Bytemaster,
You are proposing we need a bitUSD that trades at a premium so that merchants can keep prices matched for USD and bitUSD, while effectively hiding a 6% fee on the bitUSD from the consumer. I'm perplexed why we would harm the wider utility of bitAssets to pander to a specific group accepting currencies like bitUSD. The following would help my understanding:
1. Why do merchants need a 6% fee for accepting bitUSD? Is part of it to cover the variability in the bitUSD premium? Is part of it for the relative inconvenience of dealing in bitUSD? Would this problem diminish with familiarity in the long term?
2. How would you guarantee stability in the premium, that merchants would require to maintain matched prices? In theory it could range anywhere from 0% and up. I've challenged the idea of using a variable settlement fee. If not this, what other mechanism is there?
3. If consumers have a choice between using bitUSD or USD for their purchase, why wouldn't they always choose the USD that was cheaper to obtain and replace? So wouldn't this mean in practice that consumers and merchants keep using USD for external goods and services rather than bitUSD? So is this merchant demand rather futile in the end?
4. If we have a bitUSD that constantly trades at varying premiums, might this significantly diminish its value in other use cases of bitUSD? For example,
- if bitUSD were used for margin accounts in a derivative market, users would need to try to price in the volatility of the underlying asset, as well as movements in their margin collateral
- in bond markets, users would need to try to price in movements in yield as well as movements in the value of the par value of the bond
- in crypto markets, users looking to use bitUSD as a hedge would need to factor in a view on whether the premium might rise or fall
These are just some off-the-top-of-my-head examples of things we are looking to achieve in the near future. It seems to me that the utility of a variable-premium-USD is a lot less than the utility of a parity-USD.
5. Why wouldn't it be better to have a bitUSD trading at parity, that is fair to all parties, and let the free market work out the best way for merchants, consumers and other users to price goods and services around it? If there is mutual benefit to all parties, there is always a solution, isn't there?
6. Is the preference for a premium-USD now strongly being expressed to post-rationalise the lack of a current solution to establishing a parity-USD? On the other hand, I remain highly optimistic that it is possible to have a bitUSD centred on parity, and that is my strong preference at this stage.
7. Does the proposal extend to all bitAssets that are not currencies generally used for transactional purposes? For example, gold, oil, Dow Jones, or other possible bitAssets. In those cases don't we want something as close to parity as we can get, to maximise their utility as tracking instruments?