BitShares Forum
Main => General Discussion => Topic started by: vlight on March 12, 2014, 06:37:51 pm
-
Is it better than physical gold?
-
Yes.
-
could you send me gold in the next hour ?
can you store physical gold in your head ?
how much physical gold really exist ?
can you pay with gold over the internet ?
do you really own you physical gold or just a piece of paper with your ownership ?
have to eat dinner maybe i write more later ;)
-
Yes.
There are also valid reasons one could say "no:"
Can the gold bar in your basement be unexpectedly replaced (without your consent) with an equivalent number of XTS?
Can market forces ever decide that the gold bar in your basement isn't worth its weight in gold?
Can you use the BitGLD in your wallet to purchase something in the event of a large-scale power blackout?
Everything depends on what you're looking for in gold and/or BitGLD. BitGLD has many many advantages over physical gold in terms of liquidity, fungibility, portability, etc., but when it comes down to brass tacks, it is not backed by physical gold. It is backed by a promise from the BitShares X network to pay a the market value of BitGLD in XTS. If, for whatever reason (whether it be the network is maliciously attacked, or something severe happens to weaken speculators' confidence), the network stops honoring its promise, BitGLD will go the way of MtGox's Bitcoins.
If you want to take advantage of the long-term value stability (i.e., over decades) of physical gold, then BitGLD is absolutely worse than physical gold. If you want to use gold as a medium for exchange, then BitGLD is the thing for you.
-
Is it better than physical gold?
Yes. Can I send physical gold in an email?
-
Yes.
There are also valid reasons one could say "no:"
Can the gold bar in your basement be unexpectedly replaced (without your consent) with an equivalent number of XTS?
Can market forces ever decide that the gold bar in your basement isn't worth its weight in gold?
Can you use the BitGLD in your wallet to purchase something in the event of a large-scale power blackout?
Everything depends on what you're looking for in gold and/or BitGLD. BitGLD has many many advantages over physical gold in terms of liquidity, fungibility, portability, etc., but when it comes down to brass tacks, it is not backed by physical gold. It is backed by a promise from the BitShares X network to pay a the market value of BitGLD in XTS. If, for whatever reason (whether it be the network is maliciously attacked, or something severe happens to weaken speculators' confidence), the network stops honoring its promise, BitGLD will go the way of MtGox's Bitcoins.
If you want to take advantage of the long-term value stability (i.e., over decades) of physical gold, then BitGLD is absolutely worse than physical gold. If you want to use gold as a medium for exchange, then BitGLD is the thing for you.
What you stated is true, assuming that you own real physical gold, not a counterfeit.
-
Yes.
There are also valid reasons one could say "no:"
Can the gold bar in your basement be unexpectedly replaced (without your consent) with an equivalent number of XTS?
Can market forces ever decide that the gold bar in your basement isn't worth its weight in gold?
Can you use the BitGLD in your wallet to purchase something in the event of a large-scale power blackout?
Everything depends on what you're looking for in gold and/or BitGLD. BitGLD has many many advantages over physical gold in terms of liquidity, fungibility, portability, etc., but when it comes down to brass tacks, it is not backed by physical gold. It is backed by a promise from the BitShares X network to pay a the market value of BitGLD in XTS. If, for whatever reason (whether it be the network is maliciously attacked, or something severe happens to weaken speculators' confidence), the network stops honoring its promise, BitGLD will go the way of MtGox's Bitcoins.
If you want to take advantage of the long-term value stability (i.e., over decades) of physical gold, then BitGLD is absolutely worse than physical gold. If you want to use gold as a medium for exchange, then BitGLD is the thing for you.
+5%, which doesn't mean I'm not excited about bit gold.
This might be an obvious question but what is Bitgold meant to be valued at, Troy ounce?
-
I think the answer to this question mostly depends on the assumption that you have access to electricity and Internet. Without those two physical gold rules and will rule forever but in digital era BitGold is the king.
Best would be to have half in BitGold and half in physical gold 8)
-
They're different asset classes so one is not 'better' than the other, rather they can be under or overvalued to each other. And since bitGold does not have a price yet it's difficult to say which is which at the moment. With that said, I'm not selling nor would I sell my physical gold for bitGold but I would probably sell my bitGold for physical.
-
Can the gold bar in your basement be unexpectedly replaced (without your consent) with an equivalent number of XTS?
This will not happen with BitGold. There are no margin calls on long positions.
-
Can the gold bar in your basement be unexpectedly replaced (without your consent) with an equivalent number of XTS?
This will not happen with BitGold. There are no margin calls on long positions.
And furthermore the network NEVER replaces your assets without your consent. It only takes stuff you *willingly* put into collateral in order to go short on another asset.
-
That said, gold is my "anti-catastrophe" value store, I hold it in the event something so bad that internet connectivity is at the back of my mind happens
bitgold < gold
bitusd > usd
-
Can the gold bar in your basement be unexpectedly replaced (without your consent) with an equivalent number of XTS?
This will not happen with BitGold. There are no margin calls on long positions.
And furthermore the network NEVER replaces your assets without your consent. It only takes stuff you *willingly* put into collateral in order to go short on another asset.
Right. Of course. I will go hang my head in shame for my previous misunderstanding of margin calls...
Seriously, I think the explanation of margin calls I put in the FAQ was wrong. Gonna go do a little revision.
-
This might be an obvious question but what is Bitgold meant to be valued at, Troy ounce?
Yes, in all commodities we need to know what are the measures, or I guess they will be implied by the price?
-
That said, gold is my "anti-catastrophe" value store, I hold it in the event something so bad that internet connectivity is at the back of my mind happens
bitgold < gold
bitusd > usd
+5%
-
This might be an obvious question but what is Bitgold meant to be valued at, Troy ounce?
Yes, in all commodities we need to know what are the measures, or I guess they will be implied by the price?
The unit and seed 'idea' behind each asset is in the hands of the individuals who create and launch a chain. I highly recommend they be a specific as possible so the market can operate as efficiently as possible.
-
I had a similar question. What mechanism is used to determine the price for use in bitgold etcetera? Is for example the price of gold versus bitcoin taken from some price-index average or is it something decided on by the majority on the network?
I'd be interested to know how those exchange rates get fed into the system, for short- and long-positions to be evaluated. Could be that this has already been answered, but I can't remember if an official plan or decision on that matter has already been made.
-
I had a similar question. What mechanism is used to determine the price for use in bitgold etcetera? Is for example the price of gold versus bitcoin taken from some price-index average or is it something decided on by the majority on the network?
I'd be interested to know how those exchange rates get fed into the system, for short- and long-positions to be evaluated. Could be that this has already been answered, but I can't remember if an official plan or decision on that matter has already been made.
The price is set via the market as bids and asks take opposite sides.
Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
-
I had a similar question. What mechanism is used to determine the price for use in bitgold etcetera? Is for example the price of gold versus bitcoin taken from some price-index average or is it something decided on by the majority on the network?
I'd be interested to know how those exchange rates get fed into the system, for short- and long-positions to be evaluated. Could be that this has already been answered, but I can't remember if an official plan or decision on that matter has already been made.
Is 1 bitGold to represent 1oz of gold?
-
I had a similar question. What mechanism is used to determine the price for use in bitgold etcetera? Is for example the price of gold versus bitcoin taken from some price-index average or is it something decided on by the majority on the network?
I'd be interested to know how those exchange rates get fed into the system, for short- and long-positions to be evaluated. Could be that this has already been answered, but I can't remember if an official plan or decision on that matter has already been made.
You should read the whitepaper, the whole idea behind BTS X is to establish price ratios without having an external price feed using just a prediction-market-like mechanism.
Is 1 bitGold to represent 1oz of gold?
Whatever the chain launcher decides (actually whatever the market decides). So it's reasonable to assume 1 oz since that's what most price tickers for gold use.
-
[T]he whole idea behind BTS X is to establish price ratios without having an external price feed using just a prediction-market-like mechanism.
Backed assets issued with BitShares Me probably will be a bit easier for people to visualize. They will be essentially warehouse receipts.
BitAssets most likely will be issued to track the 'usual suspect' assets first, including USD, EUR, XAU, XAG, CNY, JPY, etc. Once people are used to those, it will be fun to see how the market prices BitUnobtainium, BitVaporware, and BitNothing.
-
[T]he whole idea behind BTS X is to establish price ratios without having an external price feed using just a prediction-market-like mechanism.
Backed assets issued with BitShares Me probably will be a bit easier for people to visualize. They will be essentially warehouse receipts.
BitAssets most likely will be issued to track the 'usual suspect' assets first, including USD, EUR, XAU, XAG, CNY, JPY, etc. Once people are used to those, it will be fun to see how the market prices BitUnobtainium, BitVaporware, and BitNothing.
BitNot$100
I'll bet it tracks $100 ;)
-
Sorry for sounding uneducated, but I'm new to this type of trading. What's preventing the chosen price-standard to start leading a life on it's own? How will bitgold for example track gold, without becoming goxgold? Or will the prospect of losing ones collateral be enough of a safeguard for people not getting a raw deal?
-
Sorry for sounding uneducated, but I'm new to this type of trading. What's preventing the chosen price-standard to start leading a life on it's own? How will bitgold for example track gold, without becoming goxgold? Or will the prospect of losing ones collateral be enough of a safeguard for people not getting a raw deal?
BitGoxGold, BitKitcoGold, BitBob'sMattressGold, etc. would all be different assets that should reflect market participants' trust in Gox, Kitco, Bob, etc.
-
BitGoxGold, BitKitcoGold, BitBob'sMattressGold, etc. would all be different assets that should reflect market participants' trust in Gox, Kitco, Bob, etc.
I'm taking special note of the "should" in that quote. I take it that the social consensus is that BitBob'sMattressGold would be 1:1 interchangeable with real Bob'sMattressGold should Bob ever want to trade the comfort of his physical version for some of the advantages of its digital representative.
-
BitGoxGold, BitKitcoGold, BitBob'sMattressGold, etc. would all be different assets that should reflect market participants' trust in Gox, Kitco, Bob, etc.
I'm taking special note of the "should" in that quote. I take it that the social consensus is that BitBob'sMattressGold would be 1:1 interchangeable with real Bob'sMattressGold should Bob ever want to trade the comfort of his physical version for some of the advantages of its digital representative.
Yes, I would think so, but the market at large (apart from Bob) is unlikely to value either BitBob'sMattressGold or Bob'sMattressGold very highly or consistently, unless Bob has a truly impeccable reputation.
-
No don't confuse me any further, don't add seasonal value to Bob'sMattressGold and make it global or hemisphere dependent. I'm still having trouble wrapping my head around the idea of trading in the value of something, instead of trading the something itself.
-
Yeah ignore those examples, they make it sound like an iou trading platform a la mastercoin. BitGold is just an asset on the chain that can be traded for whatever the market thinks 1 BitGold is worth in terms of the underlying asset (XTS in this case). Read the whitepaper on the main site, it should clarify.
Sent from my SCH-I535 using Tapatalk
-
No don't confuse me any further, don't add seasonal value to Bob'sMattressGold and make it global or hemisphere dependent. I'm still having trouble wrapping my head around the idea of trading in the value of something, instead of trading the something itself.
There's a great analogy running around somewhere called "Bookie Bob's solution to bitcoin volatility." Google it - it's highly worth a read if you're trying to figure out bitshares X for the first time.
Sent from my SCH-S720C using Tapatalk 2
-
There's a great analogy running around somewhere called "Bookie Bob's solution to bitcoin volatility."
http://invictus-innovations.com/bookie-bob/
It's interesting but it actually does not address the question. The relevant section says:
If bitcoins go up,
...
If bitcoins go down,
But does not discuss how BitSharesX becomes aware of this (ie, how it knows that Price of Bitcoins has 'gone up' or 'gone down'). Similarly, JoeyD's question is about the difference between the price of gold, and the price of BitGold.
-
Yeah ignore those examples, they make it sound like an iou trading platform a la mastercoin.
That is how some issuers are likely to use BitShares Me. Ignoring this won't make it go away.
BitGold is just an asset on the chain that can be traded for whatever the market thinks 1 BitGold is worth in terms of the underlying asset (XTS in this case). Read the whitepaper on the main site, it should clarify.
Right, but I've had this discussion with non-BitShares people already who respond with something like, "Wait a second. I don't get it. There's no gold in BitGold? ...? <blink />... No, look. You see, what you need is..." followed by a description of a warehouse receipt/IOU.
Someone, somewhere is going to issue IOUs for USD, EUR, XAU, etc., and tout them as 'better' than Bit[USD | EUR | XAU], because they're backed.
-
Whoa whoa wait, I thought he was asking about how BTS X works?
If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
-
Don't worry I understood the principle of bitshares being "bets" instead of IOU's, but as was mentioned by MolonLabe I'm having some issues grasping how the price is determined and how the bets are refereed by the system. I'm a bit worried that since we're not talking IOU's and the price of for example gold is not referenced from any external average price index, that prices may get a bit wild.
As I said I'm new to this kind of trading and have no experience in how these markets usually work, maybe it's just me being confused by multiple floating data-points (both bitshares and bitgold fluctuating in price separately, which suggests having to do a lot of corrective calculations manually if those prices aren't deduced automagically). I'm trying to understand how the system comes to a consensus and trying to figure out what's keeping everyone on the same page, so to speak. As I understand it all prices are dictated by the human participants, so I was wondering if widespread confusion about the unit of measure could lead to problems. Then again, how could you trust a 3rd party price index? I'm trying to work out how the system remains honest and secured from exploits by less trustworthy people.
I'm working my way through the white-papers, but exhaustion is having it's toll. My brain, which is allready rickety to begin with, is now firing on less cylinders than usual.
-
Whoa whoa wait, I thought he was asking about how BTS X works?
If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
Why back anything by reputation when you can back it by collateral?
-
I'm trying to understand how the system comes to a consensus and trying to figure out what's keeping everyone on the same page, so to speak.
The name of the asset and nothing else. Let's start with USD: The price of BitUSD is kept in line *only* by the fact that people expect it to trade for around $1. If everyone thinks everyone else thinks it does, then everyone has a profit motive to place orders that will push it towards the "correct" price. Are you familiar with the concept of a Schelling point (http://en.wikipedia.org/wiki/Focal_point_(game_theory))? Unless there is a global decision made to price BitUSD at something other than USD that the majority of the capital in the market is aware of and wants to participate in, the *only* rational profit-seeking move you can make it trade BitUSD at USD, since the only "consensus point" you could make in a distributed environment is just to look at the name of the asset.
So back to GLD: If you see, absent any other information, that BitGLD has been trading for $1300-ish, the only profit-seeking rational move you can make is to assume BitGLD refers to one ounce of gold and place orders accordingly. To kick off the process, the chain creator should be clear about what denomination they are talking about. Everyone doing this at once pushes the price to the real ratio.
-
Whoa whoa wait, I thought he was asking about how BTS X works?
If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
Why back anything by reputation when you can back it by collateral?
And how do you know I have that collateral? I was talking about Me, not X.
-
Whoa whoa wait, I thought he was asking about how BTS X works?
If he's talking about BTS Me then yes, you are just trading IOUs and should be "backed" the the issuer's reputation.
Why back anything by reputation when you can back it by collateral?
And how do you know I have that collateral? I was talking about Me, not X.
Proof of Collateral? Unless you prove you have at least double what you're asking for an IOU for then you don't get the loan.
Okay take it like this, say you offer a token which represents some product you promise to redeem if buy the token at a discount and then send it to you later on when the product is ready to be redeemed. Since we don't know for sure whether or not you'll redeem, if you have collateral in escrow and it's proven somehow, then we know at any time we can send the token back to you and get out money back.
This removes all the risk from the buyer and puts it on the entrepreneur where it belongs. An entrepreneur should simply put enough value in escrow to act as collateral for people to get their money back if they don't redeem, are late, or whatever. Bitshares would make the perfect collateral.
-
Sounds sort of like you're re-inventing BTS X =P
Certainly what you're saying is useful for many applications (when the asset is used to transfer ownership more than to store value, when the time-value of the collateral is not worth more than the loss of business due to the customer's expected loss), but I imagine most "asset-backed" assets would not bother with tying up collateral when trust is "good enough" and they can use the extra money to buy more of the real asset and issue more of the digital assets.
-
Thanks Toast, I was indeed unfamiliar with the concept of the Schelling point. This was the missing puzzle piece for me and it does indeed make sense to me now. I recommend putting a reference to that wiki page or an explanation of the theory in any marketing attempt for bitshares.
Some very interesting concepts that people are working with in this space, almost feels like I've been living under a rock. I'm having a bit of a culture shock ever since I dove into crypto-currencies a couple of months ago, I'm not used to encountering so many exceptionally clever people in a single location.
-
I'm trying to understand how the system comes to a consensus and trying to figure out what's keeping everyone on the same page, so to speak.
...
Are you familiar with the concept of a Schelling point (http://en.wikipedia.org/wiki/Focal_point_(game_theory))? Unless there is a global decision made to price BitUSD at something other than USD that the majority of the capital in the market is aware of and wants to participate in, the *only* rational profit-seeking move you can make it trade BitUSD at USD, since the only "consensus point" you could make in a distributed environment is just to look at the name of the asset.
So back to GLD: If you see, absent any other information, that BitGLD has been trading for $1300-ish, the only profit-seeking rational move you can make is to assume BitGLD refers to one ounce of gold and place orders accordingly. To kick off the process, the chain creator should be clear about what denomination they are talking about. Everyone doing this at once pushes the price to the real ratio.
The Schelling Point assumes a game where the (Benefits - Costs) of each Option are exactly the same...
they could win by both choosing any square
...and are NOT affected by anything external. Hence the need to use an intrinsic coordinator (such as a name).
BitSharesX does not satisfy this assumption because:
1] Margin calls can force you sell a losing position, giving someone an external incentive to push the direction causing such a forced sale (currently under discussion here https://bitsharestalk.org/index.php?topic=3130.90).
2] The Benefits for each Option will be different for each player (they are Sale Price - FutureValue(Purchase Price)), and not in a way that they are perfectly offset by the previously-locked-in Costs for each Option.
3] The Cost for each Option will be different for each player (they are FV(Purchase Price)), and not in a way that they are perfectly offset by the expected benefits for each purchase.
-
Very interesting. The assumption that all the options have to have the same expected return is a strictly weaker requirement, I wonder if there's an analogous concept for when the "outer" payoff matrix ("peg to a price everyone else pegs to and you win AND everyone else who agrees wins, else you all lose") leads everyone into the same option for which the "inner" payoff matrix ("use the name or don't use the name") could have a focal point
-
The assumption that all the options have to have the same expected return is a strictly weaker requirement
What do you mean by "strictly weaker"? Focal Points are defined in a game where the Players could meet anywhere, as long as they end up together. So it is really the only requirement.
("peg to a price everyone else pegs to and you win AND everyone else who agrees wins, else you all lose")
If someone owns a small amount of BTS, they would "lose" disproportionally in the "else you all lose" clause making it a weak threat (unless the plan is to have everyone own the same proportion of BTS at all times a la "Communism"). If someone owns a competing system, they would gain (if "you all lose") making it an incentive.