you claim they can make money is by selling BTS off chain and buying BitUSD on chain... but these two actions are mutually exclusive as buying BitUSD is ultimately buying a variable amount of BTS.
Perhaps I did not explain...you either use BTS for one or the other. You go long whenever you can and sell on an external exchange otherwise (as long as you are long somewhere). This is less 'attack' and more 'defense', and does not need to be deliberate contrived by anyone.
So buying BitUSD is generating demand for BTS and supporting the price.
I thought that, to go long BitUSD, you spent BTS to receive BitUSD. That's usually what people mean when they say they went long stocks (that they spent dollars on stocks). If the price of stocks in terms of usd has gone up, then the price of usd in terms of stock has gone down. So buying BitUSD is putting pressure on the price of BTS, not supporting it. Or have I misunderstood?
So if you want to execute this attack for the purpose of making money the only way to do so is to short BTS off chain which means borrowing from someone off chain.
You might do this, but you could also just sell the BTS that you currently own. If BTS/USD price is falling, many will decide to sell (surely you do not believe that the BTS/USD price will
always go up?).
So if buying BitUSD is viewed as a proxy for buying some amount of BTS in the future where the amount depends upon the future market value of the dollar or 2x the BTS you could have purchased with USD today. Thus BitUSD is merely a partial hedge against BTS value falling and is still an investment in BTS.
Really? I can go long an ounce of gold, and short a barrel of oil. Each of those transactions could be described as "buying some amount of USD in the future", but I would NOT then describe them as "an investment in USD". You must be saying that the BTS system will be valuable, and BTS-owners will receive a sizable quantity of fees (paid in BTS, I assume). Even if this were true, it wouldn't be a reason NOT to sell those BTS off during a collapse in value.
So if the system has 0 value then it does not work, but as long as it has some value it will work. An attacker must buy before he can sell and must own a large amount. Attacks are not likely to be profitable because at the end of the day he ends up with BitUSD converted to BTS which is worthless as a result of the attack than it was when he purchased it originally in order to execute the attack.
Actually, I assumed that, by your own design, the BTS he received post-attack, while being at a lower market price, would be at a higher market quantity and still retain all of their value. The attack-profit comes from the initial raiding of the shorts, but also by selling BTS before anyone else can.
So selling 'off-chain' is the only way to making money and in this sense it is like bitcoin, very hard to make money on the down side because few will lend BTC or BTS in the real world necessary to short it in the real world.
Why do you assume that people need to borrow BTS to sell? Even those who believe in the BTS philosophy prefer having more money to less money. They will sell if it benefits them, and one way to do that is to go long an asset (of course, my attack murders all the shorts, so the only other way is to sell on an external exchange).
So I still conclude that your attack is not 'automatic' nor 'assumed' and that it is not profitable. It would have to be triggered by first buying into the system to prop up the price...
Not true. Can (and will) be triggered by existing True "BTS-Believers".
then buying a ton of BitUSD which will cause the price to rise
Each rational person will buy a little BitUSD, if only to protect themselves from this attack. This itself is enough to start the attack.
and cause new shorts to enter.
Anyone who shorts inside of BitsharesX is going to regret it. I have already explained why. Those who don't learn the easy way will eventually learn the hard way, or run out of money. The BitAssets allow people to flee BTS even more easily than they would otherwise.
The strategy of buying BitUSD until a short squeeze results in more and more collateral being put up for the later BitUSD purchases. So some early positions may get squeezed but the later ones will not.
In fact I think attempts at buying up BitUSD will only strengthen the network... so all that remains is attempting to manipulate the real world values.
Sorry, this is too vague for me. "later ones", "strengthen", "real world values"?