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Offline islandking

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Are bitassets backed by nothing?
« on: November 21, 2014, 01:50:55 AM »

Are bitassets backed by anything? I know they are pegged to the currency/commodity but are they backed by it?
Like with bitUSD is there actual USD backing it? Do the bitasset commodities have ETF's backing them?
I am having a hard time grasping this, so if someone could help me that would be awesome!  :)
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Offline toast

Re: Are bitassets backed by nothing?
« Reply #1 on: November 21, 2014, 01:52:56 AM »
BitAssets are backed by BTS, which is like a more profitable version of BTC
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zerosum

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Re: Are bitassets backed by nothing?
« Reply #2 on: November 21, 2014, 01:53:47 AM »
I call the bottom!!!!!

That kind of questions are asked only in strong up-trends!

Offline Empirical1.1

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Re: Are bitassets backed by nothing?
« Reply #3 on: November 21, 2014, 01:58:33 AM »
For 1 BitUSD to be created a short has to post $2 worth of BTS as collateral. As trades are happening fairly frequently, BitUSD is on average backed by a few hundred percent of BTS as collateral.

This is much better than banks which work on a fractional reserve and only have like 5-10% of collateral to back up your deposits.

Offline lastagile

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Re: Are bitassets backed by nothing?
« Reply #4 on: November 21, 2014, 03:08:13 AM »
For 1 BitUSD to be created a short has to post $2 worth of BTS as collateral. As trades are happening fairly frequently, BitUSD is on average backed by a few hundred percent of BTS as collateral.

This is much better than banks which work on a fractional reserve and only have like 5-10% of collateral to back up your deposits.
I dont know why people want short 1 BITUSD with 2$ worth of BTS as collateral. If they have 2$ worth of BTS and think the price will fall, they can just sell BTS to 2USD, why short for 1BITUSD?

Offline toast

Re: Are bitassets backed by nothing?
« Reply #5 on: November 21, 2014, 03:09:00 AM »
For 1 BitUSD to be created a short has to post $2 worth of BTS as collateral. As trades are happening fairly frequently, BitUSD is on average backed by a few hundred percent of BTS as collateral.

This is much better than banks which work on a fractional reserve and only have like 5-10% of collateral to back up your deposits.
I dont know why people want short 1 BITUSD with 2$ worth of BTS as collateral. If they have 2$ worth of BTS and think the price will fall, they can just sell BTS to 2USD, why short for 1BITUSD?

You short when the price of USD falls (the price of BTS goes up). If you sold right away that would be the opposite of what you want.
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline lastagile

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Re: Are bitassets backed by nothing?
« Reply #6 on: November 21, 2014, 03:24:59 AM »
For 1 BitUSD to be created a short has to post $2 worth of BTS as collateral. As trades are happening fairly frequently, BitUSD is on average backed by a few hundred percent of BTS as collateral.

This is m :Duch better than banks which work on a fractional reserve and only have like 5-10% of collateral to back up your deposits.
I dont know why people want short 1 BITUSD with 2$ worth of BTS as collateral. If they have 2$ worth of BTS and think the price will fall, they can just sell BTS to 2USD, why short for 1BITUSD?

You short when the price of USD falls (the price of BTS goes up). If you sold right away that would be the opposite of what you want.
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Offline donkeypong

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Re: Are bitassets backed by nothing?
« Reply #7 on: November 21, 2014, 03:25:47 AM »
Nothing but assets.

Offline CLains

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Re: Are bitassets backed by nothing?
« Reply #8 on: November 21, 2014, 08:46:21 PM »
bitAssets are "shorted" into existence. what does "short" mean? someone who "shorts" is borrowing money and then selling it. why would anyone do that? if you believe the price of bread is going down tomorrow, you can borrow 10 breads today, and then sell them, ending up perhaps with 10 dollars. it turns out you did a clever move, because the very next day bread is worth half. since you promised  to pay back 10 breads and not 10 dollars you can now pay back exactly what you borrowed, 10 breads, for only 5 dollars, leaving you with 5 dollars profit.

when you borrow something, the person you borrow from wants to make sure you don't run away with their money.. so they may ask you to leave something valuable or important that they can hold on to for security, for Bitshares it holds on to 3x the value of the bitAsset you are borrowing in BTS. so if you want to borrow 2 dollars, it holds 6 dollars worth of BTS as security until you pay the 2 dollars back.

 

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