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General Discussion / Re: Introduction to BitShares - Video
« on: February 19, 2014, 07:11:28 pm »Does the notion of termination enter into the stock market or for that matter the cryptocurrency markets.
Bitshares is not being explained as a de-centralized stock market, FOREX, or crypto-currency exchange, where real assets change hands. We are being told to think of it as a non-terminating futures market. I (and others) are expressing concerns about the validity of this analogy. In Bitshares, there is no causal link to a real asset, i.e. there is no method to quickly and efficiently convert a bitAsset into a real asset. If there was, you'd have problems with centralization and trust, just like at the NYSE, CBOE, and Mt Gox. Bitshares insists on being completely decentralized, eschewing even an external price feed as is proposed in Mastershares. In Bitshares, one must have a belief/faith/trust that an appropriately named bitAsset -- with no causal connection to the real asset other than its name -- will track its price via a non-terminating prediction market.
I can't prove that it won't work. It may. But the notion that some sort of collective herd behavior will converge to the real-world price strikes me as significant a leap of faith. The classic prediction market with an agreed settlement time is known to work. Bitshares is extrapolating this concept by removing the settlement time. But you don't need decentralization or a blockchain to implement a non-terminating prediction market. Surely others must have considered this in the last half century. Why are there no examples of it working elsewhere?