This article is far more fair than his prior articles and focuses entirely one the "black swan failure mode".... the dreaded 50% fall that happens so fast BitUSD ends up only partially backed by BTSX. An event similar to a bank run, hyper inflation, or bankruptcy of a traditional banking institution.
The only issue is that Preston is arguing against the straw man that we claimed BitUSD will ALWAYS under ALL conditions be worth $1 with 0 risk. We do not claim this and have never claimed this when you read the details. Sure high-level marketing always has fine print with financial instruments. We have always maintained that BitUSD will vary in price around the value of the dollar and that in the event of a massive black swan BitUSD is worth at most 2x the BTSX you spent to buy it.
All banks make claims that are far less sound that BTSX makes. Namely, they claim you can withdraw your deposit on demand. They borrow short term and lend long term. They create USD on illiquid, non-fungible, collateral (housing, cars, etc) that can be just as volatile as any crypto-currency and is subject to fire, flood, weather, and owner abuse. The mechanics of BitUSD creation are far more sound than any fractional reserve bank creating USD with similar accounting principles.
So claiming that Mt. Gox USD is always worth a dollar is the same as claiming BitUSD is always worth a dollar. Sometimes GoxUSD is worth more than paper USD (if you want to buy in the next 48 hours)... sometimes it is worth less (you need paper USD in the next 48 hours). Thus GoxUSD vs Paper USD has similar price volatility to BitUSD / Paper USD. You don't see anyone complaining about exchanges making the claim that your USD deposits are pegged to the dollar yet the RISK that you could get nothing for your Gox USD is always there.
The relevance of the issue is that BitSharesX does not benefit from protections available to users of deposit-taking banks or other financial institutions, such as guaranteed deposits or claims in insolvency.
A DAC offers depositors the same thing regular banks do in the event of insolvency, their debt is converted to equity. As far as I can tell BTSX offers a far more efficient conversion to equity than any claims system. As long as BitUSD holders accept this risk then BitUSD can serve a valuable role.
So the only questions that remain are:
Is BitUSD pegged to the USD while volatility is within the design tolerance? Yes
Is there value in having an instrument that is pegged within the design tolerance? Yes
Is it possible to tweak the design parameters to reduce risk (ie: increase collateral?)... Yes
Is it possible to back BitUSD with printing BTSX? Yes (to some extent)
If the prior steps are true, then the system is very valuable even with its limits. You cannot eliminate risk, you can only change its nature, hedge, and insure. BTSX provides an innovative new tool to manage your risk. Users can trade risk of bank failure, government seizures, capital controls, lack of privacy, slow transactions and high fees for the risk of a black swan in BTSX valuation or their private keys being stolen. Every individual will evaluate these risks differently. The key is to know the risks when you act so you can choose to accept them or not.