Saying that NuBits is like fractional reserve banking is a much better comparison than calling it a Ponzi. :)
Saying that NuBits is like fractional reserve banking is a much better comparison than calling it a Ponzi. :)
Saying that NuBits is like fractional reserve banking is a much better comparison than calling it a Ponzi. :)
I created a detailed post examining whether the notion of fractional reserve has any meaning within the Nu network eight hours ago. In short, because Nu is designed for zero counterparty risk and zero reserves, there can be no fractional reserve. There is, however, the related notion of a ratio of assets to liabilities:
https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126
I hope you don't think it is inappropriate to post a link to our forum here, but where you are interested in fractional reserve in the context of NuBits right now, and where I just wrote about that, it seems appropriate to bring it to your attention.
Obviously you cannot use the market cap of NuShares as a basis of solvency because it is based on the spot price where there is relatively little depth.
I would be very interested to know how many NuBits are held by parties other than your market making custodians or NuShare insiders ready to support the peg?
So while technically you say there are no "reserves" that is only true legally but not true practically.
Obviously you cannot use the market cap of NuShares as a basis of solvency because it is based on the spot price where there is relatively little depth.
As I understand it, Nu and Bitshares are quite similar in this regard. In Bitshares, if a margin call is not met, it causes a liquidation, I presume, which due to limited liquidity would reduce the value of all collateral.I would be very interested to know how many NuBits are held by parties other than your market making custodians or NuShare insiders ready to support the peg?
We are developing automated reporting to make this figure publicly available in real time. While I don't have access to real time figures, there are almost certainly between 500,000 and 1,000,000 NuBits out in the wild right now.So while technically you say there are no "reserves" that is only true legally but not true practically.
There are some reserves right now. My point is that because reserves equate to counterparty risk and are not necessarily useful in backing NuBits, we are aiming for 0% reserves, not 100%.
I have an unrelated question about how Bitshares operates, if you will indulge my ignorance for a moment. Let us suppose I purchase BitUSD, and then the value of BTS drops such that the party that went long BTS to create my BitUSD receives a margin call. The issuer does not meet the margin call, which I presume causes a liquidation. What happens to my BitUSD at that point?
Obviously you cannot use the market cap of NuShares as a basis of solvency because it is based on the spot price where there is relatively little depth.
As I understand it, Nu and Bitshares are quite similar in this regard. In Bitshares, if a margin call is not met, it causes a liquidation, I presume, which due to limited liquidity would reduce the value of all collateral.I would be very interested to know how many NuBits are held by parties other than your market making custodians or NuShare insiders ready to support the peg?
We are developing automated reporting to make this figure publicly available in real time. While I don't have access to real time figures, there are almost certainly between 500,000 and 1,000,000 NuBits out in the wild right now.So while technically you say there are no "reserves" that is only true legally but not true practically.
There are some reserves right now. My point is that because reserves equate to counterparty risk and are not necessarily useful in backing NuBits, we are aiming for 0% reserves, not 100%.
I have an unrelated question about how Bitshares operates, if you will indulge my ignorance for a moment. Let us suppose I purchase BitUSD, and then the value of BTS drops such that the party that went long BTS to create my BitUSD receives a margin call. The issuer does not meet the margin call, which I presume causes a liquidation. What happens to my BitUSD at that point?
I want all cryptos to uplift humanity and we are all walking this path together, learning and evolving in hopes of trying to make the Is it safe to say by this point that we could have a hangout with Jordan and Bytemaster to have a grown up, rational conversation about this?
world a better place overall for those here now and those in the future. In light of this I think it would be valuable for all of us to consider having a hangout specifically on this topic where both viewpoints can be clearly and fairly represented.
I would personally love to see this next hangout be one wherein Jordan visits our mumble server and brings any and all community members who would like to participate in an open discussion. There is no reason why Nubits/NuShares couldn't find a way to fix these problems if in fact we come to a consensus that they are valid.
Please consider it.
Saying that NuBits is like fractional reserve banking is a much better comparison than calling it a Ponzi. :)
I created a detailed post examining whether the notion of fractional reserve has any meaning within the Nu network eight hours ago. In short, because Nu is designed for zero counterparty risk and zero reserves, there can be no fractional reserve. There is, however, the related notion of a ratio of assets to liabilities:
https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126
I hope you don't think it is inappropriate to post a link to our forum here, but where you are interested in fractional reserve in the context of NuBits right now, and where I just wrote about that, it seems appropriate to bring it to your attention.
I have an unrelated question about how Bitshares operates, if you will indulge my ignorance for a moment. Let us suppose I purchase BitUSD, and then the value of BTS drops such that the party that went long BTS to create my BitUSD receives a margin call. The issuer does not meet the margin call, which I presume causes a liquidation. What happens to my BitUSD at that point?
I want all cryptos to uplift humanity and we are all walking this path together, learning and evolving in hopes of trying to make the Is it safe to say by this point that we could have a hangout with Jordan and Bytemaster to have a grown up, rational conversation about this?
world a better place overall for those here now and those in the future. In light of this I think it would be valuable for all of us to consider having a hangout specifically on this topic where both viewpoints can be clearly and fairly represented.
I would personally love to see this next hangout be one wherein Jordan visits our mumble server and brings any and all community members who would like to participate in an open discussion. There is no reason why Nubits/NuShares couldn't find a way to fix these problems if in fact we come to a consensus that they are valid.
Please consider it.
NO!!! Absolutely not!
There is no point in BM arguing about a tone of nonsense every time some knucklehead comes around with his stupid ideas...
Hell, I can do a good enough job of arguing it Jordan... if you let me do so of course... I mean, if you decide that I am no longer the only person speaking on mumble worth cutting each time I open my mouth....Saying that NuBits is like fractional reserve banking is a much better comparison than calling it a Ponzi. :)
I created a detailed post examining whether the notion of fractional reserve has any meaning within the Nu network eight hours ago. In short, because Nu is designed for zero counterparty risk and zero reserves, there can be no fractional reserve. There is, however, the related notion of a ratio of assets to liabilities:
https://discuss.nubits.com/t/regarding-reserves-and-fractional-reserve/1126
I hope you don't think it is inappropriate to post a link to our forum here, but where you are interested in fractional reserve in the context of NuBits right now, and where I just wrote about that, it seems appropriate to bring it to your attention.
Fist off I screamed for 1/2 hour before starting to write this...
You and all the rest must realize that if 20% reserves is 80% Ponzi, your system with 0% reserves is 100% Ponzi...
Nu is designed for zero counterparty risk - Yes, there is 0% counterparty risk :)...as the buyer has assumed 100% of the risk buying something backed by 0% value...
NuBits is not Ponzi...Nubits is a self appointed federal reserve that issues non-interest bearing bonds of a self appointed organization
In short if fractional reserve banking is 75-80-90% insolvent, the fed is 100% insolvent... but they at least have some power to claim themselves worth it... It is 'no-interest bearing bond/obligation of the government'...Nubits on the other hand is also 100% insolvent/100% no value backing it and only have the words of the totally lost and clueless 'JordanLee' to collateralize Nubits value... And by definition:' A NuBit is no obligation bearing instrument [no interest including], aka promise for nothing by nobody and/or ???[JordanLee???]'
[/end rant]
Banks have assets to cover all their liabilities. Banks assets are for example mortgages, which can be sold on open market when bank needs liquidity. There are regulatory requirements that bank have to maintain some level of reserves, so basically deposits are always covered in more than 100%. Not so different than bitshares.
Of course there are times when bank assets are temporary illiquid or permanently loose value, but same thing can happen to collateral in bitshares.
It is in this situation that we consider the bank to have fractional reserves.Isn't it that fractional reserves equal liabilities > assets? It at least sounds intuitive to me. But you said "It is in this situation" and the situation you described in the sentence before involves another condition besides the "liabilities > assets" condition.
The bank will only be able to continue operation provided new depositors come in at a rate faster than withdraw requests, the classic characteristic of a Ponzi Scheme.I would make extra clear here that this depends on BOTH conditions (liabilities > assets AND income < expenses). A reader that is convinced of the banking system would tend to oversee the necessary AND condition and then get the impression that you are wrong.
If the new creditors were not aware of the financial condition of the company then that constitutes fraud.This is at least inconsistent with how the word "fraud" is used: "Fraud is a deception deliberately practiced in order to secure unfair or unlawful gain". (http://en.wikipedia.org/wiki/Fraud)
In fact, I would argue that the easiest way to discover whether or not a system is a Ponzi Scheme is if all obligations can be met immediately when they are due.Is "immediately" and "due" a contradiction here?
In other words, is the system solvent....needs a "?" behind "solvent".
and a Ponzi Scheme is clearly fraudfraud requires bad intent... Having the conclusion in mind that the banking system is determined to fail should not lead to using words like they normally are not used.
We all know how the warehouse receipt game goes. Moving the debt instrument accounting from the internal database of the bank to a public transaction ledger does not change the risk or prevent the fraud that the banking system has been unable to prevent for hundreds of years.This one I probably just don't understand: Since we are talking about warehouse receipts (like Bitreserve etc.), how is it possible to show their actual USD/gold/whatever deposits on a blockchain or is this not what you are saying here?
There is another approach that technically avoids creating a Ponzi Scheme....added an "a".
The price information that is used to trigger these margin calls is provided by over 50 independent sources elected by the shareholders which are implicitly trusted to be fair judges of the price.Wouldn't it be worth adding here that the median is making up the price feed? Otherwise "judges of the price" sounds more susceptible to collusion than it is.
It involves selling a crypto currency that you are not legally required to buy back at any price, but which you have established a proven history of doing so.Shouldn't this say "buy back at a target price (for example 1 USD) per crypto currency unit at any time" also since in the next sentence you assume that the reader understands this mechanism?