it is being sold (by you in particular) looks just like that (so please stop telling me to "educate myself").

[matt608]

I'll try and clear up a few misconceptions.

BitAssets are shorted into existence.  The shorters are forced to buy back the BitAsset they shorted every 30 days.  So anytime someone buys $1 BitUSD, there is guaranteed to be a buyer within 30 days.  This keeps the peg in place, because people know that if you can snap up BitUSD down below the price feed, then later you will be able to sell it closer to the price feed (or slightly above).  You can view the accuracy of the peg here: https://bitsharesblocks.com/charts/feeds?asset=USD.  You can see it usually stays +/- 2% of the price feed, occasionally slipping to 3%.  So it's been working well for months and the more liquidity gained in the future will improve its function, making it get tighter and tighter.

So that's the peg, then there's the collateral.  The collateral percentage for each BitAsset is viewable here:
https://bitsharesblocks.com/assets/market.  You can see there is over 250% collateral for every BitAsset locked up by the BitShares blockchain.  This high collateral requirement is due to the unstable price of BTS, for more stable collateral types typically lower percentages are needed.

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

It's normal for derivatives to be backed by collateral different to that of the derivative.  A gold derivative doesn't have to be backed by gold, just an asset of equivalent value.  In this case, BitGOLD is backed by as much BTS as it takes to buy a physical ounce of gold. 

Very soon though you will be able to exchange BitGOLD and BitSiLVER 1:1 with the physical metal at http://cryptosmith.info/. Also, BTC38.com accepts BitCNY as if it were real CNY and actually pays a small bonus for depositing it.  This is just the beginning for BitShares.  Stocks are coming soon, backed by real stock bought on a stock exchange.

[tee-rex]

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

So BTS, which is used to back up bitassets as I got it, is just another shit coin out there, which we've seen more than enough already.

[robrigo]

There are use cases that bitassets can fulfill that nothing else in the space is capable of atm. I wouldn't be so quick to dismiss it all as "snake oil" because you haven't taken the proper time to research it for yourself and are making assumptions instead.

You are probably unaware that Dan Larimer used to chat with me on Skype before Bitshares even existed and that I knew about this whole concept before nearly anyone on this forum.

I am not making assumptions at all - calling something xBTC that has no BTC to back it up is not what I think of as being a valid product (but again that is just IMO).

And for the record I am not claiming that it *is* snake oil but the way it is being sold (by you in particular) looks just like that (so please stop telling me to "educate myself").

Sorry to make an assumption about you, there are a lot of misconceptions around the concept of bitassets so I was just trying to help the readers of this thread understand the difference. I am passionate about the project but I want nothing more than full disclosure of the associated truth, risks, rewards, and use cases. Not to sell someone on something they don't understand.

So as for you thinking I am selling snake oil, well like, that's just your opinion, man.  

Personally, I think the ability to peg the price of BTC is rationale enough to include BTC in the name. I think BTSBTC would also be a good way to identify it.

[robrigo]

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

So BTS is just another shit coin, which we've seen more than enough already.

Not quite, but I suppose that depends on how you define shitcoin. Bitshares is built from the ground up on a new codebase instead of being a simple fork of another like actual "shitcoins". The proof of work distribution (which accounts for ~50% of the BTS supply) was based off of a snapshot taken from protoshares (PTS), which is a bitcoin fork. The other 50% of the initial distribution was sharedropped to AGS holders, who contributed to a development fund by donating BTC or PTS to the AGS initial crowd offering.

 It is also the first cryptocurrency to use delegated proof of stake. To me, a shitcoin is something that has NO value proposition or unique use cases; instead it is just a simple fork of an old coin with a new brand.

Some examples of non-shitcoin projects (IMO) with their own native token: maidsafe, ethereum, ripple, nxt, bitshares

[tee-rex]

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

So BTS is just another shit coin, which we've seen more than enough already.

Not quite, but I suppose that depends on how you define shitcoin. Bitshares is built from the ground up on a new codebase instead of being a simple fork of another like actual "shitcoins". It is also the first cryptocurrency to use delegated proof of stake. To me, a shitcoin is something that has NO differentiating value or unique use cases; instead it is just a simple fork of an old coin with a new brand.

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

[robrigo]

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

So BTS is just another shit coin, which we've seen more than enough already.

Not quite, but I suppose that depends on how you define shitcoin. Bitshares is built from the ground up on a new codebase instead of being a simple fork of another like actual "shitcoins". It is also the first cryptocurrency to use delegated proof of stake. To me, a shitcoin is something that has NO differentiating value or unique use cases; instead it is just a simple fork of an old coin with a new brand.

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

Proof of work in the current incarnation doesn't confirm transactions quickly enough to facilitate a decentralized exchange smoothly. The design of DPOS also has block confirmations set at every 10 seconds, to keep the flow of the market running smoothly. Each delegate can also be viewed as an oracle... they publish price feeds from scripts interacting with an RPC API on the server their delegate node is running, to provide the internal market with spot prices, the median of which is the price new short orders execute at for that given bitasset.

[tee-rex]

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

So BTS is just another shit coin, which we've seen more than enough already.

Not quite, but I suppose that depends on how you define shitcoin. Bitshares is built from the ground up on a new codebase instead of being a simple fork of another like actual "shitcoins". It is also the first cryptocurrency to use delegated proof of stake. To me, a shitcoin is something that has NO differentiating value or unique use cases; instead it is just a simple fork of an old coin with a new brand.

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

Proof of work in the current incarnation doesn't confirm transactions quickly enough to facilitate a decentralized exchange. The design of DPOS also has block confirmations set at every 10 seconds, to keep the flow of the market running smoothly.

But if the primary purpose of the BTS blockchain is organizing decentralized trading, why make use of an intermediary when you can trade directly, say, buy doges and pay for them in bitcoins?

That would make trading even faster, right?

[robrigo]

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

So BTS is just another shit coin, which we've seen more than enough already.

Not quite, but I suppose that depends on how you define shitcoin. Bitshares is built from the ground up on a new codebase instead of being a simple fork of another like actual "shitcoins". It is also the first cryptocurrency to use delegated proof of stake. To me, a shitcoin is something that has NO differentiating value or unique use cases; instead it is just a simple fork of an old coin with a new brand.

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

Proof of work in the current incarnation doesn't confirm transactions quickly enough to facilitate a decentralized exchange. The design of DPOS also has block confirmations set at every 10 seconds, to keep the flow of the market running smoothly.

But if the primary purpose of the BTS blockchain is organizing decentralized trading, why make use of an intermediary when you can trade directly, say, buy doges and pay for them in bitcoins?

BitShares is a DAC- a distributed automated company.

It offers a service: value transfer
has expenses: delegate pay
has revenue: transaction fees
and its equity (BTS) rises in price as the adoption and utility of the network grows.

You can apply the same line of reasoning to Bitcoin and realize that mining is a really expensive way to secure the ledger. I'm not trying to get into a debate regarding whether or not mining is the way to go, just saying that it costs more to secure due to the energy expenditures. The idea is that there is a happy medium where you can achieve a sufficiently decentralized network where malicious actors cannot game or easily get control of the system, yet also minimize the cost of securing the blockchain ledger of said network.

BitShares attempts to redirect those miner fees in a more efficient way by allowing delegates to campaign for funding via delegate pay. Many delegates are being paid for their efforts in core development, building the BTS supporting infrastructure, and marketing initiatives, including many other things including education, exchanges, and blockchain statistic sites (such as bitsharesblocks.com). Their actual delegate node is validating and signing blocks to form the network consensus. In such a system, each delegate actor has their reputation at stake and their interactions with the blockchain are public and can be audited.

Also, Atomic cross chain trading is what you are talking about. Ideally, a decentralized exchange can accomplish such a thing... but in practice it is more difficult than it looks. Looking forward to seeing some creative solutions to that problem spring up in the coming year.

[tee-rex]

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

Proof of work in the current incarnation doesn't confirm transactions quickly enough to facilitate a decentralized exchange. The design of DPOS also has block confirmations set at every 10 seconds, to keep the flow of the market running smoothly.

But if the primary purpose of the BTS blockchain is organizing decentralized trading, why make use of an intermediary when you can trade directly, say, buy doges and pay for them in bitcoins?

BitShares is a DAC- a distributed automated company.

It offers a service: value transfer
has expenses: delegate pay
has revenue: transaction fees
and its equity (BTS) rises in price as the adoption and utility of the network grows.

You can apply the same line of reasoning to Bitcoin and realize that mining is a really expensive way to secure the ledger. I'm not trying to get into a debate regarding whether or not mining is the way to go, just saying that it costs more to secure due to the energy expenditures. The idea is that there is a happy medium where you can achieve a sufficiently decentralized network where malicious actors cannot game or easily get control of the system, yet also minimize the cost of securing the blockchain ledger of said network.

BitShares attempts to redirect those miner fees in a more efficient way by allowing delegates to campaign for funding via delegate pay. Many delegates are being paid for their efforts in core development, building the BTS supporting infrastructure, and marketing initiatives, including many other things including education, exchanges, and blockchain statistic sites (such as bitsharesblocks.com). Their actual delegate node is validating and signing blocks to form the network consensus. In such a system, each delegate actor has their reputation at stake and all of their actions are publicly auditable.

Also, Atomic cross chain trading is what you are talking about. Ideally, a decentralized exchange can accomplish such a thing... but in practice it is more difficult than it looks. Looking forward to seeing some creative solutions to that problem spring up in the coming year.

It's all very good indeed, but why use an intermediary? You said that bitcoin is not fast enough. I say in reply that without an intermediary the system should work even better. If I want to buy doges and am going to pay in bitcoins, why should I at first buy BTS to sell bitcoins and then sell BTS to buy doges? I don't get it.

[Cryddit]

The collateral is BTS (for the 3rd time).

I don't accept BTS as having value.  I don't accept doge coin either.  I regard these assets as having no collateral, because I have no guarantee that I can exchange BTS for anything of value.

[robrigo]

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

Proof of work in the current incarnation doesn't confirm transactions quickly enough to facilitate a decentralized exchange. The design of DPOS also has block confirmations set at every 10 seconds, to keep the flow of the market running smoothly.

But if the primary purpose of the BTS blockchain is organizing decentralized trading, why make use of an intermediary when you can trade directly, say, buy doges and pay for them in bitcoins?

BitShares is a DAC- a distributed automated company.

It offers a service: value transfer
has expenses: delegate pay
has revenue: transaction fees
and its equity (BTS) rises in price as the adoption and utility of the network grows.

You can apply the same line of reasoning to Bitcoin and realize that mining is a really expensive way to secure the ledger. I'm not trying to get into a debate regarding whether or not mining is the way to go, just saying that it costs more to secure due to the energy expenditures. The idea is that there is a happy medium where you can achieve a sufficiently decentralized network where malicious actors cannot game or easily get control of the system, yet also minimize the cost of securing the blockchain ledger of said network.

BitShares attempts to redirect those miner fees in a more efficient way by allowing delegates to campaign for funding via delegate pay. Many delegates are being paid for their efforts in core development, building the BTS supporting infrastructure, and marketing initiatives, including many other things including education, exchanges, and blockchain statistic sites (such as bitsharesblocks.com). Their actual delegate node is validating and signing blocks to form the network consensus. In such a system, each delegate actor has their reputation at stake and all of their actions are publicly auditable.

Also, Atomic cross chain trading is what you are talking about. Ideally, a decentralized exchange can accomplish such a thing... but in practice it is more difficult than it looks. Looking forward to seeing some creative solutions to that problem spring up in the coming year.

It's all very good indeed, but why use an intermediary? You said that bitcoin is not fast enough. I say in reply that without an intermediary the system should work even better. If I want to buy doges and am going to pay in bitcoins, should why I at first buy BTS to sell bitcoins and then sell BTS to buy doges?

I think we will see better usability as businesses see startup opportunity in the space and build those types of services.

http://mercuryex.com/ looks interesting too, I haven't tried it out. They are using the atomic cross chain swap to allow trading between the two. I think there is a centralized orderbook, tho so it isn't completely decentralized.

[robrigo]

The collateral is BTS (for the 3rd time).

I don't accept BTS as having value.  I don't accept doge coin either.  I regard these assets as having no collateral, because I have no guarantee that I can exchange BTS for anything of value.

The market disagrees with you but of course you are free to believe what you wish. BTS are trading for around $0.01... seems like a steal to me. 

[Cryddit]

I am quite familiar with options trading (used to do some of that years ago) and although options are often never exercised they always *can* be if the conditions are met (i.e. the underlying share ownership will be transferred).

In my own experience, farmers sometimes trade options in their crops in order to reduce risk from, eg, a year with tough weather patterns.  When they do so, it's usually with the full intent of fulfilling that option, or demanding the actual physical asset it represents, should the market do what they hope it doesn't.

Thus a wheat farmer will place a  'buy' option on some quantity of wheat, and then if his own crops get hailed out (and likely everyone else's as well, driving prices sky-high) he will exercise that option and expect trucks to show up with product he can take to the grain elevator and sell.  

[CIYAM]

http://mercuryex.com/ looks interesting too, I haven't tried it out. They are using the atomic cross chain swap to allow trading between the two. I think there is a centralized orderbook, tho so it isn't completely decentralized.

The Automated Transactions project (aka AT) has already created an atomic cross-chain transfer smart contract that could operate on any platform that implements AT (it is on Burst and soon to be on Qora).

If you guys are seriously interested in a completely decentralised solution then perhaps you should think about integrating AT with BitShares (I know at least two BitShares devs are interested in it).

[CIYAM]

Incidentally, this is false.

For the type of options that are normally sold for stocks what I stated is 100% correct (perhaps you are referring to some type of option that only applies to the US?).

You sell options as an "insurance" against loss on the underlying stock. So the seller of the option is hedging and the buyer is speculating.

This is generally most useful for stocks that don't pay much in the way of dividends (as you are less likely to want to sell options on blue chip shares that pay good dividends).

[Cryddit]

I'll try and clear up a few misconceptions.

BitAssets are shorted into existence.  The shorters are forced to buy back the BitAsset they shorted every 30 days.  So anytime someone buys $1 BitUSD, there is guaranteed to be a buyer within 30 days.  This keeps the peg in place, because people know that if you can snap up BitUSD down below the price feed, then later you will be able to sell it closer to the price feed (or slightly above).

The problem with this is counterparty risk.  The guy who "guarantees" to buy back the bitasset in 30 days may go broke first.  And somebody eats the loss. 

Counterparty risk is exactly what you get with IOU's and some types of derivatives, too.  So your "trustless" system involves "trusting" that someone will not have filed bankruptcy, will be able to buy back the asset, and will follow through on the promise rather than disappearing and retiring under a fake name in the tropics or something.   

[robrigo]

http://mercuryex.com/ looks interesting too, I haven't tried it out. They are using the atomic cross chain swap to allow trading between the two. I think there is a centralized orderbook, tho so it isn't completely decentralized.

The Automated Transactions project (aka AT) has already created an atomic cross-chain transfer smart contract that could operate on any platform that implements AT (it is on Burst and soon to be on Qora).

If you guys are seriously interested in a completely decentralised solution perhaps you should think about integrating AT with BitShares.

How does Automated Transaction differ from Open Transactions? I'll have to read more about it.

I believe bitsapphire is working on something similar with Pactum- uses Hyperledger, Open Transactions, DPOS, and Codius apparently from this source:

http://www.slideshare.net/MrCollectrix/is-the-adoption-of-blockchains-and-consensus-ledgers-a-foregone-conclusion

There isn't much information on Pactum yet so it is mostly speculation.

[robrigo]

I'll try and clear up a few misconceptions.

BitAssets are shorted into existence.  The shorters are forced to buy back the BitAsset they shorted every 30 days.  So anytime someone buys $1 BitUSD, there is guaranteed to be a buyer within 30 days.  This keeps the peg in place, because people know that if you can snap up BitUSD down below the price feed, then later you will be able to sell it closer to the price feed (or slightly above).

The problem with this is counterparty risk.  The guy who "guarantees" to buy back the bitasset in 30 days may go broke first.  And somebody eats the loss.  

Counterparty risk is exactly what you get with IOU's and some types of derivatives, too.  So your "trustless" system involves "trusting" that someone will not have filed bankruptcy, will be able to buy back the asset, and will follow through on the promise rather than disappearing and retiring under a fake name in the tropics or something.  

Actually the beauty of it is the scenario you described won't happen because the shorter already put up enough collateral to perform the buy back, which is sent to an address controlled by the market on the blockchain. If the user shorting doesn't have the money to buy up bitUSD for example, and use it to cover the short manually, it will be bought out of the collateral they put up initially in the short (which is 2x the amount of the short).

[CIYAM]

How does Automated Transaction differ from Open Transactions? I'll have to read more about it.

You can find some information here: http://ciyam.org/at (am sorry it is mostly very technical).

To explain succinctly though AT is a "smart contract" implementation that can be added to *any* blockchain (so it does not have its own blockchain).

It already works and we have created Lottery and Crowdfund ATs that have been running "live" for weeks.