BitShares Forum
Main => General Discussion => Topic started by: Method-X on September 15, 2014, 02:57:06 am
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List the common objections you get when telling others about the merits of BitShares X, and how you respond.
I'll take the best responses and edit this post to look like an FAQ.
Having this type of list should help the marketing team and community at large.
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It's just the FED 2.0!
You can't fork the FED, but you can fork BitShares X.
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Bitshares X is issuing bitAssets which are backed by its own shares. This looks like a financial pyramid or a Ponzi scheme.
What are the symptoms of a Ponzi scheme? A Ponzi scheme constantly needs to recruit more and more new supporters in order to survive. As long as the recruitment process works a Ponzi scheme is fine and makes everyone happy. If for any reason the recruitment process fails a Ponzi business crashes with a big bang.
Bitshares X is a business that does need a critical mass of users to be able to operate. There is nothing unusual about this: so do most other online businesses like Facebook, e-Bay, bit-torrent etc. But Bitshares X does NOT need a constantly increasing number of users to be successful: if Bitshares X acquired 10 mln users and then stopped growing it would still be very stable and profitable. Thus it would be nice to have a constant growth of Bitshares X but it is not essential for its existence. And this makes a very clear distinction between a Ponzi scheme and a legitimate financial service.
(This distinction does not work so nicely for bitcoin: because of its POW mechanism it does need a constant growth to counteract the daily $2 mln flood of supply generated by the newly mined coins.)
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Anticipating a few questions for a FAQ..
1) What is different about BitShares that its blockchain will not become burdensome; too large; and require too much computing power to maintain delegates?
2) BitShares is just one among a number of Bitcoin2.0 offerings tempting the use of digital tokens to represent real world value. While BitShares perhaps has an edge at the moment having created a market to speculate on the value of bitUSD and other assets, the first offering that bridges the gap to real world assets where one token is maintained as evidence of ownership, will perhaps win big. What efforts is BitShares making to hook real world assets and look beyond the usual cryptocurrency crowd?
3) Why should we trust BitShares devs and delegates with our money?.. Why should we not just wait for Winklevoss like efforts and others who know what they are doing; what financial credentials do BitShares devs have?
4) Running a full client is a pain, where is the web equivalent the like of counterparty with simple client-side transaction confirmations?
5) It's too complicated :-\ .. all this talk of DACs and keeping track of them. Where is the static point of reference that is an upto date tldr;? If I'm away from the forum for a month, where do I look for a simple catchup?
6) I've never heard of BitShares.. how is this not just a flash in the pan, fly by night gimick? How many supporters does it really have - how many people are running clients and seeds and delegates - where are those stats declared? Isn't limiting the delegates to 101 likely to limit those who provide the network support? A billion dollar industry surely needs support from more than 101 people.
7) Is the legal and tax position clear? It seems that perhaps I should wait a year or two before jumping into this new world.
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"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."
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"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."
I wonder this is likely one of the most important and more overlooked issues. The average Joe can't be trusted to make backups of wallets.. and likely knows enough not to trust themselves relative to hosting money in a computer on a product they cannot comprehend. A website option then and the importance of keeping the private key safe, might be a good option here. That perhaps also tempts the need for banks for private keys and other options for insurance relative to all cryptocurrency.
Products need to be foolproof not just fullproof..
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"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."
I wonder this is likely one of the most important and more overlooked issues. The average Joe can't be trusted to make backups of wallets.. and likely knows enough not to trust themselves relative to hosting money in a computer on a product they cannot comprehend. A website option then and the importance of keeping the private key safe, might be a good option here. That perhaps also tempts the need for banks for private keys and other options for insurance relative to all cryptocurrency.
Products need to be foolproof not just fullproof..
Like that! +5%
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"I am not going to download a software from the internet, enter a password into it and then entrust it with my lifetime savings."
When banks start doing bail-ins and/or hyper inflation sets in, this objection may very well evaporate. 8)
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Hoping this thread won't get buried and wondering perhaps it should be in Marketing..
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You can't create USD out of nothing, backed by nothing, without counterparty risk!
Instead of beginning with BitUSD I begin my explanation with prediction markets:
BTSX has a build in prediction market which can track anything that is quantifiable, the more quantifiable the underlying is the better can it track (it might not be possible at all to track an underlying which is not quantifiable enough).
*Beginning the explanation with what is most acceptable (a prediction market) and does not contain any assets with direct real world use (like BitUSD) builds a good common ground.*
We can track the S&P500 but we can also track the USD. Tracking works buy allowing traders to sell or buy a token which has the value of for example the USD. No "real" USD are created, what is created is a "crypto-asset" (like Bitcoin) that tracks the value of the dollar and ppl might accept it as money if it is useful enough to them.
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It's just the FED 2.0!
You can't fork the FED, but you can fork BitShares X.
Or, just own it: if we're not trying to create systems that beat the Fed at its own game, we're just children playing in the sand. That's my take on it.
Sent from my SCH-S720C using Tapatalk 2
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Or, just own it:
The FED is a liability. It's better to be seen as what follows that, than simply the same and more.
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An objection I heard the other day is that BitAssets are not backed by anything.
With regard to the opinion (expressed by delulo above, but that I've heard elsewhere) that its OK because BitAssets are really prediction markets, not assets, I am confused. Doesn't a prediction market require a pre-determined point in time at which the result is verified, such that people's bets are estimates of the probability of the outcome? What outcome are BitAssets predicting? If there is no end-point, there is no guarantee of any outcome at all. I'm not sure how this overcomes the concern.
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An objection I heard the other day is that BitAssets are not backed by anything.
With regard to the opinion (expressed by delulo above, but that I've heard elsewhere) that its OK because BitAssets are really prediction markets, not assets, I am confused. Doesn't a prediction market require a pre-determined point in time at which the result is verified, such that people's bets are estimates of the probability of the outcome? What outcome are BitAssets predicting? If there is no end-point, there is no guarantee of any outcome at all. I'm not sure how this overcomes the concern.
That's an interesting misconception. Actually, bitAssets are backed! They're backed by at least 1.5x their value in BTSX! To open a short position (akatkam create bitAssets) I have to put twice their value in escrow as backing.
Sent from my SCH-S720C using Tapatalk 2
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An objection I heard the other day is that BitAssets are not backed by anything.
With regard to the opinion (expressed by delulo above, but that I've heard elsewhere) that its OK because BitAssets are really prediction markets, not assets, I am confused. Doesn't a prediction market require a pre-determined point in time at which the result is verified, such that people's bets are estimates of the probability of the outcome? What outcome are BitAssets predicting? If there is no end-point, there is no guarantee of any outcome at all. I'm not sure how this overcomes the concern.
That's an interesting misconception. Actually, bitAssets are backed! They're backed by at least 1.5x their value in BTSX! To open a short position (akatkam create bitAssets) I have to put twice their value in escrow as backing.
Sent from my SCH-S720C using Tapatalk 2
The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
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The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
Strictly speaking you right. But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
. To me the backing of BitshareX is the business behind, and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?
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The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
Strictly speaking you right. But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
. To me the backing of BitshareX is the business behind, and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?
Yeah, that question is great: "what is backing bitcoin?" To another crowd, you can ask "what is backing gold?" Though gold has the benefit that it's been highly valued for millennia...
Sent from my SCH-S720C using Tapatalk 2
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The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
Strictly speaking you right. But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
. To me the backing of BitshareX is the business behind, and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?
Yeah, that question is great: "what is backing bitcoin?" To another crowd, you can ask "what is backing gold?" Though gold has the benefit that it's been highly valued for millennia...
Sent from my SCH-S720C using Tapatalk 2
Money is a collective belief, a game of pretend we're all in on. Belief is the root of all value.
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The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
Strictly speaking you right. But this will happen only if the peg is not working in witch event the whole experiment is a failure. . So let rephrase it, if the peg is not working your bitAssets could be in danger else your bitAssets are backed by real money.
. To me the backing of BitshareX is the business behind, and my short explanation for newbie is : BitSharesX is a virtual bank that lets users buy, sell and trade virtual assets that have the valued of real world assets. In the process of creating those virtual assets people make money trading similar way like Forex. To me the difference is: What's backing a share in Western Union or Google ? And for the crypto crowd my killer question is what is backing Bitcoin ?
Yeah, that question is great: "what is backing bitcoin?" To another crowd, you can ask "what is backing gold?" Though gold has the benefit that it's been highly valued for millennia...
Sent from my SCH-S720C using Tapatalk 2
You are all correct of course that other currencies in the modern age have dubious if any backing also, and value is subjective. I just think it can be a misleading claim to say for example BitUSD is backed without a proper explanation of what is meant by that.
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Are bitshares vulnerable to denial-of-service attacks ? Can spammers inflate the blockchain so much it becomes inusable ? If I create huge loads of trollshares and want to spam them around, are fees enough to stop me ?
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The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
The bolded is your conundrum. What happened when those gold-backed currencies were suddenly no longer backed by gold? People got screwed. Trust was violated. They no longer owned what they had been told that they owned. Would those same people that got screwed tell you that the asset they owned was backed by gold? Probably not. In that light, I would posit that those currencies were NEVER truly backed by gold and the reason for this failure is simple; central management. Now we have a decentralized system where an asset can be truly backed by another asset(btsx) in a completely decentralized and trustless environment. We will see if it can stand the test of time.
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The BTSX collateral is there to protect the rights of all parties to be paid according to price movements in the bitAssets. So the rights to proper payment are backed.
However it does not back the actual value of the BitAssets in the same way that say the value of a share or loan is backed by the saleable assets of a business, or that a house loan is backed by the ability of a bank to liquidate the recuperate the value of the loan, or the way in which gold-backed currencies used to be redeemable for gold. If the market decided to value BitAssets at 10% of today's value, instead of at the peg price, the BTSX collateral does not alter that, it only ensures everyone is paid accordingly. So perhaps we need to be careful with what we mean by 'backed'?
The bolded is your conundrum. What happened when those gold-backed currencies were suddenly no longer backed by gold? People got screwed. Trust was violated. They no longer owned what they had been told that they owned. Would those same people that got screwed tell you that the asset they owned was backed by gold? Probably not. In that light, I would posit that those currencies were NEVER truly backed by gold and the reason for this failure is simple; central management. Now we have a decentralized system where an asset can be truly backed by another asset(btsx) in a completely decentralized and trustless environment. We will see if it can stand the test of time.
That's a good point. Backing of any asset is more valuable to the extent it does not rely on trust in another party. Governments took away metals backing of currencies, companies can have fraudulent accounts etc. So a decentralised, transparent and trust-less system will be a vast improvement in our financial system. However, we should still be aware that in this case the BTSX does not back the value of BitUSD in a capital sense, or guarantee that its price behaviour will be at all similar to real USD, or even stable. It is assurance against counterparty risk only.
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One of the common objections I am getting from Bitcoin supporters from my discussions on reddit is that POW somehow makes distribution "fair" and that POS is unacceptable because the early elite stay rich while no one else has a chance to get into the system because "new coins are not being minted for distribution."
I view this as a misunderstanding of the economics. Inflating the coin supply doesn't give an advantage to the latecomers, it only redistributes the wealth from the early adopters to other entities (entities who are not necessarily the latecomers). The stake in the system will still eventually be distributed to many people, because that is the way the system grows in adoption and thus in value. If the initial stakeholders just sit on their stake and never sell or spend that value, the system will never grow in value (what is the point of holding a majority of a worthless currency?). This is not a real issue though, since as the market cap of BTSX goes up, early adopters will want to start selling/spending portions of their stake to actually consume real goods/services with it.
Some may have some misguided notion of fairness where they think inflating for the sake of inflating is still a beneficial thing (meaning if we cannot give the latecomers an advantage, at least let us punish the early adopters). Without trying to argue about whether or not that is "just" I like to simply argue that: one, you can still achieve such economic policies in DPOS as well through inflating the shares and distributing them to other entities; and two, in POW you are forced to do the wealth redistribution to ASIC manufacturers and power companies (you cannot choose to at least give the money to productive purposes such as charity, research, infrastructure, etc.).
You can see some of the relevant reddit discussions here (http://www.reddit.com/r/Bitcoin/comments/2gjkpv/is_this_the_reason_the_bitcoin_price_is_not/ckk91wm?context=10000) and here (http://www.reddit.com/r/Bitcoin/comments/2gjkpv/is_this_the_reason_the_bitcoin_price_is_not/ckk2kqz?context=3).
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biggest question I am asked is how do I cash in and out of it. People want a atm or bank card. When I say well you cant yet they always ask, what can I buy with it.
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biggest question I am asked is how do I cash in and out of it. People want a atm or bank card. When I say well you cant yet they always ask, what can I buy with it.
What can you buy with GE, APPL, or GOOG? It's a share in a derivative market. Perhaps one day you can buy stuff with bitUSD but that would be above and beyond what traditional equity exchanges offer.