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Offline fumanchu808

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Can we talk about BitAssets and how they work?
« on: August 28, 2014, 03:43:41 AM »

So I've been trying to understand BitAssets and how they tie into real world assets. For example BitUSD, unless it is somehow impacted by USD's actual price in the market is more or less just a label. However, for all my digging I can't seem to find any evidence to support that it is just that, a digital label placed on a token that we can of course agree has value but it has nothing to do with actual USD.

Am I missing something?

Offline thisisausername

Re: Can we talk about BitAssets and how they work?
« Reply #1 on: August 28, 2014, 03:53:06 AM »
Am I missing something?

Not really.  This might be somewhat enlightening.
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Offline luckybit

Re: Can we talk about BitAssets and how they work?
« Reply #2 on: August 28, 2014, 03:57:35 AM »
Some concepts:

1) Wealth and money are not the same. Wealth produces buying power while money are simple bank notes which represent an IOU. The power is in the buying power.
2) BitAssets simulate the buying power of any asset, thus they are digital polymorphic market consensus assets. The consensus process is shaped by speculation which through incentives creates a peg to map near 1:1 on any asset.
3) Labels which measure are money but if it is a label with nothing backing it then it's worthless value because the value are not the labels/digits. All BitAssets are actually backed by BTSX. Think of it like grains of sand on a beach and you add water to those grains of sand to make sand castles. Those sand castles look like indistinguishable simulations of real castles and because those grains of sand have a non 0 value to them the only thing which changes is the amount of sand/water used.

BTSX are shapeless abstract grains of sand. They are like atoms in the universe and aren't solid but can form any structure. The amount of them you need to form the structure is always changing but you don't really care as long as you get $1 buying power worth of sand. So the peg holds the shape of the structure to guarantee you $1 worth of BTSX no matter what the market does.

This is actually an incredible new capability that humans never had before. Now you can simulate the buying power of anything and do it completely decentralized. As long as people need to make money to live they will speculate and there are plenty of capitalists on the planet who wouldn't mind.

Eventually market bots will do all of that and the pegging will happen by artificial intelligence. For today if you're involved you've got the opportunity to live like a stock trader and make significant profits until the world figures out what you're doing.

Bitshares allows us to protect our purchasing power from economic vultures.
https://en.wikipedia.org/wiki/Purchasing_power
« Last Edit: August 28, 2014, 04:02:50 AM by luckybit »
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Offline oco101

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Offline luckybit

Re: Can we talk about BitAssets and how they work?
« Reply #4 on: August 28, 2014, 04:08:23 AM »
So I've been trying to understand BitAssets and how they tie into real world assets. For example BitUSD, unless it is somehow impacted by USD's actual price in the market is more or less just a label. However, for all my digging I can't seem to find any evidence to support that it is just that, a digital label placed on a token that we can of course agree has value but it has nothing to do with actual USD.

Am I missing something?

So the reason Bitcoin has value is it's utility. It's utility comes from it's innovation. That utility and the limited supply of shares on the market are what gives it purchasing power. But it inflates as new Bitcoins are produced which creates an opening for economic vultures to steal extra purchasing power.

So it's all about purchasing power. If you can simulate the purchasing power of any asset then you've got polymorphic capabilities. If you can protect your purchasing power then inflation can't hurt you.

So imagine we simulate the purchasing power of Bitcoin with BitBTC and of the USD with BitUSD?

Why would we need to trade the real thing? We trade the purchasing power of BTC against the purchasing power of the USD within Bitshares X. The fact that it is decentralized makes it better than NASDAC for this kind of trading, safer than Mt Gox, less volatile than Bitcoin (and faster).

If Bitshares X works as intended we will not need anything else to protect our purchasing power or even increase it. If that is the case we don't need Bitcoin and only need dollars to pay bills and taxes.
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