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Offline BTSInvestor

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Questions about BitShares white paper
« on: January 01, 2014, 06:11:11 AM »

I am aware that 3i is considering to use POS in BTS  instead of POW  which is original proposed solution in the published white paper,we all know that the POS mechanism is totally different with POW.my question is that will the 'mining' approach change affect the original system design, e.g. the original BTS mining dividends,if yes,is there any better solution to address this issue,recently,I also heard many people are talking about the change, people are nervous about the uncertain things,some people also think the new proposal solution is not a good choice. will 3i consider to publish a new system design specification or revised white paper?then we can have a better understanding for the coming system. Look forward to your reply.


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Offline bytemaster

Re: Questions about BitShares white paper
« Reply #1 on: January 01, 2014, 06:41:00 AM »
I am aware that 3i is considering to use POS in BTS  instead of POW  which is original proposed solution in the published white paper,we all know that the POS mechanism is totally different with POW.my question is that will the 'mining' approach change affect the original system design, e.g. the original BTS mining dividends,if yes,is there any better solution to address this issue,recently,I also heard many people are talking about the change, people are nervous about the uncertain things,some people also think the new proposal solution is not a good choice. will 3i consider to publish a new system design specification or revised white paper?then we can have a better understanding for the coming system. Look forward to your reply.


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100% of the BTS money supply will be assigned in the genesis block between ProtoShare holders (mining) and AngelShare holders (investing).

All BitAssets now receive 5% interest
All Short positions now pay 5% interest
100% of all transaction fees are paid as dividends.
Ripple Style Consensus used to build each block.
Proof-of-Stake used to provide long-term security and irreversibility.

Yes, enough has changed that I need to write a new white paper.  Fortunately, most of these changes represent simplification and enhancement rather than adding complexity.  Owning BTS is now more profitable than ever.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline santaclause102

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Re: Questions about BitShares white paper
« Reply #2 on: January 16, 2014, 01:26:48 AM »
Quote
BitShares attempts to arrange for all actors to act proactively to ensure that collateral requirements are met even during the most extreme market fluctuations.  To illustrate how these market forces will interact with the BitShare block-chain rules lets consider some example market situations.

Rapid Fall in BitShare Value
If the value of a BitShare starts to fall rapidly against BitGold, then all shorts in the system will be faced with a ‘squeeze’ which will force them to buy proactively before their margin is called.  If their margin is hit, then they will suffer a 5% fee or worse, complete loss of their collateral.   The result of this short-squeeze is that the value of BitGold would rise dramatically above market value of Gold causing even more shorts to face margin calls.  This would create an opportunity for new shorts to enter market with full collateral backing their new position.  These new shorts would profit when the price settles down after the short-squeeze is over.    As a result all market participants will be pro-active about monitoring the price and their collateral which should result in the minimal amount of volatility.

Does this mean that someone that wants to bet on gold also has to bet on the value of bitshares at the same time ("monitor the price of bitshares") and therefore has to take not only gold but also bitshare BEX into account? The volatility of Bitshares will at the start be so much higher than the volatility of gold so how can bitshares BEX be used to speculate on Gold? 

I am not a native speaker and I didn't get everything the whitepaper has to say about this. Maybe someone can explain in a bit easier terms? What does squeeze  mean for example? I mean I know what it means in general but not in that context... 
« Last Edit: January 16, 2014, 01:30:45 AM by delulo »

Offline bytemaster

Re: Questions about BitShares white paper
« Reply #3 on: January 16, 2014, 01:47:45 AM »
Someone betting on gold (BitGold) is paired with someone betting on BitShares and against BitGold.   The individual who is SHORT is exposed to 2x the volatility of bitshares while the BitGold holder is free from the volatility of bitshares.  This is why there is 2x margin requirements.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Markus

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Re: Questions about BitShares white paper
« Reply #4 on: January 16, 2014, 02:31:56 AM »
What does squeeze  mean for example? I mean I know what it means in general but not in that context...

https://en.wikipedia.org/wiki/Short_squeeze

clout

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Re: Questions about BitShares white paper
« Reply #5 on: January 23, 2014, 06:31:11 AM »
Someone betting on gold (BitGold) is paired with someone betting on BitShares and against BitGold.   The individual who is SHORT is exposed to 2x the volatility of bitshares while the BitGold holder is free from the volatility of bitshares.  This is why there is 2x margin requirements.

So in essence, when you hold bitshares you are automatically exposed to 2x the volitility of its price to insure the stability of bitAssets? So a bitAsset is thereby backed by 2x its value in bitshares? So the bitshares holders put up the collateral for the bitasset with a 2:1 ratio of bitshares to assets? Do I understand it now? I wasnt sure before who put up the collateral for each bitasset. If it is as I have described I think this is a very sophisticated yet simple system. Additionally is the 5 point swing you described simply from the dividend? I don't see how the price of a bitAsset could dip below the "real world" price if the dividend is always a positive value. 

Offline bytemaster

Re: Questions about BitShares white paper
« Reply #6 on: January 23, 2014, 06:32:49 AM »
Someone betting on gold (BitGold) is paired with someone betting on BitShares and against BitGold.   The individual who is SHORT is exposed to 2x the volatility of bitshares while the BitGold holder is free from the volatility of bitshares.  This is why there is 2x margin requirements.

So in essence, when you hold bitshares you are automatically exposed to 2x the volitility of its price to insure the stability of bitAssets? So a bitAsset is thereby backed by 2x its value in bitshares? So the bitshares holders put up the collateral for the bitasset with a 2:1 ratio of bitshares to assets? Do I understand it now? I wasnt sure before who put up the collateral for each bitasset. If it is as I have described I think this is a very sophisticated yet simple system. Additionally is the 5 point swing you described simply from the dividend? I don't see how the price of a bitAsset could dip below the "real world" price if the dividend is always a positive value.

When you SHORT BitUSD you are exposed to 2x volatility.  Simply holding BitShares exposes you to 1x volatility. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

clout

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Re: Questions about BitShares white paper
« Reply #7 on: January 23, 2014, 06:55:52 AM »
When you SHORT BitUSD you are exposed to 2x volatility.  Simply holding BitShares exposes you to 1x volatility. 

So the value of bitassets created isnt limmited to half the value of all bitshares but is rather limited further to the number of short positions? I don't see as many ppl shorting an asset as would be needed to created the potential demand for bitassets. does the 5% fee only affect margin calls or is it deducted from every short. In the latter case I would think there is a lot less of an incentive to short bitusd to bitshares than there is to long bitusd

Offline bytemaster

Re: Questions about BitShares white paper
« Reply #8 on: January 23, 2014, 07:04:42 AM »
When you SHORT BitUSD you are exposed to 2x volatility.  Simply holding BitShares exposes you to 1x volatility. 

So the value of bitassets created isnt limmited to half the value of all bitshares but is rather limited further to the number of short positions? I don't see as many ppl shorting an asset as would be needed to created the potential demand for bitassets. does the 5% fee only affect margin calls or is it deducted from every short. In the latter case I would think there is a lot less of an incentive to short bitusd to bitshares than there is to long bitusd

If you expect BitShares to grow by more than 5% per year against the dollar then you can increase your gains by shorting USD and paying 5%.   If you expect it to grow less than 5% per year, then of course you shouldn't short as you would not recover your borrowing costs.

If there is high demand for BitUSD then it will be bid up in price until it is tempting for shorts to enter the market because they believe the price has been bid up too high.  This will increase supply and keep things in line.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

clout

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Re: Questions about BitShares white paper
« Reply #9 on: January 23, 2014, 07:14:26 AM »
When you SHORT BitUSD you are exposed to 2x volatility.  Simply holding BitShares exposes you to 1x volatility. 

So the value of bitassets created isnt limmited to half the value of all bitshares but is rather limited further to the number of short positions? I don't see as many ppl shorting an asset as would be needed to created the potential demand for bitassets. does the 5% fee only affect margin calls or is it deducted from every short. In the latter case I would think there is a lot less of an incentive to short bitusd to bitshares than there is to long bitusd

If you expect BitShares to grow by more than 5% per year against the dollar then you can increase your gains by shorting USD and paying 5%.   If you expect it to grow less than 5% per year, then of course you shouldn't short as you would not recover your borrowing costs.

If there is high demand for BitUSD then it will be bid up in price until it is tempting for shorts to enter the market because they believe the price has been bid up too high.  This will increase supply and keep things in line.

And if theres no fee and consequently no dividend payment what becomes of the market? Rather than fluctuating +/-5% the price of bit assets stay closer to parity with the real asset. Why is that not preferable?

Offline bytemaster

Re: Questions about BitShares white paper
« Reply #10 on: January 23, 2014, 07:16:02 AM »
When you SHORT BitUSD you are exposed to 2x volatility.  Simply holding BitShares exposes you to 1x volatility. 

So the value of bitassets created isnt limmited to half the value of all bitshares but is rather limited further to the number of short positions? I don't see as many ppl shorting an asset as would be needed to created the potential demand for bitassets. does the 5% fee only affect margin calls or is it deducted from every short. In the latter case I would think there is a lot less of an incentive to short bitusd to bitshares than there is to long bitusd

If you expect BitShares to grow by more than 5% per year against the dollar then you can increase your gains by shorting USD and paying 5%.   If you expect it to grow less than 5% per year, then of course you shouldn't short as you would not recover your borrowing costs.

If there is high demand for BitUSD then it will be bid up in price until it is tempting for shorts to enter the market because they believe the price has been bid up too high.  This will increase supply and keep things in line.

And if theres no fee and consequently no dividend payment what becomes of the market? Rather than fluctuating +/-5% the price of bit assets stay closer to parity with the real asset. Why is that not preferable?

The price doesn't fluctuate because of the 5% but based upon whether more people want into or out of BitUSD at any given moment in time.  Whether the rate is 5%, 10% or 0% there will be a fluctuation in price.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

clout

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Re: Questions about BitShares white paper
« Reply #11 on: January 23, 2014, 08:03:32 PM »
I understand. I just think a 5% fee sounds steep

Offline bytemaster

Re: Questions about BitShares white paper
« Reply #12 on: January 23, 2014, 10:58:00 PM »
5% annual fee not one time.


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For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

clout

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Re: Questions about BitShares white paper
« Reply #13 on: January 23, 2014, 11:04:17 PM »
ooooooooooooooooooooooooooooooooooooooooohhh

Offline Pocket Sand

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Re: Questions about BitShares white paper
« Reply #14 on: January 24, 2014, 02:11:41 AM »
Still a bit confused on the 5% fee, if one person shorts bitUSD, and another person goes long, will the transaction fee for the person going short be 5% of their overall investment immediately or will it only cost them 5% if the deal goes longer than a full year?

 

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