Author Topic: bitGold  (Read 10489 times)

0 Members and 1 Guest are viewing this topic.

Offline MolonLabe

  • Full Member
  • ***
  • Posts: 58
    • View Profile
The assumption that all the options have to have the same expected return is a strictly weaker requirement

What do you mean by "strictly weaker"? Focal Points are defined in a game where the Players could meet anywhere, as long as they end up together. So it is really the only requirement.

("peg to a price everyone else pegs to and you win AND everyone else who agrees wins, else you all lose")
If someone owns a small amount of BTS, they would "lose" disproportionally in the "else you all lose" clause making it a weak threat (unless the plan is to have everyone own the same proportion of BTS at all times a la "Communism"). If someone owns a competing system, they would gain (if "you all lose") making it an incentive.

Offline toast

  • Hero Member
  • *****
  • Posts: 4001
    • View Profile
  • BitShares: nikolai
Very interesting. The assumption that all the options have to have the same expected return is a strictly weaker requirement, I wonder if there's an analogous concept for when the "outer" payoff matrix ("peg to a price everyone else pegs to and you win AND everyone else who agrees wins, else you all lose") leads everyone into the same option for which the "inner" payoff matrix ("use the name or don't use the name") could have a focal point
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 MolonLabe

  • Full Member
  • ***
  • Posts: 58
    • View Profile
I'm trying to understand how the system comes to a consensus and trying to figure out what's keeping everyone on the same page, so to speak.
...
Are you familiar with the concept of a Schelling point? Unless there is a global decision made to price BitUSD at something other than USD that the majority of the capital in the market is aware of and wants to participate in, the *only* rational profit-seeking move you can make it trade BitUSD at USD, since the only "consensus point" you could make in a distributed environment is just to look at the name of the asset.

So back to GLD: If you see, absent any other information, that BitGLD has been trading for $1300-ish, the only profit-seeking rational move you can make is to assume BitGLD refers to one ounce of gold and place orders accordingly. To kick off the process, the chain creator should be clear about what denomination they are talking about. Everyone doing this at once pushes the price to the real ratio.

The Schelling Point assumes a game where the (Benefits - Costs) of each Option are exactly the same...
Quote from: Wikipedia
they could win by both choosing any square
...and are NOT affected by anything external. Hence the need to use an intrinsic coordinator (such as a name).

BitSharesX does not satisfy this assumption because:
1] Margin calls can force you sell a losing position, giving someone an external incentive to push the direction causing such a forced sale (currently under discussion here https://bitsharestalk.org/index.php?topic=3130.90).
2] The Benefits for each Option will be different for each player (they are Sale Price - FutureValue(Purchase Price)), and not in a way that they are perfectly offset by the previously-locked-in Costs for each Option.
3] The Cost for each Option will be different for each player (they are FV(Purchase Price)), and not in a way that they are perfectly offset by the expected benefits for each purchase.

Offline JoeyD

Thanks Toast, I was indeed unfamiliar with the concept of the Schelling point.  This was the missing puzzle piece for me and it does indeed make sense to me now.  I recommend putting a reference to that wiki page or an explanation of the theory in any marketing attempt for bitshares.

Some very interesting concepts that people are working with in this space, almost feels like I've been living under a rock.  I'm having a bit of a culture shock ever since I dove into crypto-currencies a couple of months ago, I'm not used to encountering so many exceptionally clever people in a single location.

Offline toast

  • Hero Member
  • *****
  • Posts: 4001
    • View Profile
  • BitShares: nikolai
Sounds sort of like you're re-inventing BTS X =P

Certainly what you're saying is useful for many applications (when the asset is used to transfer ownership more than to store value, when the time-value of the collateral is not worth more than the loss of business due to the customer's expected loss), but I imagine most "asset-backed" assets would not bother with tying up collateral when trust is "good enough" and they can use the extra money to buy more of the real asset and issue more of the digital assets.
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 luckybit

  • Hero Member
  • *****
  • Posts: 2921
    • View Profile
  • BitShares: Luckybit
Whoa whoa wait, I thought he was asking about how BTS X works?

If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
Why back anything by reputation when you can back it by collateral?

And how do you know I have that collateral? I was talking about Me, not X.

Proof of Collateral? Unless you prove you have at least double what you're asking for an IOU for then you don't get the loan.

Okay take it like this, say you offer a token which represents some product you promise to redeem if buy the token at a discount and then send it to you later on when the product is ready to be redeemed. Since we don't know for sure whether or not you'll redeem, if you have collateral in escrow and it's proven somehow, then we know at any time we can send the token back to you and get out money back.

This removes all the risk from the buyer and puts it on the entrepreneur where it belongs. An entrepreneur should simply put enough value in escrow to act as collateral for people to get their money back if they don't redeem, are late, or whatever. Bitshares would make the perfect collateral.

« Last Edit: March 17, 2014, 08:33:20 pm by luckybit »
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline toast

  • Hero Member
  • *****
  • Posts: 4001
    • View Profile
  • BitShares: nikolai
Whoa whoa wait, I thought he was asking about how BTS X works?

If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
Why back anything by reputation when you can back it by collateral?

And how do you know I have that collateral? I was talking about Me, not X.
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 toast

  • Hero Member
  • *****
  • Posts: 4001
    • View Profile
  • BitShares: nikolai
I'm trying to understand how the system comes to a consensus and trying to figure out what's keeping everyone on the same page, so to speak.

The name of the asset and nothing else. Let's start with USD: The price of BitUSD is kept in line *only* by the fact that people expect it to trade for around $1. If everyone thinks everyone else thinks it does, then everyone has a profit motive to place orders that will push it towards the "correct" price. Are you familiar with the concept of a Schelling point? Unless there is a global decision made to price BitUSD at something other than USD that the majority of the capital in the market is aware of and wants to participate in, the *only* rational profit-seeking move you can make it trade BitUSD at USD, since the only "consensus point" you could make in a distributed environment is just to look at the name of the asset.

So back to GLD: If you see, absent any other information, that BitGLD has been trading for $1300-ish, the only profit-seeking rational move you can make is to assume BitGLD refers to one ounce of gold and place orders accordingly. To kick off the process, the chain creator should be clear about what denomination they are talking about. Everyone doing this at once pushes the price to the real ratio.
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 luckybit

  • Hero Member
  • *****
  • Posts: 2921
    • View Profile
  • BitShares: Luckybit
Whoa whoa wait, I thought he was asking about how BTS X works?

If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
Why back anything by reputation when you can back it by collateral?
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline JoeyD

Don't worry I understood the principle of bitshares being "bets" instead of IOU's, but as was mentioned by MolonLabe I'm having some issues grasping how the price is determined and how the bets are refereed by the system. I'm a bit worried that since we're not talking IOU's and the price of for example gold is not referenced from any external average price index, that prices may get a bit wild.

As I said I'm new to this kind of trading and have no experience in how these markets usually work, maybe it's just me being confused by multiple floating data-points (both bitshares and bitgold fluctuating in price separately, which suggests having to do a lot of corrective calculations manually if those prices aren't deduced automagically). I'm trying to understand how the system comes to a consensus and trying to figure out what's keeping everyone on the same page, so to speak. As I understand it all prices are dictated by the human participants, so I was wondering if widespread confusion about the unit of measure could lead to problems. Then again, how could you trust a 3rd party price index? I'm trying to work out how the system remains honest and secured from exploits by less trustworthy people.

I'm working my way through the white-papers, but exhaustion is having it's toll. My brain, which is allready rickety to begin with, is now firing on less cylinders than usual.

Offline toast

  • Hero Member
  • *****
  • Posts: 4001
    • View Profile
  • BitShares: nikolai
Whoa whoa wait, I thought he was asking about how BTS X works?

If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
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 CWEvans

  • Full Member
  • ***
  • Posts: 183
    • View Profile
Yeah ignore those examples, they make it sound like an iou trading platform a la mastercoin.

That is how some issuers are likely to use BitShares Me. Ignoring this won't make it go away.

BitGold is just an asset on the chain that can be traded for whatever the market thinks 1 BitGold is worth in terms of the underlying asset (XTS in this case). Read the whitepaper on the main site, it should clarify.

Right, but I've had this discussion with non-BitShares people already who respond with something like, "Wait a second. I don't get it. There's no gold in BitGold? ...?  <blink />... No, look. You see, what you need is..." followed by a description of a warehouse receipt/IOU.

Someone, somewhere is going to issue IOUs for USD, EUR, XAU, etc., and tout them as 'better' than Bit[USD | EUR | XAU], because they're backed.

Offline MolonLabe

  • Full Member
  • ***
  • Posts: 58
    • View Profile
There's a great analogy running around somewhere called "Bookie Bob's solution to bitcoin volatility."

http://invictus-innovations.com/bookie-bob/

It's interesting but it actually does not address the question. The relevant section says:
Quote from: BB Analogy
If bitcoins go up,
...
If bitcoins go down,

But does not discuss how BitSharesX becomes aware of this (ie, how it knows that Price of Bitcoins has 'gone up' or 'gone down'). Similarly, JoeyD's question is about the difference between the price of gold, and the price of BitGold.

Offline biophil

  • Hero Member
  • *****
  • Posts: 880
  • Professor of Computer Science
    • View Profile
    • My Academic Website
  • BitShares: biophil
No don't confuse me any further, don't add seasonal value to Bob'sMattressGold and make it global or hemisphere dependent. I'm still having trouble wrapping my head around the idea of trading in the value of something, instead of trading the something itself.

There's a great analogy running around somewhere called "Bookie Bob's solution to bitcoin volatility." Google it - it's highly worth a read if you're trying to figure out bitshares X for the first time.

Sent from my SCH-S720C using Tapatalk 2

Support our research efforts to improve BitAsset price-pegging! Vote for worker 1.14.204 "201907-uccs-research-project."

Offline toast

  • Hero Member
  • *****
  • Posts: 4001
    • View Profile
  • BitShares: nikolai
Yeah ignore those examples, they make it sound like an iou trading platform a la mastercoin. BitGold is just an asset on the chain that can be traded for whatever the market thinks 1 BitGold is worth in terms of the underlying asset (XTS in this case). Read the whitepaper on the main site, it should clarify.

Sent from my SCH-I535 using Tapatalk

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.