Author Topic: Use Gold and Silver with BitShares to bypass Fiat Regulations [BLOGPOST]  (Read 8739 times)

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deprdoo

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Sounds good.

Would you use the price they charge for a single oz or the price they charge when you buy 20+?

The only other thing that comes to mind, which is probably a non issue but the US mint occasionally runs out of silver. So BitSilverEagle might be more affected by the US mint than a generic 1oz silver BitAsset.

My limited experience with buying silver maples which can also be in short supply has been that shipping was delayed, but price not affected.

Offline Empirical1.1

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Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

I'm aware how manipulated the price is, I expect the paper price to ultimately decouple and our delegates will have to be on top of that transition, which will probably just involve switching price feeds to Asia and places like the SGE I mentioned.

Tracking the global average price of a 1oz physical coin independently is tough. The reason I'm interested though is that there's a great marketing angle here, I'm not sure anyone else does this. I'm pretty sure we'd have to have two markets though. BitSilver & BitSilverPhyzz1oz.

Also even if the price wasn't manipulated there's stil just a natural huge deviation between the price of silver and the price of a small 1oz coin.

Purchasing a 5kg Bar of silver would work out at about $20 per ounce but buying a solitary silver eagle might cost $25 an ounce. (So trying to price in 1oz is very deceptive and is more production cost related & would result in the overpricing of gold & silver.)

Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.

Yeah, maybe 1 sub-asset market that tried to maintain a generic BitGold & Silver 1oz phyzz price would be interesting.

If I were going to try it (and I just might) I would want to pick the most commonly traded and most recognizable form of silver I could find.  There are about a half dozen good candidates, but to me the US Silver Eagle is as good as any.

So I like the idea of a sub-asset called BitSilverEagle.

It should be easy enough to establish the peg based on any five of the top ten dealers - selected because they have the same way of handling shipping and fees perhaps.

I would simply define the peg to be the average of a basket of coins from these dealers. This would be easy for delegates to compute and easy to audit by everyone.  No need to argue about what the other dealers are doing, the Big Five are already dynamically adjusting their prices to be competitive in the global market.

Then any dealer would simply shop around to get a better price than the average of the Big Five and let that be part of the dealer's added value profit.

Sounds good.

Would you use the price they charge for a single oz or the price they charge when you buy 20+?

The only other thing that comes to mind, which is probably a non issue but the US mint occasionally runs out of silver. So BitSilverEagle might be more affected by the US mint than a generic 1oz silver BitAsset.

Offline Stan

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Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

I'm aware how manipulated the price is, I expect the paper price to ultimately decouple and our delegates will have to be on top of that transition, which will probably just involve switching price feeds to Asia and places like the SGE I mentioned.

Tracking the global average price of a 1oz physical coin independently is tough. The reason I'm interested though is that there's a great marketing angle here, I'm not sure anyone else does this. I'm pretty sure we'd have to have two markets though. BitSilver & BitSilverPhyzz1oz.

Also even if the price wasn't manipulated there's stil just a natural huge deviation between the price of silver and the price of a small 1oz coin.

Purchasing a 5kg Bar of silver would work out at about $20 per ounce but buying a solitary silver eagle might cost $25 an ounce. (So trying to price in 1oz is very deceptive and is more production cost related & would result in the overpricing of gold & silver.)

Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.

Yeah, maybe 1 sub-asset market that tried to maintain a generic BitGold & Silver 1oz phyzz price would be interesting.

If I were going to try it (and I just might) I would want to pick the most commonly traded and most recognizable form of silver I could find.  There are about a half dozen good candidates, but to me the US Silver Eagle is as good as any.

So I like the idea of a sub-asset called BitSilverEagle.

It should be easy enough to establish the peg based on any five of the top ten dealers - selected because they have the same way of handling shipping and fees perhaps.

I would simply define the peg to be the average of a basket of coins from these dealers. This would be easy for delegates to compute and easy to audit by everyone.  No need to argue about what the other dealers are doing, the Big Five are already dynamically adjusting their prices to be competitive in the global market.

Then any dealer would simply shop around to get a better price than the average of the Big Five and let that be part of the dealer's added value profit.
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline Gentso1

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+5% +5% Great blog.

I'm not sure of the merits of pricing in 1oz coins.

People expect to pay a premium the smaller the size of physical you want. So I would stick to the global market price per ounce & just charge a % on that.

The Shanghai Gold Exchange has a high delivery rate & go as low as 1kg bars I think.
Exchanges like them will take over the pricing mechanism in the event Comex and others default.

(Edit: Just saw above, yeah 1:1 +5% would be good, if it was possible, but whatever it is, is probably fine. I think people are more comfortable with the widely quoted price of silver per ounce. A new system with a new price system would be a hard sell I think.)

Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

The heart of the issue is a gateway. Fiat,gold, silver you could make a case for any gateway but we need one.

I like using e-gold as a example so how did they get started? Well simple really they used their own funds to purchase a large amount of gold(it doesn't say how much) and held that as a reserve. From their you had a physical gold storage to back your e-gold which could be redeemed at any time. Even with this in place it took them 2 years to gain exponential growth.

The other interesting thing they did was when you used the spend feature of egold. This spend function meant instead of shoppers seeing AUG 1gram for a product they would instead see the current USD amount. The receiver would of course still receive egold but from a shopping experience the buyer and seller could use terms they were all ready familiar with and know they were getting that dollar amount.

With the above in mind what would stop someone from buying 50-100k worth of a 1-10 gram bars and exchanging them directly for  bitGLD for a spread? If its such a good idea why don't a few stake holders throw their bts in the mix to the tune or 50K with the knowledge that it will make the rest of their shares more valuable. Amagi metals would be the place of choice. So you just convert bts to btc to gld and now you have your reserve. Pay a operator, storage cost and a third party to audit and its gateway made.

Something tells me I am missing something or it isn't quite this simple and their must be a reason no one will bite on this.

 


Offline Empirical1.1

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+5% +5% Great blog.

I'm not sure of the merits of pricing in 1oz coins.

People expect to pay a premium the smaller the size of physical you want. So I would stick to the global market price per ounce & just charge a % on that.

The Shanghai Gold Exchange has a high delivery rate & go as low as 1kg bars I think.
Exchanges like them will take over the pricing mechanism in the event Comex and others default.

(Edit: Just saw above, yeah 1:1 +5% would be good, if it was possible, but whatever it is, is probably fine. I think people are more comfortable with the widely quoted price of silver per ounce. A new system with a new price system would be a hard sell I think.)

Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

I'm aware how manipulated the price is, I expect the paper price to ultimately decouple and our delegates will have to be on top of that transition, which will probably just involve switching price feeds to Asia and places like the SGE I mentioned.

Tracking the global average price of a 1oz physical coin independently is tough. The reason I'm interested though is that there's a great marketing angle here, I'm not sure anyone else does this. I'm pretty sure we'd have to have two markets though. BitSilver & BitSilverPhyzz1oz.

Also even if the price wasn't manipulated there's stil just a natural huge deviation between the price of silver and the price of a small 1oz coin.

Purchasing a 5kg Bar of silver would work out at about $20 per ounce but buying a solitary silver eagle might cost $25 an ounce. (So trying to price in 1oz is very deceptive and is more production cost related & would result in the overpricing of gold & silver.)

Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.

Yeah, maybe 1 sub-asset market that tried to maintain a generic BitGold & Silver 1oz phyzz price would be interesting.
« Last Edit: January 25, 2015, 03:34:24 pm by Empirical1.1 »

sumantso

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It's a nice idea, but I think it makes more problems than it solves.
How are we supposed to get a reliable feed.
Shop a charges a fee of 10 usd
Shop b charges 30 usd.
Take the average?

And with that said, if I wanted to get a 100 USD bill here in Europe. I have to pay a fee too.
Should those be calculated in BitUSD?

Yep, this is confusing. Let it be as it is.

Offline fluxer555

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Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.
« Last Edit: January 25, 2015, 03:19:01 pm by fluxer555 »

deprdoo

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Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

Offline graffenwalder

It's a nice idea, but I think it makes more problems than it solves.
How are we supposed to get a reliable feed.
Shop a charges a fee of 10 usd
Shop b charges 30 usd.
Take the average?

And with that said, if I wanted to get a 100 USD bill here in Europe. I have to pay a fee too.
Should those be calculated in BitUSD?

Offline Stan

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+5% +5% Great blog.

I'm not sure of the merits of pricing in 1oz coins.

People expect to pay a premium the smaller the size of physical you want. So I would stick to the global market price per ounce & just charge a % on that.

The Shanghai Gold Exchange has a high delivery rate & go as low as 1kg bars I think.
Exchanges like them will take over the pricing mechanism in the event Comex and others default.

(Edit: Just saw above, yeah 1:1 +5% would be good, if it was possible, but whatever it is, is probably fine. I think people are more comfortable with the widely quoted price of silver per ounce. A new system with a new price system would be a hard sell I think.)

Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline Empirical1.1

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 +5% +5% Great blog.

I'm not sure of the merits of pricing in 1oz coins.

People expect to pay a premium the smaller the size of physical you want. So I would stick to the global market price per ounce & just charge a % on that.

The Shanghai Gold Exchange has a high delivery rate & go as low as 1kg bars I think.
Exchanges like them will take over the pricing mechanism in the event Comex and others default.

(Edit: Just saw above, yeah 1:1 +5% would be good, if it was possible, but whatever it is, is probably fine. I think people are more comfortable with the widely quoted price of silver per ounce. A new system with a new price system would be a hard sell I think.)
« Last Edit: January 25, 2015, 01:45:08 pm by Empirical1.1 »

Offline Stan

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So, as a simple place to start, a company could start out dealing only in 20 piece rolls of Silver Eagles priced precisely at 1:1 with BitSilver.


I suppose the initial spread, including shipping and insurance, would have to start out a bit large but even  +5% seems like it would be competitive with wire transfers and two-step exchange fees.

So I'm thinking a simple 1:1 +1 strategy might be easy to market if the math adds up.

In other words, a fixed fee of one BitSilver and only deal in packs of 20.

Do you think that would be attractive considering the alternative on/off ramps?
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline liondani

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Quote
He charged just 1% transaction fee with a 50 cent cap.

Who is "he"?

e-gold was founded by oncologist Douglas Jackson[5] and attorney Barry Downey in 1996.

https://en.wikipedia.org/wiki/E-gold

He was a good guy. I had a little left in there and I didn't try to claim it, even though he spent years trying to track down all the holders after the Feds closed him down.

P.S. Great blog post. Lots to think about.

would it be a good idea to invite him to take a honorable delegate place?

Offline triox

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My immediate takeaway from the article: buy BitGOLD now, make easy  +5% when delegates switch their feeds to physical delivery gold  8)

Offline bitmeat

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So now instead of USD -> BTC -> ALT, you suggest people do USD -> GOLD -> BTC -> ALT.

I don't see it happening for the average Joe. Perhaps for those who already own plenty of physical gold, it might work.