BitShares Forum
Main => General Discussion => Topic started by: bytemaster on February 13, 2014, 12:28:19 am
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The economics of BitShares X is beyond my ability to fully resolve with 100% certainty and thus I would like to present a set of hypothesis that BitSharse XT will test.
Hypothesis 1) BitUSD will 'perfectly' track the USD / BTS price in all scenarios including:
a) when BitUSD is lost to transaction fees and removed from circulation
b) when extreme volatility results in more BitUSD being in circulation than shorts are required to cover.
c) perfectly is defined as within the buy/sell spread and noise floor.
d) with or without interest paid to BitUSD holders.
The justification for this hypothesis is that despite the supply side, market participants invest (buy/sell) on the assumption that all other participants in the future will expect to trade at parity. This establishes a consensus valuation of BitUSD that retains value entirely independent of changes (increases/decreases) of the backing. The historical example of this was when gold was removed from backing of the dollar. The dollar retained the purchasing power it held the day before.
This is currently my gut feeling and if I were a betting man, this is the hypothesis I would bet on.
Hypothesis 2) The valuation changes of BitUSD will 'perfectly' correlate the USD/BTS price changes except for large transient events that result in significantly more BitUSD being in existence than required to be covered by collateral. Worst case 100% of all margin positions in the network are blown and as a result some users end up holding BitUSD while there are no short positions left that are required to cover.
Unlike hypothesis 1 which suggests that this extra BitUSD would continue to trade near parity with the USD/BTS price because it is fungible with all other BitUSD... hypothesis 2 assumes that BitUSD will start trading at a discount to real USD proportional to the surplus (unbacked BitUSD) relative to the new backed USD. In this case the value of BitUSD would slowly climb as BitUSD is taken out of circulation from transaction fees and more (backed) BitUSD is created.
I doubt we will see a complete blowout and if we did I still believe market participants would be unwilling to short below parity or buy above parity. Value would thus be reallocated from everyone in the network to the holders of BitUSD who retained purchasing power despite having all collateral being consumed.
Hypothesis 3) BitUSD will trade at a premium to real USD because it provides more value (pays interest, divisible, private, instantly transferrable, etc)
I believe the prediction market will grow the supply of BitUSD to meet all demand and thus keep the price pegged near parity. Even if short-sellers have to pay interest (so longs can receive it) I believe that interest fees are just part of the risk/reward and the consensus will still be tied near parity.
Hypothesis 4) BitUSD will sell at a discount because it comes with extra risk.
Same conclusion as Hypothesis 3
So there you have it, the full spectrum of possible outcomes that I can think of at this moment. Please provide additional hypothesis. The goal is to make sure everyone understands that anything could happen with these markets and like bitcoin this is one giant experiment.
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I believe in Hypotheses 2-4. I'm not saying I have understood all details either but here is why I think what I think:
contra 1) and pro 2) for the same reasons:
The dollar might have retained its purchasing power the day after gold pegging was abolished. Now, 40 years down the track, I wouldn't claim that anymore. Once an asymmetry between long and short holdings is introduced, I would think the price will lean that way too (slowly).
3) and 4) both are true.
The weaker one will be cancelled out. Risk will be considered less and less after time, I assume, so 3) wins.
Convenience (divisible, private, instant transfer) will have a minor effect, above market interest rates will pop the ceiling out. If short sellers have to pay high interest they won't short, not even high above parity.
… looking forward to the big experiment.
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The goal is to make sure everyone understands that anything could happen with these markets and like bitcoin this is one giant experiment.
In younger days, I supported myself by performing sleight-of-hand table-to-table at a restaurant across the river from Manhattan. My friend who taught me most of what I used to earn my living taught me the most fundamental rule of magic:
Emphasize. Over-emphasize. Re-emphasize.
The goal is to make sure that everyone understands: This is one giant experiment.
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nr. 4, what we're trading here is not value; its trust.
Gox is offering a nice case:
GOXBTC used to trade 10% above USDBTC. In the eyes of investors, a GOX IOU for a BTC was worth more than an actual Bitcoin. Now shit has hit the fan. A GOX IOU now trades 15% below market. Even worse: bitcointalk has a topic now where users trade account balances at 80% of GOX/USD.
In order to have BIT/USD trade at a premium III will have to attain a level of trust higher than that of the FED.
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Hypothesis 5) BitUSD will not track USD price at all but have their own value
Hypothesis 6) BitUSD will not track USD and are worthless
:P
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If 6) is a valid possibility I might add another one. This one is from the shorts perspective.
Hypothesis 7) BitUSD will not track USD and have infinite value
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If 6) is a valid possibility I might add another one. This one is from the shorts perspective.
Hypothesis 7) BitUSD will not track USD and have infinite value
Both 0 value and infinite value are not an option as the only way to create BitUSD is for someone to agree on a non-0 value. Likewise, infinite value is impossible.
Therefore I contend these two options are invalid.
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nr. 4, what we're trading here is not value; its trust.
Gox is offering a nice case:
GOXBTC used to trade 10% above USDBTC. In the eyes of investors, a GOX IOU for a BTC was worth more than an actual Bitcoin. Now shit has hit the fan. A GOX IOU now trades 15% below market. Even worse: bitcointalk has a topic now where users trade account balances at 80% of GOX/USD.
In order to have BIT/USD trade at a premium III will have to attain a level of trust higher than that of the FED.
III is not being trusted... but I presume you mean our code and the free market will have to attain a level of trust higher than a Bank.... considering how low the trust level is in banks, this is possible.
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The goal is to make sure everyone understands that anything could happen with these markets and like bitcoin this is one giant experiment.
In younger days, I supported myself by performing sleight-of-hand table-to-table at a restaurant across the river from Manhattan. My friend who taught me most of what I used to earn my living taught me the most fundamental rule of magic:
Emphasize. Over-emphasize. Re-emphasize.
The goal is to make sure that everyone understands: This is one giant experiment.
+ 1 + 2 and +5%
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If 6) is a valid possibility I might add another one. This one is from the shorts perspective.
Hypothesis 7) BitUSD will not track USD and have infinite value
Both 0 value and infinite value are not an option as the only way to create BitUSD is for someone to agree on a non-0 value. Likewise, infinite value is impossible.
Therefore I contend these two options are invalid.
I don't believe in either of them. I just thought, IF 6 is valid THEN 7 must be too. :)
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For 2) when one side of bitUSD owner wins all , why can't we simply give the winer all the BTS and destroy the winer's bitUSD. If the winer wants to keep going with bitUSD, he can just bet again with someone else.
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I'm making this point for the sake of tempering our overconfidence biases. How is it not possible to have a zero value. Theoretically if speculators lose confidence because the bitasset is not tracking they will stop placing orders. Volume shots down until there is no demand for the bitasset. Although no bitasset was traded for a zero, you can't get any value for it-- and your sitting there with a bitasset with no demand. It's effectively at zero.
If 6) is a valid possibility I might add another one. This one is from the shorts perspective.
Hypothesis 7) BitUSD will not track USD and have infinite value
Both 0 value and infinite value are not an option as the only way to create BitUSD is for someone to agree on a non-0 value. Likewise, infinite value is impossible.
Therefore I contend these two options are invalid.
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For 2) when one side of bitUSD owner wins all , why can't we simply give the winer all the BTS and destroy the winer's bitUSD. If the winer wants to keep going with bitUSD, he can just bet again with someone else.
Because this isn't a pairing system, BitUSD is fungible for all users in the system. What I do is use 100% of the BTS to BUY as much BitUSD on the market as I can and that is functionally equivalent... so instead of the loss being born by a single BitUSD holder it is spread across all BitUSD holders.
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I'm making this point for the sake of tempering our overconfidence biases. How is it not possible to have a zero value. Theoretically if speculators lose confidence because the bitasset is not tracking they will stop placing orders. Volume shots down until there is no demand for the bitasset. Although no bitasset was traded for a zero, you can't get any value for it-- and your sitting there with a bitasset with no demand. It's effectively at zero.
If 6) is a valid possibility I might add another one. This one is from the shorts perspective.
Hypothesis 7) BitUSD will not track USD and have infinite value
Both 0 value and infinite value are not an option as the only way to create BitUSD is for someone to agree on a non-0 value. Likewise, infinite value is impossible.
Therefore I contend these two options are invalid.
There is always demand for a BitAsset as long as there is a short position. Once all short positions have covered there is not BitAsset in existence.
The assumption is that BTS has a non-0 value... if BitAssets do not work I suspect BTS has a value of near 0 and thus BitAssets are worth 0...
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By your last argument, points 5 and 6 are equal and the same hypothesis... BitAssets either track or they have no value.... they cannot have some 'other value' that is not correlated in any way.
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For 2) when one side of bitUSD owner wins all , why can't we simply give the winer all the BTS and destroy the winer's bitUSD. If the winer wants to keep going with bitUSD, he can just bet again with someone else.
Because this isn't a pairing system, BitUSD is fungible for all users in the system. What I do is use 100% of the BTS to BUY as much BitUSD on the market as I can and that is functionally equivalent... so instead of the loss being born by a single BitUSD holder it is spread across all BitUSD holders.
In a system that has all users' asset cost and holding-time, when the loss goes above the line then the system knows who(both wining side and losing side) should be kicked out of the game base on a weighted-evaluation rule over the cost / holding-time of everyone's asset. In such way every contract is backed which is assured by the system.
So it is not exactly equivalent , your way offers choices to the winers, the market and players with different expectation will solve the PEG eventually.
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I believe the prediction market will grow the supply of BitUSD to meet all demand and thus keep the price pegged near parity. Even if short-sellers have to pay interest (so longs can receive it) I believe that interest fees are just part of the risk/reward and the consensus will still be tied near parity.
Hypothesis 4) BitUSD will sell at a discount because it comes with extra risk.
I don't understand how BitUSD comes with more risk than simply holding bitshares, not to mention taking the position of shorting one of the derived assets. Bts constitutes a stake in the network and validates you're belief in its utility. If bitshares x does not work than price of Bts outside of the network will go down, but the price of a BitAsset will not. In holding BitUSD there is no risk that you will loose money only the risk of a greater opportunity cost due to pegging your stake in the network to some other asset. I think if there should be a fee/interest rate at all it should fall on the person holding the BitAsset since after all it is the BitAsset that is being "lent" into existence not the other way around. I think there should be a premium for holding BitAssets because those shorting the price of other assets are inherently providing a service through there collateral. The notion that a hard coded 5% interest rate or any other rate is kind of silly now that I think about it. The price within the market will correct to include any premium that should be paid for the BitAsset. By not hard coding an interest rate you consequently provide a floating interest rate, as the premium that people pay for BitAssets constitutes that rate. The floating interest rate is thereby: (price of BitAsset - price of real asset) / price of the real asset. The interest rate will be greatest when the demand for BitAssets is higher relative to Bts and low (probably negative) when demand for Bts is higher than demand for BitAssets. In early stages when there is uncertainty around Bitshares success there will be greater demand for BitAssets. I think the interest rate people will pay for them will be higher than even 5%. As Bitshares X proves it success more people will want to cash in on that success so there will be less demand for BitAssets and more demand for Bts so the interest rate will be negative and there may be very few holders of BitAssets.
Where my understanding of this exchange system got lost was in the analogy of BitShares being a bank. It can serve that purpose but it more simply allows participants in the network to make contracts with each other in order to redistribute risk. Short positions take all the risk/reward associated with the volatility of the networks underlying currency while holders of BitAssets peg the their stake in the network to some other asset and are thereby only subject to the price volatility of that asset. There is now borrowing, there is no lending, there is simply this underlying contract.
In terms of early adoption phases I think it behooves everyone to short BitAssets as much as they can because if the price of bitshares ever drops by 50% the experiment is over and Bitshares X is valueless and so is any stake within that network.
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I don't understand how BitUSD comes with more risk than simply holding bitshares, not to mention taking the position of shorting one of the derived assets. Bts constitutes a stake in the network and validates you're belief in its utility. If bitshares x does not work than price of Bts outside of the network will go down, but the price of a BitAsset will not. In holding BitUSD there is no risk that you will loose money only the risk of a greater opportunity cost due to pegging your stake in the network to some other asset. I think if there should be a fee/interest rate at all it should fall on the person holding the BitAsset since after all it is the BitAsset that is being "lent" into existence not the other way around. I think there should be a premium for holding BitAssets because those shorting the price of other assets are inherently providing a service through there collateral. The notion that a hard coded 5% interest rate or any other rate is kind of silly now that I think about it. The price within the market will correct to include any premium that should be paid for the BitAsset. By not hard coding an interest rate you consequently provide a floating interest rate, as the premium that people pay for BitAssets constitutes that rate. The floating interest rate is thereby: (price of BitAsset - price of real asset) / price of the real asset. The interest rate will be greatest when the demand for BitAssets is higher relative to Bts and low (probably negative) when demand for Bts is higher than demand for BitAssets. In early stages when there is uncertainty around Bitshares success there will be greater demand for BitAssets. I think the interest rate people will pay for them will be higher than even 5%. As Bitshares X proves it success more people will want to cash in on that success so there will be less demand for BitAssets and more demand for Bts so the interest rate will be negative and there may be very few holders of BitAssets.
Where my understanding of this exchange system got lost was in the analogy of BitShares being a bank. It can serve that purpose but it more simply allows participants in the network to make contracts with each other in order to redistribute risk. Short positions take all the risk/reward associated with the volatility of the networks underlying currency while holders of BitAssets peg the their stake in the network to some other asset and are thereby only subject to the price volatility of that asset. There is now borrowing, there is no lending, there is simply this underlying contract.
In terms of early adoption phases I think it behooves everyone to short BitAssets as much as they can because if the price of bitshares ever drops by 50% the experiment is over and Bitshares X is valueless and so is any stake within that network.
The risk in holding BitUSD is not relative to holding/shorting Bitshares but relative to holding FedUSD. Where that risk comes from you explained in your last sentence.
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How is it not relative to short positions on BitUSD. The short position is the supply side and the BitUSD is the demand. Even if I am bullish on Bitshares I run the risk that if bts goes down I not only lose money from the decreasing price of bts but also lose my stake in the network. My loss is twice that of holding bts. I think that short positions will lend BitUSD into existence at a higher price than USD and demand will meet that higher price for BitUSD because of the volatility of the network. That is all I am saying. The markets will decide, but that is my prediction. Once you've invested in the network you already assume that 50% decline in the price of bts is not going to happen.
With that being said, why is the collateral provided not greater than 200%? The greater the collateral backing of BitAssets the greater the price of Bts in the longrun, as the network would require the price of BTS to be greater in order to supply the same amount of BitAssets
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Although it was proposed that multiple Bitshares X be released that incorporate varying interest rate. I think it is more imperative to incorporate varying levels of collateral.
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Although it was proposed that multiple Bitshares X be released that incorporate varying interest rate. I think it is more imperative to incorporate varying levels of collateral.
Interesting variable to play with. The market will find the best solution.
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Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD? :) We would then at least see the price of ProtoBitUSD.
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Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD? :) We would then at least see the price of ProtoBitUSD.
Lol.. because I cannot make that promise :)
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Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD? :) We would then at least see the price of ProtoBitUSD.
Lol.. because I cannot make that promise :)
Maybe you don't even need to make a promise. The fact that the name ProtoBitUSD contains the string BitUSD is more than enough for it to track the price, isn't it?
Okay, this was obviously a joke. But I really don't get the concept of BitUSD. If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
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The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.
Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.
The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.
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The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.
Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.
The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.
The viability of crypto currencies is contingent upon their evolution. No currency is viable if its value cannot remain stable. It doesnt matter what you think it is relatively more secure or serves as a better medium of exchange. A currency must maintain its usefulness as a store of value, otherwise it is not a valid currency. If you think people are obsessed with bitUSD you missed the point. Bitshares isnt simply a PoS coin that takes out the need for mining, it is a bank with 200% reserves that gaurantees that any bitUSD or any bitAsset retains the value (or highly correlated value) of the real world asset from which it is derived. The notion of bitUSD or any other asset allows for price stability in the network even as the underlying currency of the network may be subject to volatility. The whole point of the experiment is bitUSD. If the price of bitUSD to bitshares does not reflect the price of real USD to bitshares, then bitshares is worthless.
I'm curious as to what you think is the core concept of cryptocurrencies.
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Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD? :) We would then at least see the price of ProtoBitUSD.
Lol.. because I cannot make that promise :)
Maybe you don't even need to make a promise. The fact that the name ProtoBitUSD contains the string BitUSD is more than enough for it to track the price, isn't it?
Okay, this was obviously a joke. But I really don't get the concept of BitUSD.
You should read the whitepaper, the whole value proposition of BTS X is having assets that track other assets.
If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.
Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.
The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.
The whole point of BTS X is the BitAssets. Without BitAssets, BTS X is just another shitcoin and we'd all be wasting our time here.
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You should read the whitepaper, the whole value proposition of BTS X is having assets that track other assets.
Sure. I will.
If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
But I'll make sure to sell my PTS first.
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You should read the whitepaper, the whole value proposition of BTS X is having assets that track other assets.
Sure. I will.
If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
But I'll make sure to sell my PTS first.
Well that would be foolish unless you plan on subsequently accumulating ags
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I think BitUSD will trade at a premium to USD within the Bitshares system thanks to the interest.
However outside Bitshares, an online retailer would prefer regular USD, so to them BitUSD will be worth less.
My hope is the premium within the system will be enough to offset this so that retailers or middlemen would allow consumers to purchase real world dollar denominated items with their BitUSD equivalent.
Edit: Actually middlemen/companies who let you pay for items in BitGold would be even more epic.
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I think BitUSD will trade at a premium to USD within the Bitshares system thanks to the interest.
The first chain won't pay interest anymore
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I think BitUSD will trade at a premium to USD within the Bitshares system thanks to the interest.
The first chain won't pay interest anymore
Oh OK, I really need to read up on Bitshares more. So much I don't understand about it.
I guess for BitUSD to start trading at a premium then, they'd have to start Cyprus-ing bank accounts elsewhere in the world then BitUSD may start to trade at a premium as it's not in 'confiscatable'
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The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.
Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.
The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.
The viability of crypto currencies is contingent upon their evolution. No currency is viable if its value cannot remain stable. It doesnt matter what you think it is relatively more secure or serves as a better medium of exchange. A currency must maintain its usefulness as a store of value, otherwise it is not a valid currency. If you think people are obsessed with bitUSD you missed the point. Bitshares isnt simply a PoS coin that takes out the need for mining, it is a bank with 200% reserves that gaurantees that any bitUSD or any bitAsset retains the value (or highly correlated value) of the real world asset from which it is derived. The notion of bitUSD or any other asset allows for price stability in the network even as the underlying currency of the network may be subject to volatility. The whole point of the experiment is bitUSD. If the price of bitUSD to bitshares does not reflect the price of real USD to bitshares, then bitshares is worthless.
I'm curious as to what you think is the core concept of cryptocurrencies.
The core concept of cryptocurrencies is that they are intended to not only replace standard fiat currency, but completely debase the central root of power for all central banks around the world. You are all so quick to forget that cryptocurrencies are a serious, viable threat to the MOST powerful entities in the world, which are central banks.
It is for this same reason that all these central banks are trying so hard to ban it. But they are slow and cold blooded, and time and time again are failing to realize that it cannot be banned without shutting the internet off. However, their control over currency is their root of power.
The majority of you seem to be forgetting that bitcoin's essentially arose out of and was proliferated by anarchist communities and the criminal underworld, and that any coins that promise anonymity like the old days continue to flourish and receive support for good reason.
The whole point of BTS X is the BitAssets. Without BitAssets, BTS X is just another shitcoin and we'd all be wasting our time here.
Obviously this is true, but what I'm saying is that BitFiatAnything should not be the one everyone is focused so hard on. Frankly, I'm not even going to purchase or make a move on a single bitUSD, because I'm more interested in any companies that may list themselves here.
You may also be forgetting that this will give many companies the opportunity to be listed publicly where they otherwise could not be.
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There are two transitions that both have to happen: one from non-distributed-consensus systems to distributed-consensus (blockchain) systems, and one from fiat to crypto. BTS X is more for the first than for the second, though it will inevitably help both.
This whole movement is bigger than just money systems.
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
Try to answer this question: Is there any difference between a $1 bill and a $100 bill besides the number written on it?
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
Not being sarcastic. Have you read the whitepaper?
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How do you think BitUSD even works at all?
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
The asset name is merely a description of what the market should track the price of. That is to say that participants in a given market are making predictions of what the price of the underlying asset will be in the immediate future. BitCents is ambiguous as it does not elaborate on what currency the market should track. If you wanted the bitAsset to track the Usd in cents well then you can simply use BitUSDinCents. These are derivative markets for the predicted value of real assets. No rational actor would enter into a market for which he or she is unsure as to what asset the bitAsset derives its price. No one would enter into a market for BitAOEUI because it unclear what this should track.
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No one would enter into a market for BitAOEUI because it unclear what this should track.
Not if Pat Sajak starts selling BitVowel on Jeopardy...
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No one would enter into a market for BitAOEUI because it unclear what this should track.
Not if Pat Sajak starts selling BitVowel on Jeopardy...
You got me, thats the one exception
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
Try to answer this question: Is there any difference between a $1 bill and a $100 bill besides the number written on it?
Okay. I could also issue my own type of bills (http://kepfeltoltes.hu/140227/100usd_www.kepfeltoltes.hu_.jpg). Let's assume it's a special kind of paper that nobody can copy. How is BitUSD different from that? What is the difference that lets BitUSD track its nominal price?
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
Try to answer this question: Is there any difference between a $1 bill and a $100 bill besides the number written on it?
Okay. I could also issue my own type of bills (http://kepfeltoltes.hu/140227/100usd_www.kepfeltoltes.hu_.jpg). Let's assume it's a special kind of paper that nobody can copy. How is BitUSD different from that?
two-ply is an ass-et
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If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?
If anything works at all, then yes.
I am not sure if your answer is sarcastic or not. Do you really think it only depends on the name and nothing else?
If you created a BitAsset called BitAOEUI, what would it track?
Try to answer this question: Is there any difference between a $1 bill and a $100 bill besides the number written on it?
Okay. I could also issue my own type of bills (http://kepfeltoltes.hu/140227/100usd_www.kepfeltoltes.hu_.jpg). Let's assume it's a special kind of paper that nobody can copy. How is BitUSD different from that? What is the difference that lets BitUSD track its nominal price?
You don't have someone's collateral tied up in a trustless distributed value store which will get called if that value falls too far below the value of a SpecialPaper.
I'm still not sure, have you read the whitepaper?
https://docs.google.com/document/d/1RLcjSXWuU9vBJzzqLEXVACSCdn8zXKTTJRN_LfoCjNY/edit?disco=AAAAAH7fcks