Is bitUSD supply not as well constantly growing with no way to reduce it? (I believe the answer will help us to make the right comparisons)
Have seen this question several times on this forum, so I will give it a shot (ELI5 hopefully)
Let's try to give a numeric value of the possible market actions:
- Buy bitUSD; Sell bitUSD; short bitUSD; close short bitUSD position;
short bitUSD - when somebody shorts 1 bitUSD actually a new bitUSD comes into existence so
+ 1 close short bitUSD position - when somebody buys 1 bitUSD and closes the short position actually 1 bitUSD is destroyed
- 1 Buy bitUSD - no bitUSD are created or destroyed
0and Sell bitUSD - no bitUSD are created or destroyed
0On the market we can have the following combinations:
short bitUSD is matched with Buy bitUSD --> 1 + 0 =+1 - total supply of bitUSD is increase with 1
short bitUSD is matched with close short bitUSD position--> 1 + (-1) =0 - total supply of bitUSD is unchanged.
Sell bitUSD is matched with Buy bitUSD--> 0 + 0 =0 - total supply of bitUSD is unchanged.
Sell bitUSD is matched with close short bitUSD position --> 0 + (-1) =-1 - total supply of bitUSD is decreased by -1
The total of all bitUSD in existence is driven by market forces!!!