Hi all,
My stupid question is about the alleged "market peg" idea. Here's what Bitshares Wiki article says: "It says so, right there in the name. Once people accept that, it self-perpetuates. It's announced at the beginning, '1 BitUSD = 1 USD' and everybody buys into the market based on that assumption, and all market participants have the incentive to keep it that way. . . . BitUSD is pegged to the USD because it says it is."
Source:
http://wiki.bitshares.org/index.php/Market_PegSo, basically, what regulates the value of BitUSD is the belief of the market participants and nothing else. Then, assume a bitAsset called
BitMultiply, whose value doubles each day. So, if it's worth $1 today, it will be worth $2 tomorrow, and about $1K after 10 days. Not a bad way to make profit, isn't it? I am sure everybody will readily agree that such a bitAsset cannot succeed. My question is: Why? My second question is: How is this idea different than the idea of creating an asset whose value is and will always be exactly $1, namely, BitUSD?
My point is that a system like Bitshares cannot just rely on the belief of market participants. Even if all market participants buy BitMultiply with the belief that its value will multiply in time, the idea is just not feasible. So, the issuer of the bitAsset called BitUSD is likewise responsible to give an account of the feasibility of such an idea, which they did not.
I believe that the idea behind Bitshares is but what is called a confidence trick, and people will sell their BitUSD at lower and lower prices when the time comes.
I know my language is a bit aggressive, but my only hope is to get educated.