Very cool summary .. +5%I think it's decimal separator
I am a little confused as to what exactly the "." means in your tables. Is it decimal separator or thousands separator?
I have seen much confusion and many concerns questioning the use cases of SmartCoins, almost to the point of questioning whether SmartCoins are really necessary.Just to set the record straight - I think no-one here questions SmartCoins as a financial product.
UIAs don't have this problem.With UIAs, one doesn't need to care about how much the price/value of a BTS is.
We can address this issue by strictly adhering to the principle of keeping the fees in sync with BTS market price.UIAs don't have this problem.With UIAs, one doesn't need to care about how much the price/value of a BTS is.
But the problem is, in this way, why would the price/value of BTS increase? Even if the system is "profiting" by collecting more and more BTS's into reserved fund pool, the asset issuers have incentives to keep the price/value of BTS at a low level so that they can pay less to operate their businesses. The goal of BTS holders and the UIA issuers are not aligned.
It seems this is what Ripple is facing.
Everyone in this space talks about trustless transacting and permissionless innovation.
How about trustless and permissionless OWNERSHIP?
The end goal of Bitshares is the ability of anyone in the world to store wealth in the cloud, away from prying eyes of his enemies, family, criminals, or governments. The ability to invisibly lock wealth somewhere where it's untouchable and relatively stable, has to be worth so much to so many people, that my head starts to collapse on itself every time I think about it.
It's highly likely, the actual Fort Knox is quite empty but the idea/metaphor of BTS being your own personal vault is a strong one imo.
Very cool summary .. +5%
I am a little confused as to what exactly the "." means in your tables. Is it decimal separator or thousands separator?
UIAs don't have this problem.With UIAs, one doesn't need to care about how much the price/value of a BTS is.
But the problem is, in this way, why would the price/value of BTS increase? Even if the system is "profiting" by collecting more and more BTS's into reserved fund pool, the asset issuers have incentives to keep the price/value of BTS at a low level so that they can pay less to operate their businesses. The goal of BTS holders and the UIA issuers are not aligned.
It seems this is what Ripple is facing.
This is more or less the conversation I am having with business people:
Q: OK, so who backs SmartCoins?
A: That's the point. Nobody does. It's a kind of futures contract guaranteed by the whole BitShares system.
Q: So if this system crashes for whatever reason I lose my money. And what's the current valuation of this system?
A: About USD 8 million.
Q: That's not enough for me to feel secure.
I know this is not a rational answer as the security of SmartCoins is not related to our valuation.
But that's unfortunately the perception we have to deal with at this moment. UIAs don't have this problem.
This is more or less the conversation I am having with business people:
Q: OK, so who backs SmartCoins?
A: That's the point. Nobody does. It's a kind of futures contract guaranteed by the whole BitShares system.
Q: So if this system crashes for whatever reason I lose my money. And what's the current valuation of this system?
A: About USD 8 million.
Q: That's not enough for me to feel secure.
I know this is not a rational answer as the security of SmartCoins is not related to our valuation.
But that's unfortunately the perception we have to deal with at this moment. UIAs don't have this problem.
One way to answer this is to explain that smartcoins are backed with shares of Bitshares DAC. When new smartcoins are created, BTS is needed. If there are lots of new smartcoins, it means that creators have to buy BTS from the markets and that will raise the price of BTS. That way the valuation of the system automatically goes up when people are making more smartcoins.
Incentives for the SmartCoin Seller
The next question becomes: what are the incentives for the SmartCoin seller (liquidity provider). As I look at the SILVER:BTS market right now I see a settlement price of 4289.5 and a latest price of 4619. Assuming settlement price hasn’t changed since the latest price, the SmartCoin seller asked for a 7.69% premium to collateralize bts in the form of silver and sell it. For simplicity, suppose this was for 1 ounce of silver. That means the SmartCoin seller received 329.5 bts as compensation for providing liquidity in the silver market. The buyer was willing to pay 329.5 bts to obtain 1 ounce of silver and the trade took place. This premium is a function of market dynamics and fluctuates over time as buyers and sellers agree on prices and premium. Premium is often charged for buyers of physical commodities and derivatives of physical commodities as outlined in the oil example above. Rarely do buyers get a discount in these transactions except for some cases in futures contract backwardation.
I have seen much confusion and many concerns questioning the use cases of SmartCoins, almost to the point of questioning whether SmartCoins are really necessary.Just to set the record straight - I think no-one here questions SmartCoins as a financial product.