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Offline NewMine

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BitUSD question?
« on: May 12, 2014, 05:02:28 PM »

How does one short bitUSD?

Given the following:

Let's say BTS is trading at $10.

1BTS is then worth 10bitUSD

I am not seeing how you could even short bitUSD.  I see you can short BTS.

In order to short a bitUSD $1 would have to end up being worth less than $1, which isn't possible. $1 will always be $1, just what you can buy with that is what changes.

So let's take shorting BTS:

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

If anyone has a full trade examples of what happens with bitUSD, that would be great!

Offline tonyk

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Re: BitUSD question?
« Reply #1 on: May 12, 2014, 05:19:22 PM »
I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

You ask too many question mixed with too many statements. if you ask one question at a time I might be able to help you.
 But I must figure out what you do not get/what you get wrong, first.

Here is a reading before you start asking q (if you prefer):
Think of BTS as the currency and of  bitUSD as futures contracts; bitUSD are futures contracts with: – 1. no expiration/delivery date; 2. no actual delivery;
http://www.ftpress.com/articles/article.aspx?p=1436919&seqNum=6
http://www2.hmc.edu/~evans/e104l12.pdf

« Last Edit: May 12, 2014, 05:58:21 PM by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Agent86

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Re: BitUSD question?
« Reply #2 on: May 12, 2014, 06:44:05 PM »
How does one short bitUSD?

Given the following:

Let's say BTS is trading at $10.

1BTS is then worth 10bitUSD

I am not seeing how you could even short bitUSD.  I see you can short BTS.

In order to short a bitUSD $1 would have to end up being worth less than $1, which isn't possible. $1 will always be $1, just what you can buy with that is what changes.

So let's take shorting BTS:

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

If anyone has a full trade examples of what happens with bitUSD, that would be great!

When "short bitUSD" you are not predicting it goes down relative to the dollar, you are predicting it goes down relative to BTS.

The transaction is:
A person agrees to give you $10 worth BTS (at today's exchange rate) in exchange for an IOU $10 worth of BTS (at whatever the exchange rate is at that time).  1 bitUSD = IOU 1 dollar's worth of BTS.

I think this may help:
http://invictus-innovations.com/bookie-bob

Offline NewMine

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Re: BitUSD question?
« Reply #3 on: May 12, 2014, 08:28:06 PM »
I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

You ask too many question mixed with too many statements. if you ask one question at a time I might be able to help you.
 But I must figure out what you do not get/what you get wrong, first.

Here is a reading before you start asking q (if you prefer):
Think of BTS as the currency and of  bitUSD as futures contracts; bitUSD are futures contracts with: – 1. no expiration/delivery date; 2. no actual delivery;
http://www.ftpress.com/articles/article.aspx?p=1436919&seqNum=6
http://www2.hmc.edu/~evans/e104l12.pdf

Just give me one example where you sell 1bitusd using collateral and buy it back.


They way I am seeing it is BTS and bitUSD are different denominations of the same thing. If BTS is worth $1, then they are both the same thing with different names. You sell bitUSD, you get BTS. You sell BTS, you get bitUSD.

Offline liondani

Re: BitUSD question?
« Reply #4 on: May 12, 2014, 08:50:35 PM »
I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

You ask too many question mixed with too many statements. if you ask one question at a time I might be able to help you.
 But I must figure out what you do not get/what you get wrong, first.

Here is a reading before you start asking q (if you prefer):
Think of BTS as the currency and of  bitUSD as futures contracts; bitUSD are futures contracts with: – 1. no expiration/delivery date; 2. no actual delivery;
http://www.ftpress.com/articles/article.aspx?p=1436919&seqNum=6
http://www2.hmc.edu/~evans/e104l12.pdf

Just give me one example where you sell 1bitusd using collateral and buy it back.


They way I am seeing it is BTS and bitUSD are different denominations of the same thing. If BTS is worth $1, then they are both the same thing with different names. You sell bitUSD, you get BTS. You sell BTS, you get bitUSD.

So when one day  $1= €1   then   $ = €  ?   :o  (same value don't mean same thing)
« Last Edit: May 12, 2014, 08:56:00 PM by liondani »
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Offline tonyk

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Re: BitUSD question?
« Reply #5 on: May 12, 2014, 09:03:01 PM »
Just give me one example where you sell 1bitusd using collateral and buy it back.

1.You start with B BTS in your account.
2. You place an order : sell 1 bitUSD @ X bitUDS/BTS
3. If your order is match with buy bitUSD order (i.e. there is a buy order >=1 BitUSD @ Y>X)
4. You have now ‘-1’ bitUSD in your account. Also B+X BTS in your account (B originally there and X received from the trade). Those B+X BTS are collateral of your ‘-1’ bitUSD. (meaning you cannot do anything with them until you buy 1 bitUSD); Also  at 2x margin for the trade to occure: B>= X;
…..
5. At some point in time you place an order: buy 1 bitUSD @ Z bitUDS/BTS
6. If your price Z >= of the best sell’s offers price, a trade occurs =>
7. You end up with 0 bitUSD in your account and B+X-Z BTS.

!!! This is principally how it works – implementation might make necessary to have say B>=2X in p.4
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline toast

Re: BitUSD question?
« Reply #6 on: May 12, 2014, 09:21:35 PM »
I don't think that's right... you put up 2x collateral at the time you place the order. The bts you trade the bitusd for and your margin are separate. You never have negative balance, just locked collateral

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Offline tonyk

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Re: BitUSD question?
« Reply #7 on: May 12, 2014, 09:26:50 PM »
I thought that you might do it like this so I put:
!!! This is principally how it works – implementation might make necessary to have say B>=2X in p.4
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline toast

Re: BitUSD question?
« Reply #8 on: May 12, 2014, 09:37:07 PM »
Even with that requirement the order is wrong, you put up collateral in step 2 not 4

Also steps 5 to 7, that wouldnt happen. You don't reset the "-1" to "0" just because you bought, you have to actively cover otherwise you just hold your bitusd.

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Offline santaclause102

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Re: BitUSD question?
« Reply #9 on: May 12, 2014, 09:40:43 PM »
Even with that requirement the order is wrong, you put up collateral in step 2 not 4

Also steps 5 to 7, that wouldnt happen. You don't reset the "-1" to "0" just because you bought, you have to actively cover otherwise you just hold your bitusd.

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toast, can you make a list like tonyk did?

Offline tonyk

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Re: BitUSD question?
« Reply #10 on: May 12, 2014, 09:43:09 PM »
Toast those are all implementation DETAILS:
He wants to know how it works,  no every detail how you implemented the general idea.

[EDIT]
Plus if 5-7 the way I described is far better than the nonsense actual implementation.
« Last Edit: May 12, 2014, 09:48:57 PM by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline bytemaster

Re: BitUSD question?
« Reply #11 on: May 12, 2014, 09:44:45 PM »
You cannot short BTS because you cannot borrow BTS, you can only short BitUSD because they are borrowed into existence.

You can go long BitUSD which is the equivalent of selling BTS and thus you do not profit if BTS goes up.  But you cannot get a leveraged short position on BTS.






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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 toast

Re: BitUSD question?
« Reply #12 on: May 12, 2014, 09:51:05 PM »
sam wants to short usd. Current price is 10 bitusd per bts. Larry wants to go long usd.

1) sam places a short sell order for 10 usd for 0.1 bts each. To place this order, he has to have 2 bts, which is taken as collateral.
2) larry puts buy order 10 usd for a bts.
3) the orders are matched. Network prints 10 bitusd and gives them to larry, and takes larry's bts and gives them to sam.
3) sam has 1 bts live and 2 in collateral. Larry has 10 usd.
... time passes ...
4) sam buys back 10 bitusd, but his bet was right so it costs him 0.5 bts only. Sam has 0.5 bts live and 2 in collatetal, and 10 bitusd. Larry (assuming he was again on the other side of this trade) has 0.5 bts.
5) sam uses his 10 bitusd to cover and reclaim his collateral. The bitusd is destroyed and now same has 2.5 bts.

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Offline toast

Re: BitUSD question?
« Reply #13 on: May 12, 2014, 09:54:07 PM »
Toast those are all implementation DETAILS:
He wants to know how it works,  no every detail how you implemented the general idea.

[EDIT]
Plus if 5-7 the way I described is far better than the nonsense actual implementation.

How is that nonsense? What's a better way to handle having 1 wallet with shorts at different prices? Or what if I want to receive bitusd to spend without covering?

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Offline bytemaster

Re: BitUSD question?
« Reply #14 on: May 12, 2014, 10:21:22 PM »
I don't think that's right... you put up 2x collateral at the time you place the order. The bts you trade the bitusd for and your margin are separate. You never have negative balance, just locked collateral

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Each party puts up 1x for a total of 2x entering the trade, and the output of the trade is -USD backed by 2x and +USD
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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.

 

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