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Offline starspirit

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"What's that you say? Aren't we supposed to be destroying the old financial markets and introducing a new era?"

Well, yes and no. What I'm sure everyone is in agreement on is that its the costs, inefficiencies and traditional power complexes in the outside financial industry that are becoming obsolete. However, it's important to not throw out babies with the bathwater, so to speak. Modern financial markets have created solutions to many economic problems. Rather than reinvent every wheel and spoke, we should at least take note of what works in financial markets, and seek to replicate that in some modified or improved form. Especially as that's how many people will transition over.

So I'm looking at all these intellectual battles in the forum around how bitAssets should be structured, including my own head-banging, and thinking "the modern financial industry doesn't just have one way for people to invest in an asset, but many ways, each designed to meet different needs". So why are we all arguing? Maybe we should all be working together to design everything we want, but not all in one "holy grail" bitAsset package. Maybe we just need different instruments.

Let's look at a sample of offerings in the modern financial industry, using gold as an example:

- Physical gold is like a substitute money. You hold it, and pay holding costs directly. Its difficult to do, inconvenient, and possibly only used for large financial transactions, but secure.
- Gold-backed currencies can be used as money. They are highly convenient, liquid, and transferable. (if they currently existed)
- Futures on gold allow you to trade it with leverage, subject to margin calls, and regular expiries. Its easy, and requires little capital, but you bear the risk of contango/backwardation.
- CFD accounts with long gold allow you to trade with leverage, subject to margin calls, but no expiries. It requires little capital, but costs you in spreads and funding rates.
- Exchange-Traded Funds (ETFs) on gold allow you to hold it as a long-term investment, as part of a shared pool, with holding expenses paid from the pool and adjusting your exposure over time. Its convenient and easy, but its not leveraged, and cannot be used in transactions.

These are not the only ways of investing in gold. Now if you look closely you can see that many of the bitAsset debates are really about features a bitAsset should provide. But the perfect set of features we are arguing over are never seen in the external world in a single package.

So I'm proposing we move the strategic debate in a different direction...
What are the building blocks to offer a suite of markets aimed at different needs? And where do we start, recognising that not everyone's needs can be met from that starting point.
(Of course, we can start "everywhere all at once" if we like, if we decentralise/privatise the development process as I have just suggested in another thread.)

I'd also be inclined to begin this process before we have a final solution to the issue of a stable currency. Stable currency is a hard problem. I'm convinced we will find the right answer eventually, but I do now think it's holding us up from exploring all these other profit opportunities. Who knows - maybe the optimal solution to stable currency will present itself by surprise as we let design freedom and the free market do its work.






Offline Method-X

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 +5% Awesome post. Become a financial platform, let natural selection take over and see what evolves. I'm pretty sure this is exactly where Dan wants to go, based on comments he's made in mumble hangouts.

Offline Permie

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Quote
So I'm looking at all these intellectual battles in the forum around how bitAssets should be structured, including my own head-banging, and thinking "the modern financial industry doesn't just have one way for people to invest in an asset, but many ways, each designed to meet different needs". So why are we all arguing? Maybe we should all be working together to design everything we want, but not all in one "holy grail" bitAsset package. Maybe we just need different instruments.
+5%

Most of these different products require liquidity, correct?
If we can find a way for shareholders to pool together and provide liquidity for some low risk profit then a lot of these projects/products will get off the ground a lot faster.
There must be some way to use the UIA system to achieve this

What do you think?
I've read about CryptoHedge doing something similar for bitGold, not sure what's happening now.
A fund to trade our main products bitUSD and bitCYN against BTC/fiat in as low risk way as possible is of benefit to the entire BitShares ecosystem. Perhaps the community can find some "verified" (?) traders who are deemed trustworthy to trade for the fund and take the lion's share of the profits, distributing the rest to bitFUND asset holders.
Do we have to wait for whales or can the community crowdfund this stuff?
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Offline starspirit

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Quote
So I'm looking at all these intellectual battles in the forum around how bitAssets should be structured, including my own head-banging, and thinking "the modern financial industry doesn't just have one way for people to invest in an asset, but many ways, each designed to meet different needs". So why are we all arguing? Maybe we should all be working together to design everything we want, but not all in one "holy grail" bitAsset package. Maybe we just need different instruments.
+5%

Most of these different products require liquidity, correct?
If we can find a way for shareholders to pool together and provide liquidity for some low risk profit then a lot of these projects/products will get off the ground a lot faster.
There must be some way to use the UIA system to achieve this

What do you think?
I've read about CryptoHedge doing something similar for bitGold, not sure what's happening now.
A fund to trade our main products bitUSD and bitCYN against BTC/fiat in as low risk way as possible is of benefit to the entire BitShares ecosystem. Perhaps the community can find some "verified" (?) traders who are deemed trustworthy to trade for the fund and take the lion's share of the profits, distributing the rest to bitFUND asset holders.
Do we have to wait for whales or can the community crowdfund this stuff?
Good thoughts Permie.

1. I think the first and most critical thing is incentive. The optimal incentive structure needs to be in place for issuers or counter parties to be willing to offer and support each instrument.
2. The second thing that will help liquidity is convenience. Give the parties the most convenient tools possible to make their job of supporting the market easier.
3. Finally pooling. Offer avenues, through UIAs as you suggest, that allow the broadest possible range of users to pool to support the endeavour, with a manager that handles the more sophisticated implementation.

I believe setting these up as clear profit and income opportunities will attract more people, including whales, into the community to support it. Build it and they will come.

 

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