Hi, I think you replied to me on reddit as well, very noob friendly this place which I like.
So if you invest in bitBTC and BTC rises. You decide to sell your bitBTC for BTSX which you now have more of due to rise in price. That seems right to me.
True .. but only if BTC rises against the BTSX ...
Then what is the Collateral XTS part of the exchange. Is this used to short?
XTS is the BTSX in the test network. ... worth nothing much like bitcoin in the testnetwork .. dont mix theses up!
The collateral is used when someone goes short on bitUSD (as an example)
to short (create and lend) 1 bitUSD you need to put BTSX woth 2 USD
into collateral ..
you will only get them back when you buy back bitUSD and 'cover' your position ...
This only makes sense if the price for a bitUSD goes down (relative to the BTSX) ...