Quote from: wasthatawolf on April 10, 2014, 05:56:19 pm

The only way Bitshares X even works is by having a significant external trade volume of Bitshares themselves to USD, bitcoin, etc. in order to establish the margin requirements for the various BitAssets within the chain.  The total value of all BitAssets is limited to a fraction of the total value of Bitshares.  I see this is one of the biggest challenges Bitshares will have to overcome because with the volatility of altcoins we currently see in the market, automatic margin calls could be triggered often enough to turn people off to the whole idea.  If it was backed by Bitcoin, there would be less volatility and a much higher ceiling for total BitAsset value.

So you're right, in a sense, because Bitshares X would essentially become Bitcoin X.  I just don't know if that's necessarily a bad thing.

One difference here, is that demand for BTS could be driven by demand for the BitAssets, whereas side chains work the other way around.

If someone wants BitUSD, he or she will need to buy some or buy some BTS and create some. With side chains, one most likely already has bitcoins, otherwise why all the hoopla?

The only thing that changes here is that Bitshares are replaced by Bitcoin.  I don't see how BitAssets driving demand for either really affects my previous statement. 

Once Bitshares X is availabe, price discovery of Bitshares will have a major effect on the BitAsset market as it will likely be extremely volatile.  Bitcoin, while volatile in its own right, is still the most stable and universally accepted cryptocurrency.  Using Bitcoin as the base asset should provide enough price stability to allow this asset market the opportunity to succeed right out of the gate.

I see this as hugely beneficial to Bitshares X.  If Bitshares X was implemented as a side chain, the functional difference would be that all BitAssets are backed by bitcoin instead of bitshares.  Wouldn't this only help strengthen the Bitshares X model by allowing a much lower barrier to entry (direct transfer of bitcoin into the Bitshares X side chain) and a much more stable base asset?

2) Mining results in a kind of centralization and de-facto trustee that cannot be fired

This is misleading.  With this comparison, there would only be a singular "de-facto trustee" if someone controls 51% of the network.  Otherwise the "de-facto trustee" is the collective group of miners.  If you're referring to the pool operators as the "de-facto trustee" that assumes that they control the net mining power of their pool.  We've already seen with bitcoin that when pools get too big, people will stop mining within them.

With a trustee, you're talking about centralizing control, hiding it behind a Tor node, and leaving it up to the shareholders to fire the trustee if they think they're acting to harm the network.  How would you even elect a trustee in the first place?  Campaigning?

I'm not convinced that the adjusters would act in the best interest of the shareholders.  It's risky to the insured if the adjuster has the ability to interpret the intention of the coverage in addition to judging whether the claim meets the requirements of the policy.  You're essentially paying premium before you've even bought the policy.

To keep with the comparison to a fraternal order and help eliminate the need for adjusters to judge intention, you could allow only existing shareholders the ability to issue new shares.  Policies/pools/MAS could be started by the first person or persons seeking the coverage. Those persons would then own 100% of the shares and be discriminate when issuing new shares to build the pool. 

If the others in the pool feel that one has violated some unstated rule, then they can reduce the payout.

Why would anyone risk their coverage in a pool like this?  So all I'd need to do is buy up a bulk of the shares and I could decree who gets what as a payout?

Risk can be mitigated by reducing factors that contribute to risk.  For example, property insurance premiums are much lower for a building with a sprinkler system vs a building without. 

This is a pretty big flaw in the insurance DAC model.  It doesn't take into consideration the risk factors of the individual policy holder / insured asset.  This essentially encourages participation of higher risk individuals and discourages that of lower risk individuals.


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Note: if the claim is valid, then the risk was there the whole time and the guy who was buying 20% of the insurance was subsidizing everyone else.  Also note, that you will eventually receive your payout as the long-run averages are all that matter.

Most of these things are just tweaks to the basic framework.

It's a mute point whether the guy with 20% of the insurance DAC shares was subsidizing everyone else because it's still an additional, and significant, risk that I as a potential customer would need to consider before buying a policy in this system.

With your model, the traditional insurance policy workflow is essentially reversed. 

If I want prompt payment of my coverage once I file my claim, I would need to pay a much higher premium (buy more shares) all at once instead of buying them over time.  This kind of defeats the whole purpose of insurance.  When I'm insuring something I want my coverage to be paid out immediately if I file a valid claim.  I don't want to be paid out slowly over time, I want to pay IN slowly over time.  While I could eventually accumulate enough shares by buying them over time, theres a long initial period before I can accumulate a significant portion of shares. 

Any good insurance company pays out claims immediately and has a good legal team that goes through subrogation to recover any funds that were claimed fraudulently.  They also mitigate their own risk by buying reinsurance on the policies they write. 

I don't know how your model will be able to compete with conventional insurance.  Policy holders would, at the very least, need an additional outside policy to supplement their claim amount while it's slowly being paid out by the DAC.

If you use Google Spreadsheets, you can use this general script to import prices from each exchange's API (select Tools -> Script Editor from within your spreadsheet):

var url = "http://bter.com/api/1/ticker/pts_btc/";
var response = UrlFetchApp.fetch(url);
var json = response.getContentText();
var bter_ptsdata = JSON.parse(json);

function bter_pts() {
  var ss = SpreadsheetApp.getActiveSpreadsheet().getSheetByName("Exchange Rates");                     
  ss.getRange("B5").setValue(bter_ptsdata["last"])
}

The script above populates cell B5 in the spreadsheet tab "Exchange Rates" with the PTS to USD exchange rate data from Bter.  Now, in order to keep this exchange rate up to date you need to setup a Trigger (in the Script Editor this is under Resources -> Current Project's Triggers).  The trigger will run your script at a set increment to keep your exchange rate up to date.

I keep the "Exchange Rates" sheet separate of my balance sheet to keep things clean.