I have been reading this article multiple times and still have some issues wrapping my head around this concept. Let's run through an example to clarify the process.
Example 1: Physical Gateway that accepts fiat.
1. Buyer Joe deposits $100 worth of fiat into the physical gateway.
2. Gateway issues an IOU as a BitShares User Issued Asset (UIA). Gateway only has to keep a record that Buyer(Joe) deposited $100 via transaction ID of UIA
From the article "If the issuer is trustworthy then those IOUs will trade at face value and therefore be useful in trade." What is backing the UIA that will maintain the $100 worth of fiat? Just the free market of buyers and sellers of the UIA?
From the article "Once an asset has been issued it can be freely traded against all of the other asset types on the network including the fully collateralized market pegged assets known as BitAssets such as (BitUSD, BitBTC, etc.)." I don't understand how all of these markets could be traded vs the UIA. Wouldn't the only market available be UIA vs BitUSD if USD was the fiat deposited with the gateway?
3. Joe now trades UIA for BitUSD > Bitshares. Just like any other market there has to be enough liquidity for the UIA vs BitUSD and obviously also the BitUSD vs Bitshares market.
4. BitShares doubles in price vs USD and now Joe wants to get back into Fiat USD. Joe trades back for the UIA and sends the UIA back to the gateway to redeem the 2x amount in person. The gateway and Joe now know he has a tax burden on the financial gain correct?
I know the KYC and AML laws vary around the world so I am not questioning what the gateway has to keep as a record but specifically how does the UIA maintain value?