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OK, I said up-front that the BTC IOUs are subject to counter-party risk. That does not make their intrinsic value zero, any more than money in the bank is worth zero. UIAs are shares in something, just like any other share.
Can you elaborate? I would have thought that bitAssets could in practice be collateralised by any suitable on-chain token. Here we are talking about collateralising with a reserve-backed token as a specially designed collateral token, rather than the native ownership token (BTS) of the system.
Quote from: ebit on May 12, 2015, 12:51:36 pm starBTC should be multi-signature addressed , and one delegate to pay insurance.That is still susceptible to colluding I would think vs. the MIA that is on the decentralized trustless system.
starBTC should be multi-signature addressed , and one delegate to pay insurance.
Quote from: betax on May 12, 2015, 10:27:02 amQuote from: monsterer on May 12, 2015, 10:17:48 amQuote from: starspirit on May 12, 2015, 10:00:07 amThe entity that maintains the reserve would issue all the bitBTC as receipts for BTC deposits made. And it would destroy bitBTC received in exchange for returning those BTC deposits back to users. In both cases it would enforce an exchange of 1:1. So there is no balance sheet risk. It always holds as much BTC as it owes.This works fine as long as the entity can create bitBTC out of thin air. However, this is not the case It does not have to be bitBTC it can be an user asset.Yes, that's more or less what I had in mind. I may have confused things (especially with monsterer) by labelling it bitBTC - its not actually a bitAsset itself. Let's call it UIABTC.Quote from: monsterer on May 12, 2015, 10:43:50 amYou can't have a pegged bitAsset be backed by a UIA for obvious reasons.Can you elaborate? I would have thought that bitAssets could in practice be collateralised by any suitable on-chain token. Here we are talking about collateralising with a reserve-backed token as a specially designed collateral token, rather than the native ownership token (BTS) of the system.
Quote from: monsterer on May 12, 2015, 10:17:48 amQuote from: starspirit on May 12, 2015, 10:00:07 amThe entity that maintains the reserve would issue all the bitBTC as receipts for BTC deposits made. And it would destroy bitBTC received in exchange for returning those BTC deposits back to users. In both cases it would enforce an exchange of 1:1. So there is no balance sheet risk. It always holds as much BTC as it owes.This works fine as long as the entity can create bitBTC out of thin air. However, this is not the case It does not have to be bitBTC it can be an user asset.
Quote from: starspirit on May 12, 2015, 10:00:07 amThe entity that maintains the reserve would issue all the bitBTC as receipts for BTC deposits made. And it would destroy bitBTC received in exchange for returning those BTC deposits back to users. In both cases it would enforce an exchange of 1:1. So there is no balance sheet risk. It always holds as much BTC as it owes.This works fine as long as the entity can create bitBTC out of thin air. However, this is not the case
The entity that maintains the reserve would issue all the bitBTC as receipts for BTC deposits made. And it would destroy bitBTC received in exchange for returning those BTC deposits back to users. In both cases it would enforce an exchange of 1:1. So there is no balance sheet risk. It always holds as much BTC as it owes.
You can't have a pegged bitAsset be backed by a UIA for obvious reasons.
It does not have to be bitBTC it can be an user asset.
Quote from: starspirit on May 12, 2015, 12:23:28 ammonsterer, could you explain the mechanics here a bit further, as it could be the simplest starting point as a stepping stone to a more distributed trust system. My understanding is that a gateway only retains enough inventory to facilitate transactions. In this case, a potentially large backing reserve would need to be held for all the bitBTC issued. So for example:Yes, this is true - you have to trust that the bridge will be able to satisfy any demand for redemption, which isn't usually designed into their business model because they need to keep 50/50 reserves to remain price risk neutral. You'd need a custom bridge which would accept BTC and hand out bitBTC and guarantee to hold onto it. But such an endeavour would be very risky for the bridge owner because the bitBTC must come from somewhere, and it's price is not 1:1 with BTC.
monsterer, could you explain the mechanics here a bit further, as it could be the simplest starting point as a stepping stone to a more distributed trust system. My understanding is that a gateway only retains enough inventory to facilitate transactions. In this case, a potentially large backing reserve would need to be held for all the bitBTC issued. So for example:
Quote from: starspirit on April 29, 2015, 12:46:33 pmmonsterer, xeroc, are you saying we can't do this yet, or that the ideal way of doing it (ACCT) is not available yet? To get commercial product to market, there are always trade-offs to be made. A company can go broke waiting to achieve the ideal.There is no trust free way of doing this currently. If you don't mind that compromise and if you could use a backing of bitBTC instead of BTS for other bitAssets, then you could simply use both metaexchange / blocktrades for redemption.
monsterer, xeroc, are you saying we can't do this yet, or that the ideal way of doing it (ACCT) is not available yet? To get commercial product to market, there are always trade-offs to be made. A company can go broke waiting to achieve the ideal.
So the trust profile is very different: a single gateway operator versus the 101 Top Delegates we are already trusting to maintain BitShares network security. That is centralized vs decentralized.
Further more gateways by their nature do not maintain bids and offers and so there is a limited qty per transaction. With integrated ACCT using the Top Delegates a bid/ask market can be setup so there are no qty limits. People could offer to exchange 1000BTC for BTS trusting only the Top Delegates to escrow the transaction.
But there is a trust free way possible with DPOS, that is the method described in my link, it just hasn't been implemented. Basically the Top Delegates act as escrow for ACC trades since they can run code to monitor the Bitcoin blockchain, verify that a bitcoin transaction has 6 confirmations, and then trigger a release of locked BTS that corresponds to the bitcoin transaction.
There is no trust free way of doing this currently. If you don't mind that compromise and if you could use a backing of bitBTC instead of BTS for other bitAssets, then you could simply use both metaexchange / blocktrades for redemption.
Its not a fairytale. BitShares is capable of it:https://bitsharestalk.org/index.php/topic,13274.0.html
Quote from: monsterer on April 29, 2015, 08:34:15 amQuote from: starspirit on April 29, 2015, 08:29:08 amYeah, but that's less controversial. That's just bitAsset backed by bitUSD backed by BTS. That's a good idea that I've also promoted for some time. I'm suggesting the possibility of another class altogether: bitUSD backed by bitBTC backed by BTC. I don't know if it technically can be done, just floating the idea, because I think the more immediate market potential might be far greater.The difficult part is the bitBTC backed by BTC - that requires trust, unless you believe in the fairytale of atomic cross chain transactions ACCT are just not working with btc the way it is required ..
Quote from: starspirit on April 29, 2015, 08:29:08 amYeah, but that's less controversial. That's just bitAsset backed by bitUSD backed by BTS. That's a good idea that I've also promoted for some time. I'm suggesting the possibility of another class altogether: bitUSD backed by bitBTC backed by BTC. I don't know if it technically can be done, just floating the idea, because I think the more immediate market potential might be far greater.The difficult part is the bitBTC backed by BTC - that requires trust, unless you believe in the fairytale of atomic cross chain transactions
Yeah, but that's less controversial. That's just bitAsset backed by bitUSD backed by BTS. That's a good idea that I've also promoted for some time. I'm suggesting the possibility of another class altogether: bitUSD backed by bitBTC backed by BTC. I don't know if it technically can be done, just floating the idea, because I think the more immediate market potential might be far greater.
Quote from: starspirit on April 29, 2015, 03:39:49 amGuys, its not heresy to talk about currencies being backed by something other than BTS is it?? Let me cite BM from the other thread:Quote from: bytemaster on April 28, 2015, 09:18:57 pmQuote from: bitmarley on April 28, 2015, 09:07:31 pmAnother reason is that normally in finance someone who wants to go short GOLD means they want to profit when GOLD falls versus the USD. But in BitShares shorting the bitGOLD(i.e. GOLD/BTS) and does not give the same kind of exposure. It would be good if there was a way to establish an asset whose "Last Price" was a formula instead of a direct price feed. For example: bitGOLDUSD = GOLD/USD. This is the asset that the wider market really wants. At the moment shorting bitAssets means you increase your long exposure to BTS. So if the market trend for BTS is down nobody wants to short. Soon you will be able to have BitGOLD backed by BitUSD.
Guys, its not heresy to talk about currencies being backed by something other than BTS is it??
Quote from: bitmarley on April 28, 2015, 09:07:31 pmAnother reason is that normally in finance someone who wants to go short GOLD means they want to profit when GOLD falls versus the USD. But in BitShares shorting the bitGOLD(i.e. GOLD/BTS) and does not give the same kind of exposure. It would be good if there was a way to establish an asset whose "Last Price" was a formula instead of a direct price feed. For example: bitGOLDUSD = GOLD/USD. This is the asset that the wider market really wants. At the moment shorting bitAssets means you increase your long exposure to BTS. So if the market trend for BTS is down nobody wants to short. Soon you will be able to have BitGOLD backed by BitUSD.
Another reason is that normally in finance someone who wants to go short GOLD means they want to profit when GOLD falls versus the USD. But in BitShares shorting the bitGOLD(i.e. GOLD/BTS) and does not give the same kind of exposure. It would be good if there was a way to establish an asset whose "Last Price" was a formula instead of a direct price feed. For example: bitGOLDUSD = GOLD/USD. This is the asset that the wider market really wants. At the moment shorting bitAssets means you increase your long exposure to BTS. So if the market trend for BTS is down nobody wants to short.
If you can control BTC as collateral (for example with spv sidechain) you might as well just use it directly as sidechain BTC