Author Topic: Common Objections To BitShares X  (Read 4810 times)

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Offline Riverhead

biggest question I am asked is how do I cash in and out of it. People want a atm or bank card. When I say well you cant yet they always ask, what can I buy with it.


What can you buy with GE, APPL, or GOOG? It's a share in a derivative market. Perhaps one day you can buy stuff with bitUSD but that would be above and beyond what traditional equity exchanges offer.

Offline Gentso1

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biggest question I am asked is how do I cash in and out of it. People want a atm or bank card. When I say well you cant yet they always ask, what can I buy with it.

Offline arhag

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One of the common objections I am getting from Bitcoin supporters from my discussions on reddit is that POW somehow makes distribution "fair" and that POS is unacceptable because the early elite stay rich while no one else has a chance to get into the system because "new coins are not being minted for distribution."

I view this as a misunderstanding of the economics. Inflating the coin supply doesn't give an advantage to the latecomers, it only redistributes the wealth from the early adopters to other entities (entities who are not necessarily the latecomers). The stake in the system will still eventually be distributed to many people, because that is the way the system grows in adoption and thus in value. If the initial stakeholders just sit on their stake and never sell or spend that value, the system will never grow in value (what is the point of holding a majority of a worthless currency?). This is not a real issue though, since as the market cap of BTSX goes up, early adopters will want to start selling/spending portions of their stake to actually consume real goods/services with it.

Some may have some misguided notion of fairness where they think inflating for the sake of inflating is still a beneficial thing (meaning if we cannot give the latecomers an advantage, at least let us punish the early adopters). Without trying to argue about whether or not that is "just" I like to simply argue that: one, you can still achieve such economic policies in DPOS as well through inflating the shares and distributing them to other entities; and two, in POW you are forced to do the wealth redistribution to ASIC manufacturers and power companies (you cannot choose to at least give the money to productive purposes such as charity, research, infrastructure, etc.).

You can see some of the relevant reddit discussions here and here.
« Last Edit: September 18, 2014, 05:43:37 pm by arhag »

Offline starspirit

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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'?

The bolded is your conundrum.  What happened when those gold-backed currencies were suddenly no longer backed by gold?  People got screwed.  Trust was violated.  They no longer owned what they had been told that they owned.  Would those same people that got screwed tell you that the asset they owned was backed by gold?  Probably not.  In that light, I would posit that those currencies were NEVER truly backed by gold and the reason for this failure is simple; central management.  Now we have a decentralized system where an asset can be truly backed by another asset(btsx) in a completely decentralized and trustless environment.  We will see if it can stand the test of time.

That's a good point. Backing of any asset is more valuable to the extent it does not rely on trust in another party. Governments took away metals backing of currencies, companies can have fraudulent accounts etc. So a decentralised, transparent and trust-less system will be a vast improvement in our financial system. However, we should still be aware that in this case the BTSX does not back the value of BitUSD in a capital sense, or guarantee that its price behaviour will be at all similar to real USD, or even stable. It is assurance against counterparty risk only.

Offline Helikopterben

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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'?

The bolded is your conundrum.  What happened when those gold-backed currencies were suddenly no longer backed by gold?  People got screwed.  Trust was violated.  They no longer owned what they had been told that they owned.  Would those same people that got screwed tell you that the asset they owned was backed by gold?  Probably not.  In that light, I would posit that those currencies were NEVER truly backed by gold and the reason for this failure is simple; central management.  Now we have a decentralized system where an asset can be truly backed by another asset(btsx) in a completely decentralized and trustless environment.  We will see if it can stand the test of time.

Offline inarizushi

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Are bitshares vulnerable to denial-of-service attacks ? Can spammers inflate the blockchain so much it becomes inusable ? If I create huge loads of trollshares and want to spam them around, are fees enough to stop me ?
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Offline starspirit

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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'?

Strictly speaking you right.  But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if  the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
 . To me the backing of BitshareX is the business behind,  and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the  valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union  or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?

Yeah, that question is great: "what is backing bitcoin?" To another crowd, you can ask "what is backing gold?" Though gold has the benefit that it's been highly valued for millennia...

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You are all correct of course that other currencies in the modern age have dubious if any backing also, and value is subjective. I just think it can be a misleading claim to say for example BitUSD is backed without a proper explanation of what is meant by that.

Offline Method-X

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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'?

Strictly speaking you right.  But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if  the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
 . To me the backing of BitshareX is the business behind,  and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the  valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union  or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?

Yeah, that question is great: "what is backing bitcoin?" To another crowd, you can ask "what is backing gold?" Though gold has the benefit that it's been highly valued for millennia...

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Offline biophil

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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'?

Strictly speaking you right.  But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if  the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
 . To me the backing of BitshareX is the business behind,  and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the  valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union  or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?

Yeah, that question is great: "what is backing bitcoin?" To another crowd, you can ask "what is backing gold?" Though gold has the benefit that it's been highly valued for millennia...

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Offline oco101

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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'?

Strictly speaking you right.  But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if  the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
 . To me the backing of BitshareX is the business behind,  and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the  valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union  or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?

Offline starspirit

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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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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'?

Offline biophil

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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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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 davidpbrown

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 biophil

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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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