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Messages - Empirical1.1

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46

Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

I'm aware how manipulated the price is, I expect the paper price to ultimately decouple and our delegates will have to be on top of that transition, which will probably just involve switching price feeds to Asia and places like the SGE I mentioned.

Tracking the global average price of a 1oz physical coin independently is tough. The reason I'm interested though is that there's a great marketing angle here, I'm not sure anyone else does this. I'm pretty sure we'd have to have two markets though. BitSilver & BitSilverPhyzz1oz.

Also even if the price wasn't manipulated there's stil just a natural huge deviation between the price of silver and the price of a small 1oz coin.

Purchasing a 5kg Bar of silver would work out at about $20 per ounce but buying a solitary silver eagle might cost $25 an ounce. (So trying to price in 1oz is very deceptive and is more production cost related & would result in the overpricing of gold & silver.)

Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.

Yeah, maybe 1 sub-asset market that tried to maintain a generic BitGold & Silver 1oz phyzz price would be interesting.

If I were going to try it (and I just might) I would want to pick the most commonly traded and most recognizable form of silver I could find.  There are about a half dozen good candidates, but to me the US Silver Eagle is as good as any.

So I like the idea of a sub-asset called BitSilverEagle.

It should be easy enough to establish the peg based on any five of the top ten dealers - selected because they have the same way of handling shipping and fees perhaps.

I would simply define the peg to be the average of a basket of coins from these dealers. This would be easy for delegates to compute and easy to audit by everyone.  No need to argue about what the other dealers are doing, the Big Five are already dynamically adjusting their prices to be competitive in the global market.

Then any dealer would simply shop around to get a better price than the average of the Big Five and let that be part of the dealer's added value profit.

One thing you don't seem to be taking into account here Stan is that dealers in the existing market base their prices on the manipulated spot price. Until an alternative to that exists you could just as easily base feeds on the spot and take the dealer variable commission out of the equation.

Once trade volume in the BitSilver / BitGold  gets high enough let the blockchain define the average price. It's hard to determine the real "free market"  price with all the influences / manipulations going on. It may not be possible to determine the real market price for some time, but the closest we could come is observing trades on the blockchain. Maybe some sort of rolling averages.

No, I see there is some value in having a BitSilverEagle, even though dealers base their price off the manipulated silver price, in times of crisis you see a big divergence, a higher premium over spot for physical, so many people may well rather have a BitAsset that tracks dealer prices.



http://www.forbes.com/sites/greatspeculations/2013/05/28/somebody-is-messing-with-the-gold-market/

47
In isolation this news should make BTS rise vs. dollar, fall vs. BTC

I think this already happened over the past few days.

Don't know if it's finished though.

48
In isolation this news should make BTS rise vs. dollar, fall vs. BTC

49
It's a big move. LTC has 30% inflation though, so if they're not consistently adding users they'll just start sliding down again even after a positive announcement.

50

Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

I'm aware how manipulated the price is, I expect the paper price to ultimately decouple and our delegates will have to be on top of that transition, which will probably just involve switching price feeds to Asia and places like the SGE I mentioned.

Tracking the global average price of a 1oz physical coin independently is tough. The reason I'm interested though is that there's a great marketing angle here, I'm not sure anyone else does this. I'm pretty sure we'd have to have two markets though. BitSilver & BitSilverPhyzz1oz.

Also even if the price wasn't manipulated there's stil just a natural huge deviation between the price of silver and the price of a small 1oz coin.

Purchasing a 5kg Bar of silver would work out at about $20 per ounce but buying a solitary silver eagle might cost $25 an ounce. (So trying to price in 1oz is very deceptive and is more production cost related & would result in the overpricing of gold & silver.)

Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.

Yeah, maybe 1 sub-asset market that tried to maintain a generic BitGold & Silver 1oz phyzz price would be interesting.

If I were going to try it (and I just might) I would want to pick the most commonly traded and most recognizable form of silver I could find.  There are about a half dozen good candidates, but to me the US Silver Eagle is as good as any.

So I like the idea of a sub-asset called BitSilverEagle.

It should be easy enough to establish the peg based on any five of the top ten dealers - selected because they have the same way of handling shipping and fees perhaps.

I would simply define the peg to be the average of a basket of coins from these dealers. This would be easy for delegates to compute and easy to audit by everyone.  No need to argue about what the other dealers are doing, the Big Five are already dynamically adjusting their prices to be competitive in the global market.

Then any dealer would simply shop around to get a better price than the average of the Big Five and let that be part of the dealer's added value profit.

Sounds good.

Would you use the price they charge for a single oz or the price they charge when you buy 20+?

The only other thing that comes to mind, which is probably a non issue but the US mint occasionally runs out of silver. So BitSilverEagle might be more affected by the US mint than a generic 1oz silver BitAsset.

51
+5% +5% Great blog.

I'm not sure of the merits of pricing in 1oz coins.

People expect to pay a premium the smaller the size of physical you want. So I would stick to the global market price per ounce & just charge a % on that.

The Shanghai Gold Exchange has a high delivery rate & go as low as 1kg bars I think.
Exchanges like them will take over the pricing mechanism in the event Comex and others default.

(Edit: Just saw above, yeah 1:1 +5% would be good, if it was possible, but whatever it is, is probably fine. I think people are more comfortable with the widely quoted price of silver per ounce. A new system with a new price system would be a hard sell I think.)

Unfortunately that widely quoted price is highly manipulated.  For every ounce of silver there are nearly 100 ounces of paper silver driving the supply/demand equilibrium way down.  We need to decouple from that in order to be of any interest to silver bugs.

I'm aware how manipulated the price is, I expect the paper price to ultimately decouple and our delegates will have to be on top of that transition, which will probably just involve switching price feeds to Asia and places like the SGE I mentioned.

Tracking the global average price of a 1oz physical coin independently is tough. The reason I'm interested though is that there's a great marketing angle here, I'm not sure anyone else does this. I'm pretty sure we'd have to have two markets though. BitSilver & BitSilverPhyzz1oz.

Also even if the price wasn't manipulated there's stil just a natural huge deviation between the price of silver and the price of a small 1oz coin.

Purchasing a 5kg Bar of silver would work out at about $20 per ounce but buying a solitary silver eagle might cost $25 an ounce. (So trying to price in 1oz is very deceptive and is more production cost related & would result in the overpricing of gold & silver.)

Why not bitGold at spot, and then have other assets like bitGoldMaple and bitGoldKruger, etc? They all have different values. It costs a lot more to mint 10 1 ounce mapleleafs than it costs to make a generic 10 oz bar.

I think this is a great idea. They could be 'SubAssets' which are based on the price feed, but trade at a percentage offset. The offset would need to be set by Delegates in order for this to work correctly.

Delegates could cooperate and include SubAssets in their price feeds, and as long as 51 delegates have SubAssets of the same name, they qualify to be included in the marketplace.

This could account for the different mints, but also may be a path to decoupling paper/physical while still serving both markets.

Yeah, maybe 1 sub-asset market that tried to maintain a generic BitGold & Silver 1oz phyzz price would be interesting.

52
 +5% +5% Great blog.

I'm not sure of the merits of pricing in 1oz coins.

People expect to pay a premium the smaller the size of physical you want. So I would stick to the global market price per ounce & just charge a % on that.

The Shanghai Gold Exchange has a high delivery rate & go as low as 1kg bars I think.
Exchanges like them will take over the pricing mechanism in the event Comex and others default.

(Edit: Just saw above, yeah 1:1 +5% would be good, if it was possible, but whatever it is, is probably fine. I think people are more comfortable with the widely quoted price of silver per ounce. A new system with a new price system would be a hard sell I think.)

53
General Discussion / Re: Proposal---Delegates inspectors group
« on: January 23, 2015, 05:02:50 pm »
 +5% Great idea.

Other:

I hope 1 day BitShares has a delegate profile site.

- Where it easy to view the delegates, their projects and their progress.
- Where the site owner uses the project information to create a roadmap for BTS.
- Where trusted inspectors/delegates and individuals can give delegate reviews.

54
General Discussion / Re: Please Consider Voting for fuzzy.beyondbitcoin
« on: January 23, 2015, 02:06:53 pm »
I don't mind supporting other DPOS blockchains as there's also a psychological battle of the blockchains occurring.

POW is looking extremely lonely in the top 10 despite dominating up till a year ago. As a result Bitcoin looks weak and vulnerable and this will manifest itself over the following year.

The more strong DPOS blockchains we have the stronger BitShares looks as the dominant DAC on the dominant blockchain. (Having said that I would push to cannibalise anything useful from any competitor.)

My only reservation with beyondbitcoin is that my impression is the viewership numbers are quite low. It's an essential service that should be funded but I would be reluctant to spend too much money on it, (as the value of a 100% position grows) if it wasn't popular in the sense it was generating reasonable interest & views from outsiders and new/potential BTS holders after a period of time.

55
DPOS can function well as global money standard.

This can be achieved by explicitly defining a supply curve or lack thereof. It can also become implicit just by sticking to a certain system for a long period of time.

While you can't define what future shareholder consensus will be, once the market defines you as having a defined supply & uses you as a money, then changing it results in a catastrophic loss of value. (Lost trust, confidence and certainty of future supply expectations.)

Despite being only a few months old and still not established, the dilution of BTSX and the resultant significant value loss was a demonstration of not adhering to this principle in practice.

Now that BTS has a supply curve that can be used to meet the majority of its needs and the market is aware of the cost of changing the rules, the probability that future shareholders will change the existing system is extremely low. Over time and with enough examples of the price you pay, all DPOS blockchains will eventually be trained to never change the rules if they wish to function as a money.

(Undefined supply company shares can still function as a form of payment, but they don't get widely adopted on a large scale as a money.)

In terms of DPOS voting, I guess we could look at public company voting trends.

http://www.pwc.com/en_US/us/corporate-governance/publications/assets/pwc-proxypulse-april-2014.pdf

I don't know how useful that is, first thing that came up but on page 3, I think it says that public companies seem to end up being owned by a fairly even mix of institutional and retail investors.
Institutional investors vote with a majority of their shares, up to 90%, and retail investors only about 30%. This seems to still result in high voting numbers while giving smaller investors the ability to be less involved and yet have the blockchain still run smoothly.

I suspect DPOS chains will also introduce a range of incentives and mechanisms to encourage voter participation as in the case of a decentralized crypto-currency, greater involvement adds value.

56
I didn't read past your first paragraph.

Based on what you wrote, I think that if you read it all you wouldve seen that I was agreeing with you. :)

Yeah I meant I saw the first bolded paragraph and it was basically the conclusion I'd also already drawn so I presumed the rest of the long post was in a similar vein. I'll definitely read the whole thread a bit later.

I didn't read past your first paragraph.

Inflating BTSX heavily damaged our value and network effect. The income derived from fees at a higher valuation may well have been comparable to what we currently access via dilution at a low CAP. Losing profitable DAC status but more importantly crypto-money status especially given the way inflation is distributed will be our main marketing & PR headwind going forward and it's possible no amount of dilution spent on marketing can offset the marketing cost of dilution.

Also looking at the big picture, long term outlook, BitAssets will take you only so far and then the future belongs to a very large defined supply crypto-currency.  It will be hard for BitShares to play that role vs. a money that defines a supply, which builds trust, confidence and increasing value in it over a period of time as well as stickiness. (Ie. Future investors wouldn't change by consensus because of the loss of crypto-currency status and BitShares has already given them an example of what happens to your value when you do.) Now we may just be seen as a crypto-equity whereas other options established by more far sighted investors can play a dual role.

BitShares is still best places to replace Bitcoin in the near term imo.

People like rune came when inflation was added

He came before it was added I think and pushed hard for it. I seem to recall some heated debates. I think he's a big asset, very competitive, hostile take-over mindset, but like many weak on the psychology of money and therefore the impact of the move.

It's close though. Now that we have dilution if we maximise it and continue adding value at a pace that outstrips existing competitors, then there's no reason BitShares can't rapidly grow bigger than Bitcoin. Bytemaster has also suggested that over time fees should outstrip the need for dilution anyway at which point BTS may be the equivalent of a no inflation crypto-money and with enough time spent sticking to that it could become viewed by the market as a crypto-currency & one that future consensus would be unlikely to try inflate/change the supply of.

Edit: Ok I read the second part of Anders post. Yes you can basically enforce a supply curve by just explicitly stating it. Even though it doesn't provide a guarantee, it makes it harder to change because of the loss of value changing it would cause & so immediately gives more confidence and certainty to the market in terms of future expectations. I agree with this and have been in favour of something like that.

57
I didn't read past your first paragraph.

Inflating BTSX heavily damaged our value and network effect. The income derived from fees at a higher valuation may well have been comparable to what we currently access via dilution at a low CAP. Losing profitable DAC status but more importantly crypto-money status especially given the way inflation is distributed will be our main marketing & PR headwind going forward and it's possible no amount of dilution spent on marketing can offset the marketing cost of dilution.

Also looking at the big picture, long term outlook, BitAssets will take you only so far and then the future belongs to a very large defined supply crypto-currency.  It will be hard for BitShares to play that role vs. a money that defines a supply, which builds trust, confidence and increasing value in it over a period of time as well as stickiness. (Ie. Future investors wouldn't change by consensus because of the loss of crypto-currency status and BitShares has already given them an example of what happens to your value when you do.) Now we may just be seen as a crypto-equity whereas other options established by more far sighted investors can play a dual role.

BitShares is still best places to replace Bitcoin in the near term imo.

58
General Discussion / Re: Does creating BitUSD = synthetic inflation?
« on: January 22, 2015, 11:29:20 pm »

BitUSD merely competes in the market for "money".  It doesn't inflate the USD supply.

I would say BitUSD competes in the market for USD not just money in general. So while it doesn't directly inflate the USD supply it can reduce it's value by diverting demand.

Similarly BitBTC would more directly compete in the market for and effect demand for BTC than money in general. So while not inflating BTC it can divert demand & reduce BTC's value by a larger % than money as a whole.

59
General Discussion / Re: Does creating BitUSD = synthetic inflation?
« on: January 22, 2015, 06:38:45 pm »
Yes it does. It's more a problem for smaller CAP BitAssets.

Another effect it could have is that the underlying asset could get under-priced as a result of too much demand going to the BitAsset instead.

This would result in the BitAsset potentially being a poor way to hold value.

For example, if a reasonable % of Comex gold holders demanded physical, the price of gold would increase substantially.

For this and other reasons I believe ultimately a limited digital money will dominate the universe not BitAssets. BitShares has a shot at being that crypto-currency. (BitAssets like BitCurrencies will dominate for a long while though as crypto-currency will be too volatile.)

60
The only thing I've found interesting along this line of thought is the alt-coin market share of POW (Excl. Bitcoin) over time. I suspect you'll see POW is in constant decline in alt-coin market share.

The information this gives me is that POW is being potentially proved inefficient/sub-optimal by the market & therefore even Bitcoin will likely be replaced.

I also think you'll find DPOS moving further ahead of POS in 2015 too.

Due to the centralized nature of Ripple and XRP, I don't think it's a potential Bitcoin replacement.

So I think an alt-coin market share analysis will point to the fall of POW and the rise of DPOS which will ultimately affect even Bitcoin, the last surviving POW in the top 5 soon enough, and so point to BitShares as the current most likely replacement.







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