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Main => General Discussion => Topic started by: starspirit on April 25, 2015, 12:41:31 pm

Title: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on April 25, 2015, 12:41:31 pm
This is just a thought-provoker. Currently we make bitBTC backed by BTS. I wonder what the broader crypto-community would think of a bitBTC backed by a reserve of BTC, where the transfer operations of the reserve are largely automatic and maybe subject to decentralised control by bitBTC owners? One that had zero financial risk associated with BitShares except as the designer and owner of the system? The bitBTC would then have:

- fast, guaranteed exchangeability with real BTC
- 10 second block times
- no feed price
- no collateral volatility

Even though we might argue that counterparty risk is introduced (and the goal should be to minimise that as far as possible), I think if people accept the security is still very high they may find it more understandable and attractive than one backed by BTS, at least at this early stage in BitShares' growth.

For BTS owners, a spread could be earned on transfers in and out of the reserve, and transaction fees from exchange markets, and this would not be limited by the market cap of BTS. For example, there's no reason why there could not be $100m of bitUSD earning $2m a year for BTS, even if the BTS valuation were lower than this.

There's been a lot of talk recently about ACCT, escrow functions, multi-sig, etc, some of which could be used. So I wondered, does this concept seem technically and legally feasible?

Just throwing this one out there.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: mdj on April 25, 2015, 01:11:27 pm
With atomic cross chain trading I guess it's feasible
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: joele on April 25, 2015, 01:12:24 pm
I think that is a good idea for a new DAC
All crypto coins that can be created as new bitAsset that is backed by its own coin.
Trading on a decentralized market.
and can earn interest. Nice!
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: Troglodactyl on April 25, 2015, 01:14:50 pm
This can be done, but there's no point in having it officially managed by the chain since it will be an IOU anyway with counterparty risk.  Our chain is an efficient host for such businesses though.  Anyone can issue redeemable BTC tokens as UIAs and I think there's certainly a market for this.

It would be great if some of the well known exchanges offered such tokens, since they have the most established reputation for that sort of counterparty risk.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: CLains on April 25, 2015, 01:30:43 pm
How about a bit-bitBTC backed by bitBTC, bitBTC^2  8)
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: toast on April 26, 2015, 12:00:38 am
If you can control BTC as collateral (for example with spv sidechain) you might as well just use it directly as sidechain BTC
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on April 26, 2015, 12:09:41 am
If you can control BTC as collateral (for example with spv sidechain) you might as well just use it directly as sidechain BTC
I only know a little about side chains. Would that enable a solution where bitUSD could be issued onto the BitShares block chain? And could counterparty risk be minimised in the design?
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on April 26, 2015, 10:44:50 pm
Let me take the thought provocation a step further, and suggest something else we could do with a bitBTC backed by real BTC. We could create a class of bitAssets that are underpinned by BTC collateral (using bitBTC) rather than BTS collateral.

For a start, using this new bitBTC as collateral, there would be no concerns about users being able to manipulate the feed price through manipulations in the BTC market. BTC remains the most liquid market in the crypto space. With manipulation concerns allayed, it would be possible to implement bitCurrencies (bitUSD, butEUR, bitCNY) with the maximum level of pegging and liquidity, such as described in the draft whitepaper here... https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776

Secondly, the market for these bitCurrencies could be orders of magnitude greater. Users in the crypto space are far more likely to accept BTC-backed pegged currencies than BTS-backed pegged currencies at this stage, as BTC remains the strongest form of digital collateral available. And on the short side, there is probably far greater demand to get margin lending on BTC than there is on BTS, as $20m odd in loans at Bitfinex will attest to.

There is no reason why bitAssets must use BTS as collateral. This is an example where we can take the technologies that have been built, and re-target them at where the current market demand is.

Again, just throwing it out there.

[Edit: Just to be clear, I'm not suggesting a replacement of current bitAssets. This could be a new product class that acts as a bridge for the market until BTS is stronger.]
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on April 29, 2015, 03:39:49 am
Guys, its not heresy to talk about currencies being backed by something other than BTS is it??  ;D
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: xeroc on April 29, 2015, 06:52:29 am
Guys, its not heresy to talk about currencies being backed by something other than BTS is it??  ;D

Let me cite BM from the other thread:

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.
Soon you will be able to have BitGOLD backed by BitUSD.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on April 29, 2015, 08:29:08 am
Guys, its not heresy to talk about currencies being backed by something other than BTS is it??  ;D

Let me cite BM from the other thread:

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.
Soon you will be able to have BitGOLD backed by BitUSD.
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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on April 29, 2015, 08:34:15 am
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.

The difficult part is the bitBTC backed by BTC - that requires trust, unless you believe in the fairytale of atomic cross chain transactions :)
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: xeroc on April 29, 2015, 08:40:26 am
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.

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 ..
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: bitmarley on April 29, 2015, 09:42:19 am
Its not a fairytale. BitShares is capable of it:
https://bitsharestalk.org/index.php/topic,13274.0.html

 :)
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on April 29, 2015, 12:46:33 pm
Its not a fairytale. BitShares is capable of it:
https://bitsharestalk.org/index.php/topic,13274.0.html

 :)
bitmarley, looking through your linked thread, such a decentralised market for real BTC:BTS, with enough liquidity, could be used as a substitute source for price feeds for other bitAssets such as bitUSD. All you require for this is one internal asset against one external asset. That would still not prevent manipulation of the feed by large players, but it would reduce reliance on centralised exchanges.

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.

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 ..

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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on April 29, 2015, 12:51:48 pm
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.

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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: xeroc on April 29, 2015, 12:58:31 pm
It's not possible counterparty-risk free atm because of Bitcoin's lack of ACCT ..
you can have a counterparty-risk free ACCT from BitShares to BitSharesPlay or BitShares MUSIC .. but not to bitcoin ..
they lack the necessary 'tools'

There are approachs to minimize risk .. i.e. using a multi-sig address managed by the delegates .. but afaik noone is following this idea atm ..

edit:// woops .. double post with monsterer :) need to refresh pages from my tabs prior to posting in the future
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: bitmarley on April 29, 2015, 01:14:34 pm
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.

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.

Bytemaster mentions in the link I provided that this would be a lot of baggage I guess because the Bitshares Top Delegates would need to keep a local copy of the bitcoin blockchain as well as the bitshares blockchain, as well as running the escrow code. But wow this sure would be a huge feature to add to Bitshares! 
 

Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on April 29, 2015, 01:21:21 pm
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.

The trust profile isn't any different than using an existing gateway to do the same job.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: bitmarley on April 29, 2015, 01:30:05 pm
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.   

Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on April 29, 2015, 01:47:01 pm
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.

I'll rephrase :) A single delegate running this system, vs a single gateway is the same trust profile.

I don't want to get drawn into semantics, but 101 delegates running this system is distributed, not decentralised. In a decentralised system, the end user holds the private keys, in this system, the delegates do.

Quote
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.

This is still subject to liquidity limits in the same way any system is. In fact, this has the disadvantage that at first there will be very poor liquidity and very wide spreads.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: bitmarley on April 29, 2015, 08:30:33 pm
Right on, the main point being the excellent reduced risk profile of 101 delegates vs 1 gateway/exchange. Its very true that we desperately need the existing gateways especially services like shapeshift and metaexchange in order to simplify access to the wider market. ACCT with bitshares is clearly a longer term goal but it will bring a great reward for whoever does it first because a distributed escrow is a great alternative to centralized exchanges so a lot of demand will flow in, especially whenever a central hub fails.   
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on May 12, 2015, 12:23:28 am
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.

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, 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:

User sends real BTC to pool in return for a new bitBTC, real BTC retained in reserve
User sends bitBTC to pool to be destroyed, for a real BTC sent back from the reserve

The key would be to have strong controls on the integrity of the reserve.


Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: ebit on May 12, 2015, 01:11:57 am
A certain delegate provide a bitcoin multi-signature address , all bitcoins are used for backed bitBTC .
The delegate's  income can be transferred into" counterparty risk insurance".

由高级受托人来担任背书人。受托人接收比特币的地址由“比特股背书系统”管理,提供多重签名和背书管理。
此受托人的收入池建立对手交易风险保险金,也由“比特股背书系统”管理。

锚定币和背书币之间应该有区别,网关网桥可以在汇率上区别对待。

背书币是一种高级UIA's(用户资产),由高级受托人发行,有保险机制。

举个例子,btc38发行38bitCNY,他的受托人管理一个多重签名BTC地址提供背书(背书系统是其中一个签名者),他的受托人收入在去中心化保险系统里积累背书风险金。这样,38bitCNY就相当安全了。

哈哈,受托人也没必要砸盘了。

"Delegate backed BitAssets" are helpful for Bitshares system.
It can be used for VC (Paid Workers Proposal for Review  ) (https://bitsharestalk.org/index.php/topic,16130.0.html)
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on May 12, 2015, 08:58:03 am
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:

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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on May 12, 2015, 10:00:07 am
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:

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.
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.

The only risk is if the reserve is compromised through hacking, fraud, malfeasance etc. This is the counter-party risk that bitBTC owners bear, and the risk that would critically need to be minimised in time through the best practices and tools available.

There may also be a regulatory risk with this reserve approach, of that I'm not sure.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: ebit on May 12, 2015, 10:14:18 am
In my opinion
BTC and bitBTC could back starBTC , starBTC is a backed UIA's.
BTC and bitUSD could back starUSD , starUSD is a backed UIA's.
Then, the risk scope is limited.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on May 12, 2015, 10:17:48 am
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.

This works fine as long as the entity can create bitBTC out of thin air. However, this is not the case :)
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: betax on May 12, 2015, 10:27:02 am
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.

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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on May 12, 2015, 10:43:50 am
It does not have to be bitBTC it can be an user asset.

You can't have a pegged bitAsset be backed by a UIA for obvious reasons.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on May 12, 2015, 12:12:05 pm
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.

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.

You 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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: BunkerChainLabs-DataSecurityNode on May 12, 2015, 12:46:09 pm
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.

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.

You 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.

I maybe wrong.. but yuo can only do that collterization with Market Issued Assets (MIA). A UIA requires no backing whatsoever and is completely dependent on the issuer how it works.

Take your starBTC example.. I pay you 5 BTC for 5 starBTC. one has backing.. the starBTC has none.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: ebit on May 12, 2015, 12:51:36 pm
 starBTC should  be multi-signature addressed , and one delegate to pay insurance.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: BunkerChainLabs-DataSecurityNode on May 12, 2015, 01:30:00 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.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: ebit on May 12, 2015, 02:19:22 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.
The optimization of answer:the starBTC  issuer is legitimate company。
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on May 12, 2015, 02:56:08 pm
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.

UIAs have no intrinsic value, so cannot be used as backing for MPAs.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: ebit on May 12, 2015, 03:01:28 pm
We should Upgrade UIA's  issue pattern 。 :D  UIA's 2.0
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: starspirit on May 12, 2015, 11:08:30 pm
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.

The key point is can it be done in such a way, and risks minimised, that the market is comfortable with any residual counter-party risk. Nubits is subject to the custodial risk. They have 5 times what we have in bitUSD. bitReserve is subject to the risk of a completely unknown entity. They have  10 times what we have in bitUSD.

We have the dream of a perfect ideal. But the free market is under no obligation to fund our dream for as long as it takes. If funding dries up, the vision dies. If we want to be truly self-funding, we need to create value in the current market-place on the way to achieving our bigger vision. All I'm suggesting is we use the energy and brainpower in this community to meet current demands in the best way we can, and to lead the market toward something bigger.

[I'm not saying this is the idea to do that, I'm still just exploring it. I'm only saying I would not reject it on the basis of not meeting an ideal such as "must have zero counter-party risk".]
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: ebit on May 13, 2015, 12:06:36 am
 +5%
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: toast on May 13, 2015, 12:43:57 am
If you can get BTC onto your chain to use as collateral (like as a sidechain or delegate multisig), then that BTC representation is strictly better than bitBTC! Why would you want to create an asset that is exactly equivalent in every way except that it has strictly more failure modes?

edit:  That BTC representation would probably be the best collateral out of all, better than BTS or bitUSD. Of course diverse collateral types is best.
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: zerosum on May 13, 2015, 01:23:42 am

In 30 years or so "Very smart oracles" will be able to move your BTC to the BTS chain in completely trustless manner.

What is more exiting (or not?) other smart oracle will be able to combine your genes residing on the BTS blockchain (being there completely secure of course, secured with ultra private key) with the genes of other human being residing on the XYZ blockchain and present all the traits of the future baby 'of yours' for inspection. If you like it, you can pay in bitSuperBaby coins or BTS if you like...then other even smarter oracles will make this baby become real (as in from flash and bone), as well as record his DNA on the blockchain of your choice.....
Title: Re: Is it feasible to make a bitBTC backed by BTC?
Post by: monsterer on May 13, 2015, 08:14:48 am
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.

With a UIA:

*) The issuer can dilute the supply at any point, at no cost and almost limitlessly
*) The issuer can revoke rights to trade or transfer the asset

Neither of these are possible with an MPA. However, these is nothing stopping you from creating your own MPA version of BTC - the trick is getting the delegates to publish feeds.

edit: but then you're back to the supply problem and inventory risk of being a bridge into that currency