Quote from: CLains on September 03, 2014, 04:54:59 PM
It is always fruitful to ask, when one claims to discover or invent something new, why was it not discovered or invented sooner? I'm sure BM could give a compact list of reasons - technological, intellectual, ideological - for why this did not occur sooner.

Perhaps the stifling of innovation in prediction markets by regulation is one reason.

This type of prediction market could not exist without the invention of blockchain technology.

Quote from: Brent.Allsop on September 03, 2014, 05:00:48 PM

Quote from: Empirical1.1 on September 03, 2014, 04:42:42 PM
There's an option to introduce a market maker with relatively little risk that guarantees a price within 10% of the peg. Agent86 and others feel that is not needed and independent market makers will step in to provide this service at a much tighter range is my understanding.

So is "relatively little risk" intended to inspire confidence?  Certainly nothing near the confidence people have in the Federal Reserve.

Yes enough confidence to create demand especially with interest.

If you pay attention to world events you know there's deposit and asset confiscations in the pipeline, Cyprus 2.0 on a much bigger scale. So there are many people that on balance even now will find the level of risk on all levels for storing value in BitAssets comparatively favourable.

There are also countries where foreign currency is limited and they're forced to use heavily depreciating currencies and would love to use BitUSD.

So the market is already there & as liquidity, utility and the BTSX system itself becomes more robust, it will become more and more appealing.

If you add in interest then definitely big demand even in the short term. The shorts are willing to pay it.

Quote from: Empirical1.1 on September 03, 2014, 04:42:42 PM
There's an option to introduce a market maker with relatively little risk that guarantees a price within 10% of the peg. Agent86 and others feel that is not needed and independent market makers will step in to provide this service at a much tighter range is my understanding.

So is "relatively little risk" intended to inspire confidence?  Certainly nothing near the confidence people have in the Federal Reserve.

It is always fruitful to ask, when one claims to discover or invent something new, why was it not discovered or invented sooner? I'm sure BM could give a compact list of reasons - technological, intellectual, ideological - for why this did not occur sooner.

Perhaps the stifling of innovation in prediction markets by regulation is one reason.

Quote from: Brent.Allsop on September 03, 2014, 04:36:32 PM

Quote from: emski on September 03, 2014, 04:23:52 PM
In this form it will either work as intended or trade will stop. It is an experiment after all.

But there is a middle ground, right?

We are attempting to get people to do what is required, by changing the prices and fees.  In other words, if things go bad, or demand for BitUSD goes way up, the cost of getting people to cover longs and shorts, and provide enough capital to cover their positions, could become so inefficient, that nobody will want to participate at the required levels?

No everything works pretty well. There's risk of flash crash in BTSX but there's an insurance fund in place.

- There's also a risk of a sudden upwards revaluation of say gold that could be difficult to deal with.
- There's the risk without a market maker in times of low liquidity or demand you may be forced to sell for less than BitAsset is worth.
- There's a risk of bug or other problem with BTSX.

All of these are risks, risks can be offset by offering interest to BitAsset holders to compensate, hence why 99% of my posts will be about interest from now till it's introduced.

China buys large amounts of USD to keep the yuan undervalued relative to the dollar to prop up their manufacturing and export sectors.  Without this intervention the yuan would be closer to parity with the USD.  The situation with BitUSD/USD isn't quite the same.

The BitUSD market is set up such that the natural valuation tends toward parity with the US dollar if any of the following are true:

• BTSX has a stable valuation that the market believes will remain stable for the near future.  This allow liquidity into BitUSD as a stable store of value.
• BitUSD markets are deep enough to absorb expected BTSX shocks.  (This is really just a different way of looking at 1.)
• Exogenous demand for BitUSD is high.  This, of course, will directly drive liquidity into BitUSD markets.

Currently none of these are true.

1 does not hold because the market is split on the future of BTSX.  Bulls think it is severely undervalued and so have no interest in BitUSD.  Bears think BitAssets cannot work and, thus, BTSX is primed for complete collapse.
2 does not hold because the market is incredibly immature and shallow.
3 does not hold because BitUSD is, currently, mostly useless.

With a larger community (or, perhaps, even just time as bulls and bears revert their BTSX expectations to the mean) the ambivalence of the market could be mitigated enough that 1 could become true.  Same for 2.

3 could become true as services and other uses for BitUSD come online.  For example, shops that accept BitUSD (unlikely to happen first) or interest bearing BitUSD.

Quote from: Empirical1.1 on September 03, 2014, 04:46:19 PM

Quote from: GaltReport on September 03, 2014, 04:43:51 PM

Quote from: emski on September 03, 2014, 04:40:57 PM

Quote from: GaltReport on September 03, 2014, 04:37:07 PM
In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

It is being discussed extensively. However such market maker requires capital or dilution. Dilution is out of the question (my impression). Question for capital is - who will provide it. So currently (as I understand it) the answer is "no market maker".

I'm glad it's being discussed because as a potential buyer of BitUSD, it would be a big concern.  It will be interesting to see how it plays out.

As a potential buyer of BitUSD would you be more likely to buy if you were earning interest daily on holding your BitAsset?

That is what I'd like to see introduced.

That's a good question.  I would be more inclined to buy but the biggest concern would be that I could sell it when necessary.  Interest is good but interest that you can never realize (by selling it) is not that good. :)

Ideally, interest plus confidence that you can sell it, would be great.

Quote from: GaltReport on September 03, 2014, 04:37:07 PM

Quote from: emski on September 03, 2014, 04:23:52 PM
Any bitUSD is trapped inside the blockchain. It cannot leave (read transform into BTSX) unless 90% of USD value is paid (in BTSX).

In the examples you state "governments" tried to purchase huge amounts of USD. Here there is no such thing. bitUSD is traded (at least) at 90% of USD value (based on feeds).

In this form it will either work as intended or trade will stop. It is an experiment after all.

In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

A stable peg will eventually create demand for BitUSD. It won't happen overnight but it will happen.

Quote from: GaltReport on September 03, 2014, 04:37:07 PM

Quote from: emski on September 03, 2014, 04:23:52 PM
Any bitUSD is trapped inside the blockchain. It cannot leave (read transform into BTSX) unless 90% of USD value is paid (in BTSX).

In the examples you state "governments" tried to purchase huge amounts of USD. Here there is no such thing. bitUSD is traded (at least) at 90% of USD value (based on feeds).

In this form it will either work as intended or trade will stop. It is an experiment after all.

In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

BTSX isn't the only game in town for bitUSD.

Quote from: GaltReport on September 03, 2014, 04:43:51 PM

Quote from: emski on September 03, 2014, 04:40:57 PM

Quote from: GaltReport on September 03, 2014, 04:37:07 PM
In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

It is being discussed extensively. However such market maker requires capital or dilution. Dilution is out of the question (my impression). Question for capital is - who will provide it. So currently (as I understand it) the answer is "no market maker".

I'm glad it's being discussed because as a potential buyer of BitUSD, it would be a big concern.  It will be interesting to see how it plays out.

As a potential buyer of BitUSD would you be more likely to buy if you were earning interest daily on holding your BitAsset?

That is what I'd like to see introduced.

Quote from: emski on September 03, 2014, 04:40:57 PM

Quote from: GaltReport on September 03, 2014, 04:37:07 PM
In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

It is being discussed extensively. However such market maker requires capital or dilution. Dilution is out of the question (my impression). Question for capital is - who will provide it. So currently (as I understand it) the answer is "no market maker".

I'm glad it's being discussed because as a potential buyer of BitUSD, it would be a big concern.  It will be interesting to see how it plays out.

Quote from: GaltReport on September 03, 2014, 04:37:07 PM

Quote from: emski on September 03, 2014, 04:23:52 PM
Any bitUSD is trapped inside the blockchain. It cannot leave (read transform into BTSX) unless 90% of USD value is paid (in BTSX).

In the examples you state "governments" tried to purchase huge amounts of USD. Here there is no such thing. bitUSD is traded (at least) at 90% of USD value (based on feeds).

In this form it will either work as intended or trade will stop. It is an experiment after all.

In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

There's an option to introduce a market maker with relatively little risk that guarantees a price within 10% of the peg. Agent86 and others feel that is not needed and independent market makers will step in to provide this service at a much tighter range is my understanding.

Quote from: GaltReport on September 03, 2014, 04:37:07 PM
In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

It is being discussed extensively. However such market maker requires capital or dilution. Dilution is out of the question (my impression). Question for capital is - who will provide it. So currently (as I understand it) the answer is "no market maker".

Quote from: emski on September 03, 2014, 04:23:52 PM
Any bitUSD is trapped inside the blockchain. It cannot leave (read transform into BTSX) unless 90% of USD value is paid (in BTSX).

In the examples you state "governments" tried to purchase huge amounts of USD. Here there is no such thing. bitUSD is traded (at least) at 90% of USD value (based on feeds).

In this form it will either work as intended or trade will stop. It is an experiment after all.

In addition to a reasonable price, people who buy BitUSD need to know that they can sell it.  If the marketplace in BitShares is so bullish on BTSX, I am concerned that people who by BitUSD won't be able to sell it.  Are they planning on implementing any sort of market maker that will buy BitUSD from seller at it's current peg?

Quote from: emski on September 03, 2014, 04:23:52 PM
In this form it will either work as intended or trade will stop. It is an experiment after all.

But there is a middle ground, right?

We are attempting to get people to do what is required, by changing the prices and fees.  In other words, if things go bad, or demand for BitUSD goes way up, the cost of getting people to cover longs and shorts, and provide enough capital to cover their positions, could become so inefficient, that nobody will want to participate at the required levels?