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« on: January 24, 2014, 03:11:29 pm »
How I view it:
The way Countries use US Treasuries to peg their currency to the US dollar is analogous to how traders use BitShares to peg BitUSD to the US dollar: A country will monitor its exchange rate relative to the dollar's value. If their currency falls below a certain range, the country will buy dollars in the form of US Treasuries - increasing their currency’s value so it once again falls within the intended range. If their currency were to rise above the range, the country would sell its Treasuries to lower their currency’s value back within its targeted range. Similarly traders monitor BitUSD relative to the dollar's value. If BitUSD falls below a certain range, traders buy dollars in the form of BitShares - thus increasing the BitUSD value so it falls within the intended range. If BitUSD were to rise above the range, traders sell BitShares to lower BitUSD back within its targeted range.
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