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Offline thazel72

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Bitshares Tranz
« on: October 08, 2014, 04:37:54 AM »

Today I had an interview with a freight company that does $500 million in revenue each year, and they are growing at a very rapid pace. They are the leading TMS in the industry, and they were looking for a product manger to help build better tools. Somehow we got on the topic of cryptocurrencies and the recent announcement about Overstock issuing stock on the blockchain. One of the questions that he asked me is how they could create a currency that is used by the transportation industry. The transportation industry in America is fairly antiquated, and fees for Comchecks and transfers are extremely high. So I talked to them about the Bitshares community and all the great things that have been created by the developers. Below is what I told him would probably be the best idea for creating a stable currency that could be used as a means of exchange in the industry. If what I am saying is off base, please tell me how you would achieve the goal of stable currency that could be implemented in the industry.

Company A creates a DAC using Bitshares technology. They take 50% of the companies equity and use it to issue 2 million Bitshares Tranz. The new DAC would have an initial Market Cap of $250,000,000 or half of the companies value. Each share would be valued at $125 at the time of the IPO, but would initially increase due to speculation. Company A then creates a dollar pegged asset called BitTranz that would be used as a currency for the transportation industry. BitTranz would be integrated into their software platform as a payment system to be used as a stable and cheap means of exchange between brokers and carriers. The software platform would include an exchange for entering and exiting the market, and an option to automatically convert to fiat if the carrier so chooses. The value of Bitshares Tranz would increase and decrease based on the performance of Company A and speculation.

Please let me know if my logic is correct. If it is not please advise what you would do in this situation, because they sounded very interested in pursuing something like this. I have thought for awhile about a cryptocurrency for the Transportation industry, but lack the technical understanding to see it through. I love what the Bitshares community is doing, and I am very interested in your feedback. Please let me know if this is a viable concept.
« Last Edit: October 08, 2014, 04:40:20 AM by thazel72 »

Offline jsidhu

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Re: Bitshares Tranz
« Reply #1 on: October 08, 2014, 05:15:26 AM »
If im thinking about this the right way, they would simply put a buy order at the $125 peg such that 2 million shares are worth $250 million (by buying 250 million bitUSD). Each share may be used to conduct business via btsx system, where you would have low fees and immediate transactions, even dividends if acting as a normal asset. If they wanted fiat they can sell their share (into the peg) and essentially the $250 million would be used to secure the peg should every single share be used to convert back to fiat (although this wouldn't be the case as shares are sold or given selectively based on business ventures or partnerships). Vendors or partners would need to enter btsx system by most likely buying bitUSD and then using that to exchange for tranz through the system. Since btsx doesn't deal with fiat due to being unregulated there may be some spread costs in getting tranz from bit coin and what that entails based on the amount of liquidity needed. Interesting though. Essentially $250 mill marketcap becomes a floor and speculated price would be higher, creating profit to the issuer of shares and holders/buyers.

Would they seriously be willing to use up to 50% yearly revenue to fund the venture?
« Last Edit: October 08, 2014, 05:23:12 AM by jsidhu »
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Offline Shentist

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Re: Bitshares Tranz
« Reply #2 on: October 08, 2014, 05:25:32 AM »
why not just simply use bitUSD?

Offline thazel72

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Re: Bitshares Tranz
« Reply #3 on: October 08, 2014, 05:44:40 AM »
They wouldn't invest 50% of their revenue, but they could choose to public with 50% of the shares. To be honest I don't know what they are valued at, because they are currently a privately owned company. They are on the cutting edge of technology in the industry but I would still have to be very convincing, and present a solution with bulletproof logic. I was just using a hypothetical situation to help me understand what the correct approach would be. They would need easy exchange to fiat, and that would be a deal breaker. This is very important from a usability standpoint because the industry isn't highly technical.

Offline thazel72

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Re: Bitshares Tranz
« Reply #4 on: October 08, 2014, 05:55:26 AM »
why not just simply use bitUSD?

Because they are interested in the concept of issuing shares using blockchain technology, and they understand the value of early adopters. They would want their own set of assets to trade like the would if they were on the stock market. They are private and at some point I am sure they will go public. Why not go public with Bitshares, and leverage those assets within the transportation community?

Offline xeroc

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Re: Bitshares Tranz
« Reply #5 on: October 08, 2014, 06:22:57 AM »
And why are they not just issuing a user-issued asset and sell their 2B shares? I don't see the need for a separated chain and I also don't see how this can be a DAC?
do you already know about the differences bitween
 - market pegged assets
 - user-issued assets
in bitshares-x?
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Offline thazel72

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Re: Bitshares Tranz
« Reply #6 on: October 08, 2014, 07:35:45 AM »
And why are they not just issuing a user-issued asset and sell their 2B shares? I don't see the need for a separated chain and I also don't see how this can be a DAC?
do you already know about the differences bitween
 - market pegged assets
 - user-issued assets
in bitshares-x?

I know about market pegged assets, but I have not heard of user-issued assets.

Offline xeroc

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Re: Bitshares Tranz
« Reply #7 on: October 08, 2014, 07:59:53 AM »
I know about market pegged assets, but I have not heard of user-issued assets.
market pegged assets have zero supply and shares are created by shorts (being bought by someone going long) .. this is what happens in the bitUSD

in contrast, user-issued assets are similar to what we see in NXT and counterparty. A user creates a user-issued asset on the blockchain and defines a max supply. That particular user can then issue up to max supply shares from the asset and sell them as IPO in the exchange.

The assets currently available on BTSX can be seen from blockchain_list_assets in the console.
Some of them are marked with ISSUER=MARKET .. these are market-pegged .. the others are user-issued assets.

Note, that anybody can create BOTH kinds of assets on the blockchain paying a relatively high fee of currently >300k BTSX
Whether you get a pegged, or non-pegged asset can be defined with a variable in wallet_asset_create.
Here's the help to that command:
Code: [Select]
delegate (locked) >>> help wallet_asset_create
Usage:
wallet_asset_create <symbol> <asset_name> <issuer_name> [description] [data] [maximum_share_supply] [precision] [is_market_issued]   Creates a new user issued asset
Creates a new user issued asset

Parameters:
  symbol (asset_symbol, required): the ticker symbol for the new asset
  asset_name (string, required): the name of the asset
  issuer_name (string, required): the name of the issuer of the asset
  description (string, optional, defaults to ""): a description of the asset
  data (json_variant, optional, defaults to null): arbitrary data attached to the asset
  maximum_share_supply (real_amount, optional, defaults to 1000000000000000): the maximum number of shares of the asset
  precision (int64_t, optional, defaults to 1000000): defines where the decimal should be displayed, must be a power of 10
  is_market_issued (bool, optional, defaults to false): creation of a new BitAsset that is created by shorting

Returns:
  transaction_record
I recommend to NOT just play around with this command in the main net as it comes with high fees!

More questions?
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Offline thazel72

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Re: Bitshares Tranz
« Reply #8 on: October 08, 2014, 09:01:43 AM »
Thank you for clarification on user-issued assets.

What would determine the value of the user-issued asset in this scenario? Would the value ultimately be tied to the performance of the company? How would that be handled contractually?

Offline xeroc

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Re: Bitshares Tranz
« Reply #9 on: October 08, 2014, 09:50:00 AM »
Thank you for clarification on user-issued assets.

What would determine the value of the user-issued asset in this scenario? Would the value ultimately be tied to the performance of the company? How would that be handled contractually?
If you are having an IPO you can set the price your self when selling .. pretty much the same as with classical stock exchanges ..

once shares are out in the wild they can be traded at any price .. (should be correlated to your companies performance ;-)  )
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Offline Gentso1

Re: Bitshares Tranz
« Reply #10 on: October 08, 2014, 12:52:12 PM »
why not just simply use bitUSD?

You could use bitUSd to pay other companies you deal with and lets not forget it pays yield which adds up when you start getting into larger amounts. I don't understand why you would want to create your own currency for shipping. When you or the people you pay go to cash out you will need to go through a extra step to turn (shipping coin we will cash it to cash) and you loose out on the yield. With bitUSD it will make conversion easy for you and your customers because when you pay a dollar they get a dollar.

Creating a DAC for your company is completely different and would just be a IPO,  bitshares work with some lawyers http://www.perkinscoie.com/en/index.html. They have experience in crypto and are the same lawyers that overstock is using to build their exchange so they would seem like a natural choice.
« Last Edit: October 08, 2014, 01:19:57 PM by Gentso1 »

Offline carpet ride

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Re: Bitshares Tranz
« Reply #11 on: October 08, 2014, 01:00:00 PM »
Just use BitUSD


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Offline jsidhu

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Re: Bitshares Tranz
« Reply #12 on: October 08, 2014, 02:53:05 PM »
you could just do bitusd and get lower tx fees that way however going back to fiat would negate this thus they would need to stay in bitusd to do business with you and earn interest.

Issuing your own asset could be more profitable if you used the strategy I outlined earlier.. and I do believe there is interest on arbritrary assets thru dividends? so they get shares of your company profit thru dividends.

A good happy medium would be to do transactions thru bitusd and have an incentive structure to use bitusd by offering tranz shares as gift or whatnot... later on when the system is being used people will naturally want to stay in bitusd for the sole reason of using them to buy shares in a cpany with rising profits... if profits dwindle fall back to bitusd and still earn more interest than any bank.
« Last Edit: October 08, 2014, 02:56:14 PM by jsidhu »
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Offline Gentso1

Re: Bitshares Tranz
« Reply #13 on: October 08, 2014, 05:37:36 PM »
you could just do bitusd and get lower tx fees that way however going back to fiat would negate this thus they would need to stay in bitusd to do business with you and earn interest.

Issuing your own asset could be more profitable if you used the strategy I outlined earlier.. and I do believe there is interest on arbritrary assets thru dividends? so they get shares of your company profit thru dividends.

A good happy medium would be to do transactions thru bitusd and have an incentive structure to use bitusd by offering tranz shares as gift or whatnot... later on when the system is being used people will naturally want to stay in bitusd for the sole reason of using them to buy shares in a cpany with rising profits... if profits dwindle fall back to bitusd and still earn more interest than any bank.

If their was a debit card created that had no fees, that gave access to bitUSD directly their would be no tx fees.

Offline carpet ride

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Re: Bitshares Tranz
« Reply #14 on: October 08, 2014, 06:09:45 PM »

you could just do bitusd and get lower tx fees that way however going back to fiat would negate this thus they would need to stay in bitusd to do business with you and earn interest.

Issuing your own asset could be more profitable if you used the strategy I outlined earlier.. and I do believe there is interest on arbritrary assets thru dividends? so they get shares of your company profit thru dividends.

A good happy medium would be to do transactions thru bitusd and have an incentive structure to use bitusd by offering tranz shares as gift or whatnot... later on when the system is being used people will naturally want to stay in bitusd for the sole reason of using them to buy shares in a cpany with rising profits... if profits dwindle fall back to bitusd and still earn more interest than any bank.

If their was a debit card created that had no fees, that gave access to bitUSD directly their would be no tx fees.

It seems a debit card has to have fees derived from opening and closing an account/card.  This might also require customer service fees.


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All opinions are my own. Anything said on this forum does not constitute an intent to create a legal obligation between myself and anyone else.
Check out my blog: http://CertainAssets.com
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