1.The market peg part is correct enough!
2.Just Change:
If the value goes up 50% and the person who shorted can no longer benefit from covering their position then the network uses the collateral to buy the amount of the bitAsset that was created back from the market and destroys it along with the remaining collateral. This removes the extra value from the market that was created when the bitAsset came into existence, closing the short person's position for them, and they untilmately end up losing half their BitShares.
With:
In order to guarantee that no short position exists without enough collateral backing it up, at predetermined price level (more precisely ratio of collateral to current bitAsset market price) the system uses the collateral to close such short position. To do this the system simply (re)purchases the bitAsset from the market. Any remaining collateral after those purchases, if any, is returned to the ex-short-position-holder.
You can add this immediately after: It is precisely the same behavior the short position holder will have if she decides that her short positions have produce enough loses and she wants to prevent any future losses, only this is done automatically by the system not the position holder herself.
3. The problem of course is that in 90 % of the ‘market peg’ subsection you explain technical details (known to mankind for quite some time) and you leave just 10% to talk about the real innovative market peg system. But it is what it is…
4.On a side note:
‘when it comes to that, i prefer conjured ’
I think that word conjured is an excellent choice in that context!