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Offline Method-X

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Common Objections To BitShares X
« on: September 15, 2014, 02:57:06 AM »

List the common objections you get when telling others about the merits of BitShares X, and how you respond.

I'll take the best responses and edit this post to look like an FAQ.

Having this type of list should help the marketing team and community at large.

Offline Method-X

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Re: Common Objections To BitShares X
« Reply #1 on: September 15, 2014, 02:59:52 AM »
It's just the FED 2.0!

You can't fork the FED, but you can fork BitShares X.

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Re: Common Objections To BitShares X
« Reply #2 on: September 15, 2014, 09:32:22 AM »
Bitshares X is issuing bitAssets which are backed by its own shares. This looks like a financial pyramid or a Ponzi scheme.

What are the symptoms of a Ponzi scheme? A Ponzi scheme constantly needs to recruit more and more new supporters in order to survive. As long as the recruitment process works a Ponzi scheme is fine and makes everyone happy. If for any reason the recruitment process fails a Ponzi business crashes with a big bang.

Bitshares X is a business that does need a critical mass of users to be able to operate. There is nothing unusual about this: so do most other online businesses like Facebook, e-Bay, bit-torrent etc. But Bitshares X does NOT need a constantly increasing number of users to be successful: if Bitshares X acquired 10 mln users and then stopped growing it would still be very stable and profitable. Thus it would be nice to have a constant growth of Bitshares X but it is not essential for its existence. And this makes a very clear distinction between a Ponzi scheme and a legitimate financial service.

(This distinction does not work so nicely for bitcoin: because of its POW mechanism it does need a constant growth to counteract the daily $2 mln flood of supply generated by the newly mined coins.)
« Last Edit: September 15, 2014, 09:36:49 AM by jakub »

Offline davidpbrown

Re: Common Objections To BitShares X
« Reply #3 on: September 15, 2014, 09:59:17 AM »
Anticipating a few questions for a FAQ..

1) What is different about BitShares that its blockchain will not become burdensome; too large; and require too much computing power to maintain delegates?

2) BitShares is just one among a number of Bitcoin2.0 offerings tempting the use of digital tokens to represent real world value. While BitShares perhaps has an edge at the moment having created a market to speculate on the value of bitUSD and other assets, the first offering that bridges the gap to real world assets where one token is maintained as evidence of ownership, will perhaps win big. What efforts is BitShares making to hook real world assets and look beyond the usual cryptocurrency crowd?

3) Why should we trust BitShares devs and delegates with our money?.. Why should we not just wait for Winklevoss like efforts and others who know what they are doing; what financial credentials do BitShares devs have?

4) Running a full client is a pain, where is the web equivalent the like of counterparty with simple client-side transaction confirmations?

5) It's too complicated :-\ .. all this talk of DACs and keeping track of them. Where is the static point of reference that is an upto date tldr;? If I'm away from the forum for a month, where do I look for a simple catchup?

6) I've never heard of BitShares.. how is this not just a flash in the pan, fly by night gimick? How many supporters does it really have - how many people are running clients and seeds and delegates - where are those stats declared? Isn't limiting the delegates to 101 likely to limit those who provide the network support? A billion dollar industry surely needs support from more than 101 people.

7) Is the legal and tax position clear? It seems that perhaps I should wait a year or two before jumping into this new world.
« Last Edit: September 15, 2014, 10:06:43 AM by davidpbrown »
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Offline Markus

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Re: Common Objections To BitShares X
« Reply #4 on: September 15, 2014, 10:10:38 AM »
"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."

Offline davidpbrown

Re: Common Objections To BitShares X
« Reply #5 on: September 15, 2014, 10:17:54 AM »
"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."

I wonder this is likely one of the most important and more overlooked issues. The average Joe can't be trusted to make backups of wallets.. and likely knows enough not to trust themselves relative to hosting money in a computer on a product they cannot comprehend. A website option then and the importance of keeping the private key safe, might be a good option here. That perhaps also tempts the need for banks for private keys and other options for insurance relative to all cryptocurrency.

Products need to be foolproof not just fullproof..
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Offline GaltReport

Re: Common Objections To BitShares X
« Reply #6 on: September 15, 2014, 10:32:56 AM »
"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."

I wonder this is likely one of the most important and more overlooked issues. The average Joe can't be trusted to make backups of wallets.. and likely knows enough not to trust themselves relative to hosting money in a computer on a product they cannot comprehend. A website option then and the importance of keeping the private key safe, might be a good option here. That perhaps also tempts the need for banks for private keys and other options for insurance relative to all cryptocurrency.

Products need to be foolproof not just fullproof..

Like that!  +5%

Offline Method-X

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Re: Common Objections To BitShares X
« Reply #7 on: September 15, 2014, 01:12:55 PM »
"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."

When banks start doing bail-ins and/or hyper inflation sets in, this objection may very well evaporate.  8)

Offline davidpbrown

Re: Common Objections To BitShares X
« Reply #8 on: September 16, 2014, 08:18:50 AM »
Hoping this thread won't get buried and wondering perhaps it should be in Marketing..
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Offline santaclause102

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Re: Common Objections To BitShares X
« Reply #9 on: September 16, 2014, 08:46:53 AM »
You can't create USD out of nothing, backed by nothing, without counterparty risk!

Instead of beginning with BitUSD I begin my explanation with prediction markets:

BTSX has a build in prediction market which can track anything that is quantifiable, the more quantifiable the underlying is the better can it track (it might not be possible at all to track an underlying which is not quantifiable enough).
*Beginning the explanation with what is most acceptable (a prediction market) and does not contain any assets with direct real world use (like BitUSD) builds a good common ground.*
We can track the S&P500 but we can also track the USD. Tracking works buy allowing traders to sell or buy a token which has the value of for example the USD. No "real" USD are created, what is created is a "crypto-asset" (like Bitcoin) that tracks the value of the dollar and ppl might accept it as money if it is useful enough to them.

Offline biophil

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Re: Common Objections To BitShares X
« Reply #10 on: September 16, 2014, 02:48:30 PM »
It's just the FED 2.0!

You can't fork the FED, but you can fork BitShares X.

Or, just own it: if we're not trying to create systems that beat the Fed at its own game, we're just children playing in the sand. That's my take on it.

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Offline davidpbrown

Re: Common Objections To BitShares X
« Reply #11 on: September 16, 2014, 03:09:47 PM »
Or, just own it:

The FED is a liability. It's better to be seen as what follows that, than simply the same and more.
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Offline starspirit

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Re: Common Objections To BitShares X
« Reply #12 on: September 16, 2014, 11:27:59 PM »
An objection I heard the other day is that BitAssets are not backed by anything.

With regard to the opinion (expressed by delulo above, but that I've heard elsewhere) that its OK because BitAssets are really prediction markets, not assets, I am confused. Doesn't a prediction market require a pre-determined point in time at which the result is verified, such that people's bets are estimates of the probability of the outcome? What outcome are BitAssets predicting? If there is no end-point, there is no guarantee of any outcome at all. I'm not sure how this overcomes the concern.

Offline biophil

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Re: Common Objections To BitShares X
« Reply #13 on: September 17, 2014, 12:47:24 AM »
An objection I heard the other day is that BitAssets are not backed by anything.

With regard to the opinion (expressed by delulo above, but that I've heard elsewhere) that its OK because BitAssets are really prediction markets, not assets, I am confused. Doesn't a prediction market require a pre-determined point in time at which the result is verified, such that people's bets are estimates of the probability of the outcome? What outcome are BitAssets predicting? If there is no end-point, there is no guarantee of any outcome at all. I'm not sure how this overcomes the concern.

That's an interesting misconception. Actually, bitAssets are backed! They're backed by at least 1.5x their value in BTSX! To open a short position (akatkam create bitAssets) I have to put twice their value in escrow as backing.

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Offline starspirit

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Re: Common Objections To BitShares X
« Reply #14 on: September 17, 2014, 12:48:48 PM »
An objection I heard the other day is that BitAssets are not backed by anything.

With regard to the opinion (expressed by delulo above, but that I've heard elsewhere) that its OK because BitAssets are really prediction markets, not assets, I am confused. Doesn't a prediction market require a pre-determined point in time at which the result is verified, such that people's bets are estimates of the probability of the outcome? What outcome are BitAssets predicting? If there is no end-point, there is no guarantee of any outcome at all. I'm not sure how this overcomes the concern.

That's an interesting misconception. Actually, bitAssets are backed! They're backed by at least 1.5x their value in BTSX! To open a short position (akatkam create bitAssets) I have to put twice their value in escrow as backing.

Sent from my SCH-S720C using Tapatalk 2

The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.

However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?

 

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