Hi hughmanwho
You of all people should know what are the risk when a central entity is holding the money, right?
Do not worry too much - this is just a theory. You do not have to 'believe' in it. After all people still refuse to believe in certain theories and instead believe that god created man out of mud.
BTW, there are better solutions before defaulting to 'trusting somebody with the money'. Just so you know.
I do realize that. I don't see a way around that though, short of the government deciding to create their own competing crypto and any bank branch can take fiat and redeem it for crypto and vice versa. Of course there is still an issue of whether that can be done trustlessly.. I guess not.
Like I said, we'll see if it works.. I hope it does, I just don't see it happening though.
In my robbery of fiat example, are you suggesting that everyone could be convinced that even though this asset is no longer backed by USD, everyone would just agree to pretend it is anyway? I see that as the same thing.
@hughmanwho I don't see how you say a cryptocurrency can have value in and of itself but then also say that it can't be used as backing collateral for a prediction market because it is like making value out of nothing
It's different, BTC, Nxt, BTS to some extend, are currencies themselves. Let me put it this way, theoretically BitUSD will have some value if enough people decide to pay the same amount for it as they will for USD.. odds are that most people won't be willing to do that. Afterall, you can't buy anything with BitUSD, you can with USD. Therefore USD clearly has more value for years to come. As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.
And just to be clear, to some extent, I'm playing devil's advocate here. Once the current bubble pops, I may buy some BTS myself, but in my mind, clearly there are issues with BitUSD.