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Offline kisa

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BTSX vs. bitAssets market cap
« on: September 30, 2014, 08:16:47 AM »

Guys did you sometimes think of BTSX along the following (simplified) lines -

We take 300 bn USD which can be used for payments,  consumption, investments, decoration... And we tie them up into BTSX market cap in order to create max. 100 bn bitUSD (incl. other bitAssets) which more efficiently serve similar purposes, apart from decoration. :)

- Is the gain in efficiency worth removing 2/3 of capital out of circulation?

- Would 1/3 generate trading and transfer fees sufficient for supporting BTSX market cap based on reasonable P/E?

- Is there any plan to become flexible on 200% reserve towards fractional?

I just realised that comparing BTSX to stock exchanges etc. could be misleading because of the limit on bitAssets market cap imposed by BTSX market cap combined with 200% reserve requirement. And I can't honestly imagine BTSX market value into trillions even at ultimate saturation. Imho innovation shouldn't defy common sense.

Thanks.
« Last Edit: September 30, 2014, 11:17:21 AM by kisa0145 »

Offline bytemaster

Re: BTSX vs. bitAssets market cap
« Reply #1 on: September 30, 2014, 12:51:22 PM »
Demand for BitAssets will drive demand for BTSX and the market cap of the BTSX held in collateral will equal 2x or more the value of all bitAssets at all times.   However, I suspect that only 30% of BTSX holders will want to risk leveraging up, and they will only tie up 2/3's of their BTSX as collateral (requiring 1/3 of their stake to cover their position).   So this means that the value of all BitAssets will be backed by just 20% of all BTSX.

If there is demand for 300 Billion bitUSD then BTSX will be worth 1.5 trillion and only 20% of the capital will be "tied up" as collateral. 

Unreasonable you say... I don't see why.
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Offline xeroc

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Re: BTSX vs. bitAssets market cap
« Reply #2 on: September 30, 2014, 12:54:29 PM »
BTSX will be worth 1.5 trillion!
Unreasonable you say... I don't see why.
citing without context rox :)
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Offline oldman

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Re: BTSX vs. bitAssets market cap
« Reply #3 on: September 30, 2014, 05:04:53 PM »
BTSX will be worth 1.5 trillion!
Unreasonable you say... I don't see why.
citing without context rox :)

Folks need to remember that BTSX increases in market cap at some multiple of the cap of the total value of all bitAssets

So if $300B of bitUSD produces a $1.5T BTSX cap what happens if bitCNY also has a few hundred billion in market cap?

Now what about bitEUR?

Now what about bitGLD/SLV/OIL/APPL/Pork Bellies?

If the tech works, and at this point we have proof positive that it does, and if marketing drives any level of adoption, the market cap of BTSX could be stunning. A singularity-type event.

BTSX is essentially a container for the value of all existing and future asset classes.

And when folks put their asset value into the BTSX container they get yield (huge!), negligible counter party risk (huge!), global portability, public ledger, TITAN etc. etc. etc.

Investors can get all the benefits of the Bitcoin protocol yet maintain portfolio allocations/diversification.

Business owners around the globe can reduce banking overhead while accessing new markets.

Hell, a company like Western Union could adopt bitUSD and avoid certain death.

Citizens in bankrupt/corrupt/hyperinflating countries can use bitAssets to preserve wealth.

The 'unbanked' billions can access full banking/investing services for the cost of a pre-paid smart phone - no gov ID, address, credit rate etc. required.

A BTSX market cap in the trillions is an eventuality if there is even a modest level of adoption.

The only speed bump is fiat on-ramps.

The fact that I3 team is making this their No. 1 non-development priority should give investors goose-bumps, especially as Circle is right now proving that debit/credit cards can work as a major fiat on-ramp.

Crazy, but it's happening.

Offline kisa

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Re: BTSX vs. bitAssets market cap
« Reply #4 on: September 30, 2014, 06:46:00 PM »
Demand for BitAssets will drive demand for BTSX and the market cap of the BTSX held in collateral will equal 2x or more the value of all bitAssets at all times.   However, I suspect that only 30% of BTSX holders will want to risk leveraging up, and they will only tie up 2/3's of their BTSX as collateral (requiring 1/3 of their stake to cover their position).   So this means that the value of all BitAssets will be backed by just 20% of all BTSX.

If there is demand for 300 Billion bitUSD then BTSX will be worth 1.5 trillion and only 20% of the capital will be "tied up" as collateral. 

Unreasonable you say... I don't see why.

- at $1.5trn market cap, assuming 30% of BTSX holders issue bitUSD collateralised by 2/3 of their stakes, means $300bn worth of BTSX collateral, backing $150bn bitUSD... or am I mistaking?

- how much could $150bn bitUSD generate in trading fees? If it was a very actively traded stock like apple, then annual turnover ~ 10xmarket cap magnitude. at retail 0.1% trading fee this would give 1.5bn annual profit...

- how much could $150bn bitUSD generate in txs fees? E.g. VISA proccesses ~$4trn txs volume p.a., resulting in gross profit of ~ $10bn and supporting the market cap of $130bn. Well, perhaps it is quite possible to achieve 4trn bitUSD txs volume p.a. with a stock of 150bn. Perhaps 50bn of them will sit idle as investment, but the other 100bn could easily get turned over 40 times per year... Okay, let it be 100 times x 100bn = 10trn txs volume. But how much is then income from processing fees? It should be a tiny fraction of credit and debit cards? (the velocity of money supply for remittance transactions aka Western Union will be much smaller, so 150bn bitUSD stock would be able to support much lesser txs volume even at higher fees). So I would roughly guess some $6bn profit is perhaps an order of magnitude for BTSX then.

- Thus at my very rough assumptios trading + payment fees for 150bn stock of bitUSD would be around $7.5bn p.a. => BTSX P/E ~ 400 / edit: 200 /at market cap of $3trn / edit: $1.5trn / required for that... well, then a profitable DAC should perhaps have a reasonable P/E of 400 /edit: 200/?

Another question is BM says that demand for bitUSD will drive BTSX market value - agree with that. Still, BTSX market cap has to be paid for with USD. For producing 150bn bitUSD, the entire /edit: 50% of/ FED balance sheet would be required to be paid for BTSX market cap. In a similar fashion, (-> OldMan) for issuing $150bn worth of bitCNY, all / edit: 50% of/ FX reserves of People's Republic of China would be required for an extra BTSX capitalization. Ultimately, for issuing $750bn worth of bitAssets (incl. BitEUR, bit GLD, ..., etc), the entire / edit: 50% of / market capitalization of S&P 500 ~ /edit: 50% of / annual US GDP would have to be invested into capitalization of BTSX... Well so should it be, why not? :)
« Last Edit: September 30, 2014, 07:55:39 PM by kisa0145 »

Offline tonyk

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Re: BTSX vs. bitAssets market cap
« Reply #5 on: September 30, 2014, 06:49:48 PM »

Since you have started the research... the whole Fed balance sheet covers how many of the S&P 500 (top down) ?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline kisa

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Re: BTSX vs. bitAssets market cap
« Reply #6 on: September 30, 2014, 07:04:46 PM »

Since you have started the research... the whole Fed balance sheet covers how many of the S&P 500 (top down) ?

Okay, around top 10... How much profit do these top 10 then generate? at 20 P/E roughly $150bn p.a....
~ as much profit as the entire bitUSD stock in circulation is then worth?

Offline tonyk

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Re: BTSX vs. bitAssets market cap
« Reply #7 on: September 30, 2014, 07:10:08 PM »

At what P/E are Google, Apple and the likes, are running nowadays? ... I will not ask about Facebook...?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline kisa

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Re: BTSX vs. bitAssets market cap
« Reply #8 on: September 30, 2014, 07:20:39 PM »

At what P/E are Google, Apple and the likes, are running nowadays? ... I will not ask about Facebook...?

Why do some companies have higher P/E than others? Perhaps because of expected EPS growth? I am not talking of 200 P/E of a startup, but of a somewhat matured DAC at $3trn market cap. So are you saying BTSX would potentially /theoretically generate $150bn of profits p.a. with 150bn bitUSD and $150bn worth of bitCNY outstanding? Or that at 3trn market cap it should be expected that BTSX market cap becomes $30trn to enable $150bn profits?

Or, perhaps, that profits don't really matter at such stage as bitAssets would be replacing current financial system anyway...
« Last Edit: September 30, 2014, 08:43:55 PM by kisa0145 »

Offline tonyk

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Re: BTSX vs. bitAssets market cap
« Reply #9 on: September 30, 2014, 08:50:01 PM »
Or, perhaps, that profits don't really matter at such stage as bitAssets would be replacing current financial system anyway...

And/or asset base valuation will be more appropriate, than P/A...

Valuation 2.5x-3.0x, current assets seems reasonable. Doesn't it?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline speedy

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Re: BTSX vs. bitAssets market cap
« Reply #10 on: September 30, 2014, 09:24:32 PM »
Demand for BitAssets will drive demand for BTSX and the market cap of the BTSX held in collateral will equal 2x or more the value of all bitAssets at all times.

I understood it to be 3x or more - 200% from the shorters, and 100% from BitAsset holders. Isnt that correct?

Offline bytemaster

Re: BTSX vs. bitAssets market cap
« Reply #11 on: September 30, 2014, 09:51:16 PM »
Demand for BitAssets will drive demand for BTSX and the market cap of the BTSX held in collateral will equal 2x or more the value of all bitAssets at all times.

I understood it to be 3x or more - 200% from the shorters, and 100% from BitAsset holders. Isnt that correct?

Shorts also should maintain an extra 100% necessary to cover... they don't have to hold this but should. 
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Offline oldman

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Re: BTSX vs. bitAssets market cap
« Reply #12 on: October 01, 2014, 02:25:37 AM »

- Thus at my very rough assumptios trading + payment fees for 150bn stock of bitUSD would be around $7.5bn p.a. => BTSX P/E ~ 400 / edit: 200 /at market cap of $3trn / edit: $1.5trn / required for that... well, then a profitable DAC should perhaps have a reasonable P/E of 400 /edit: 200/?

Another question is BM says that demand for bitUSD will drive BTSX market value - agree with that. Still, BTSX market cap has to be paid for with USD. For producing 150bn bitUSD, the entire /edit: 50% of/ FED balance sheet would be required to be paid for BTSX market cap. In a similar fashion, (-> OldMan) for issuing $150bn worth of bitCNY, all / edit: 50% of/ FX reserves of People's Republic of China would be required for an extra BTSX capitalization. Ultimately, for issuing $750bn worth of bitAssets (incl. BitEUR, bit GLD, ..., etc), the entire / edit: 50% of / market capitalization of S&P 500 ~ /edit: 50% of / annual US GDP would have to be invested into capitalization of BTSX... Well so should it be, why not? :)

Kudos for throwing some numbers at my pumping efforts! A bitAsset attracting value in the 100s of billions is certainly a bit optimistic... now.

What I am trying to impress upon folks is that BTSX is not going to attract value in the same manner as BTC - by competing with other assets.

BTSX can attract value by adding value to all existing and future assets... simultaneously.

To invest in BTC requires one to buy BTC instead of another asset.

To invest in bitAssets requires no such sacrifice by the investor.

bitAssets allows investors to have their cake and eat it too; all the benefits of crypto layered on top of any asset.

BTSX is a storm gathering - a perfect storm.

To wander a bit:

Generation X and Y are refusing to invest in traditional markets (equities and bonds) because of the 2000/2007 crashes and obscene levels of corruption in finance and government.

There are hundreds of billions parked in debt and cash. Literally hundreds of billions just sitting, waiting for a place to go.

Gen X/Y are smart - they know they need to invest, they've watched their boomer parents prosper immensely.

But they want nothing to do with stock markets.

When I explain Bitshares they instantly understand/accept it (they have unbelievable faith in tech/anything new) and more importantly, they see it as an anti-Wall Street, anti-Big Bank way to invest for their futures.

I've beat this drum before - marketing needs to reach out to the 35 and under crowd in a big way.

These folks could drive the BTSX market cap much higher and faster than anyone expects.

Offline taughtus

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Re: BTSX vs. bitAssets market cap
« Reply #13 on: October 01, 2014, 11:20:47 AM »
This is so important even to a "babyboomer like myself.  +5%

I am getting my 20 something kids into this in a big way as I see this as an incredible opportunity for them. They are not going to be succored into the booming UK housing market; such a fake investment.

But as an OAP I can see that this has the potential to protect my pension; something no government has the intention of doing.

Offline oldman

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Re: BTSX vs. bitAssets market cap
« Reply #14 on: October 01, 2014, 02:47:52 PM »
This is so important even to a "babyboomer like myself.  +5%

I am getting my 20 something kids into this in a big way as I see this as an incredible opportunity for them. They are not going to be succored into the booming UK housing market; such a fake investment.

But as an OAP I can see that this has the potential to protect my pension; something no government has the intention of doing.

Great to hear another enlightening the younger folks!

I've found Bitshares and boomers to be oil and water thus far, heavy scepticism and lots of internet-scam responses.

The initial roll-out may perhaps follow distinct phases:

- Speculators; initial bubbles

- <35 crowd seeking anti-establishment investments; increasing volume, performance metrics and yield

- Hedge funds or other institutional money having made big returns on BTC and now looking for the next big hit; marketing push

- Merchant adoption

- >35 crowd seeking capital preservation and stable ROI; widespread investment in bitUSD etc. for retirement income

Or everyone could just pile in all at once.

I'd be okay with either scenario. :)

 

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