Author Topic: Failure to peg currencies to USD?  (Read 5888 times)

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Offline Empirical1.1

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At it's simplest level it's because it's backed by enough collateral of something else that has value.

As an extreme example if you wanted to store the value of a dollar and someone agreed to back it up with a big bar of gold then it's not rocket science to understand that the bar of gold can always be used to get you your dollar's worth of value out.

In our system people are backing up the value with a lot of BTSX as collateral by shorting.
The reason they are willing to do this is because it gives bulls more exposure to the success of BTSX.

So we have a market of people that want to store the value of things and people willing to provide a lot of collateral to ensure that value can be safely stored.

I still think the current system needs interest, but that's another story...

Offline emski

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Any bitUSD is trapped inside the blockchain. It cannot leave (read transform into BTSX) unless 90% of USD value is paid (in BTSX).

In the examples you state "governments" tried to purchase huge amounts of USD. Here there is no such thing. bitUSD is traded (at least) at 90% of USD value (based on feeds).

In this form it will either work as intended or trade will stop. It is an experiment after all.

Offline Brent.Allsop

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Other countries, such as China, have tried to peg currencies to the USD for some time.  The only way they do this, is by purchasing, and holding in reserve, huge amounts of USD.

This community seems to think they will be able to achieve a peg of BitUSD to the USD, with nothing other than a few hard defined mathematical formula to determine prices, fees, and so on.

Can someone explain to me how and why BitUSD will work, with no "government" controlling things, while it seems to me nothing like this has ever worked before, without huge expenses, and a very powerful government making centrally controlled decisions, in the past?