Author Topic: Truthcoin - Bitshares(X) perceived limitations  (Read 6962 times)

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Offline hadrian

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Hmm...so prediction markets are awesome...truthcoin is a great idea...toast "wants it to exist"...and a leading dev is apparently willing to jump ship. Why aren't we in on this then? What's stopping us? I still feel like there's this big history between BitShares and Truthcoin that I'm missing...

Perhaps you've not seen this old board...https://bitsharestalk.org/index.php?board=60.0
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Offline nomoreheroes7

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Hmm...so prediction markets are awesome...truthcoin is a great idea...toast "wants it to exist"...and a leading dev is apparently willing to jump ship. Why aren't we in on this then? What's stopping us? I still feel like there's this big history between BitShares and Truthcoin that I'm missing...
« Last Edit: November 09, 2014, 04:47:14 am by nomoreheroes7 »

Offline starspirit

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Actually in this discussion on the price feed, Rune is right. Without a price feed, even with massive liquidity, there is no guarantee that the market will form a consensus around the peg price. If the average expectation were that " the price is usually around 10% below the peg" or " the price should be worth close to zero" or " gee this price can move anywhere can't it!" then there would absolutely be no arbitrage opportunity from buying or selling around the peg, only massive risk. Market makers would be forced to trade where the market is, not where some idealised peg is.

What the combination of the price feed and the 30 day short expiry does is forces shorts to only create bitUSD at the peg, and to destroy them below the peg (because shorts cannot (edited) roll until the price is back above the peg).

So even though the bitUSD are still only backed by BTS, and BTS are not fully protected against black swan events, the rules force the hands of the shorts to buy back up to the peg price for as long as they have collateral available.

Im not saying this is the best approach, but its probably the best for now.
« Last Edit: November 09, 2014, 03:55:45 am by starspirit »

Offline monsterer

On the contrary there is no benefit to have bitUSD be backed by nothing, but there is significant risk.

Price feed or no, bitUSD is backed by the same thing, BTSX. Not sure what point you are trying to make?

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As the volume of the bitUSD market increases, the profit from executing a massive speculative attack would also increase tremendously.

Along with the required capital to pull it off... In any case, you seem to be suffering under the false pretense that the price feed and shorting system makes bitshares invulnerable to attack. The system has been designed to create liquidity walls at the price feed to lessen the odds of a massive sell eating through all the orders and crashing the price. However, the wall still has a volume and can still be eaten through.

Just because there is a feed price, doesn't mean anything is locked, it is still a free market.

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With price feeds we permanently prevent such a meltdown from being possible and we ensure that the long term expected value of bitUSD is always 1. If we keep them permanently then bitAssets are and always will be backed by something liquid and valuable at a 1:1 ratio, and they can thus be trusted fully as a store of wealth.

I'm afraid your assumption is incorrect. The feed creates liquidity walls from the shorts at the feed price, but the liquidity is not infinite, it can be eaten through, just like any other order. It reduces the odds by concentrating the liquidity, but the risk is still there.
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Offline gamey

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So as I see it, the only advantage of removing price feeds is to appease religious extremists who hate anything they identify as being "centralized". There's no actual profit motive.

Agreed. You make some great arguments Rune.

The more inputs you have into a system the more combinations of state you have and thus more chances for an exploit to exist.

If everyone uses the same script for their price feed, or if everyone uses the same 2 scripts etc then you can have serious problems. 

IMO there are very practical reasons for not wanting price feeds.  I assume they are needed in this case, but it should be obvious that they are not ideal.  This is not the same argument as whether they are needed, which I have no opinion on.
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Offline fluxer555

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Offline hadrian

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Truthcoin is underrated. I tried to jumpstart an independent effort with only basic support and it fizzled. We have a c++ implementation of the critical features but no resources to build it.

I want it to exist...

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I just found this post, on the Truthcoin forum, http://forum.truthcoin.info/index.php/topic,6.msg743.html#msg743

The person seems to be available if paid enough, and seems to like POS. They say:

"Dyffy is paying me $1000 a month (minus tax) to build their version of truthcoin.
I am not loyal. If anyone would pay me more, I would work on their ideas instead.

The python version of truthcoin I built is working pretty well. It does all the prediction market stuff truthcoin is supposed to do. We have tested it with 5 nodes at a time. We have run it continuously for 4 days without it crashing.
My head-start on creating this software is very big. It will be multiple months before we see any other implementation start to catch up to where I am.

My guess for the most valuable truthcoin 2 years from now: Majority of coins will be owned by a rich person who can afford legal fees and advertising fees (and possibly mining fees). They will hire me to maintain it. Maybe it will be Dyffy, but I doubt it.

If truthcoin is launched as a proof-of-work blockchain, I expect there to be a period of time about as long as a year when we will need to pay $100-$1000 daily into mining costs. I cannot afford this. Until a rich person shows up willing to pay, I am focusing my attention on proof of stake, which will costs pennies a day to keep operational."
« Last Edit: November 08, 2014, 08:45:55 pm by hadrian »
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I really don't understand the hate people have to the price feeds. They seem like an excellent mechanism to me. They currently work great, and in the future there will be massive incentives to improve them in ways that make them more transparent, faster and smarter. I don't see why we should ever remove them unless some major problem arises from them.

It's because they are an outside source; a potential point of failure outside the control of the blockchain.

Ideally, the information which is currently injected into the blockchain would just arrive there, indirectly, through arbitrage opportunity via the efficient market hypothesis.

Sorry, but I have to rant some more about this :P. Neither of those arguments make any sense to me from a business point of view. The efficient market will not necessarily create arbitrage opportunities because without price feeds the only relation bitUSD has with USD is the name. A severe, but temporary, loss of confidence or perhaps a large-scale speculative attack against the bitasset could make it rapidly go to zero, permanently destroying it. Additionally, without external markets interfacing with the blockchain it becomes completely worthless in general, so theoretically there will always be external poins of failure and price feeds do not really add or subtract from that risk. In practice this risk is solved by diversification, and thus isn't a long term issue.

The general dismissal of price feeds seems to me like another religious fallacy that only exists due to the extremist beliefs of bitcoiners (everything must be non-profit and everything must have maximized decentralization or its a scam and evil!!11), it doesn't actually have a real basis in economics or business practice. /endrant

You can call it a religion if you want. I call it believing the market is the only and the true god.
In that regard bitUSD without price feeds will result in better valuation of the system supporting the bitUSD (aka BTS).
And No, we do not have price-feeds because it is better. We have them because we have them i.e. there is a certain level of concern that without them the peg will not work at the beginning (during the thin market phase).

BTS system working with feeds is already priced in by the market anyway.
I will venture to say that introducing the price feeds is the only reason the price of BTSX stopped its steep climb and even retracted to 7000- 8000 Satoshi.

Offline hadrian

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@nomoreheroes7 - I wonder if you'd enjoy listening to this episode of 'Let's Talk Bitcoin' http://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-episode-117-the-truth-matrix
It's an interview with Paul Sztorc, of Truthcoin. For me it was an outstanding episode, which lead me to a conclusion which agrees with Toast's statement of, "I want it to exist".


It makes since to pay attention to him since hes a decision maker

...? The way some of you guys are referring to this guy makes him sound like some legendary mastermind. I truly feel like I'm missing something here...

And I have yet to see anything that TruthCoin offers that supposedly makes it so much more awesome than BTS. Just prediction markets? (Which I admittedly don't fully understand). If they're that amazing surely BTS would implement them sooner or later?

This feels like a TruthCoin pump thread or something, lol.

Truthcoin is underrated. I tried to jumpstart an independent effort with only basic support and it fizzled. We have a c++ implementation of the critical features but no resources to build it.

I want it to exist...

Sent from my SCH-I535 using Tapatalk

I just found this comment by Paul Sztorc on the Truthcoin forum, http://forum.truthcoin.info/index.php/topic,6.msg739.html#msg739

"Money actually isn't the bottleneck, dev talent is. (This thread was started by one of the rare breed of 'good blockchain developers', "toast" from the Bitshares dev team).
Whatever it takes to get 1-2 extremely high quality developers.
(So the answer depends on finding developers and asking them "What do you want?")"
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Offline nomoreheroes7

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So as I see it, the only advantage of removing price feeds is to appease religious extremists who hate anything they identify as being "centralized". There's no actual profit motive.

Agreed. You make some great arguments Rune.

Offline Rune

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Sorry, but I have to rant some more about this :P. Neither of those arguments make any sense to me from a business point of view. The efficient market will not necessarily create arbitrage opportunities because without price feeds the only relation bitUSD has with USD is the name. A severe, but temporary, loss of confidence or perhaps a large-scale speculative attack against the bitasset could make it rapidly go to zero, permanently destroying it.

Well, this is obviously not possible at the moment because of the very poor liquidity and lack of decent on/off ramps to actual USD. But once these are in place, and liquidity is decent enough, the likelihood of this kind of attack succeeding diminishes because the advantage to be gained through arbitrage will be huge.

Quote
The general dismissal of price feeds seems to me like another religious fallacy that only exists due to the extremist beliefs of bitcoiners (everything must be non-profit and everything must have maximized decentralization or its a scam and evil!!11), it doesn't actually have a real basis in economics or business practice. /endrant

The price feed and the way shorts work is an artificial mechanism designed to make up for the lack of liquidity and resilience in the market.

I'm not sure what economics or business practices you are referring to?

What i mean is: there is no downside to having price feeds. The risk it adds is practically zero and becomes smaller with every new market that BTS is traded on, and also becomes smaller as we get more and better paid delegates and the price feed software is upgraded. If anything negative happens caused by the peg, such as a delegate screwing around with the feed, the damage will be relatively small and quickly fixed. On the contrary there is no benefit to have bitUSD be backed by nothing, but there is significant risk. As the volume of the bitUSD market increases, the profit from executing a massive speculative attack would also increase tremendously. The risk-reward ratio of executing such an attack probably doesnt stay linear as market cap increases, but the possibility will always be there (unless we get so big the dollar is already dead). If the non-price feed system starts to go astray it could rapidly destroy a bitasset permanently (in fact it could destroy all bitassets since if one goes down everyone will probably want to get out of all other bitassets)

I think it is mistaken to assume that if the peg goes off it will always be perceived as arbitrage opportunities by traders. Since there is nothing fundamental keeping the value of 1 bitUSD at 1 USD, then if a bitUSD price lower than 1 was observed it would be exactly because the markets expected value of bitUSD was not $1, and thus there'd be no arbitrage opportunity. A trader would only move to rectify the peg if they reasoned that they had more information than the market. With price feeds we permanently prevent such a meltdown from being possible and we ensure that the long term expected value of bitUSD is always 1. If we keep them permanently then bitAssets are and always will be backed by something liquid and valuable at a 1:1 ratio, and they can thus be trusted fully as a store of wealth.

So as I see it, the only advantage of removing price feeds is to appease religious extremists who hate anything they identify as being "centralized". There's no actual profit motive.

Offline jsidhu

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It makes since to pay attention to him since hes a decision maker

...? The way some of you guys are referring to this guy makes him sound like some legendary mastermind. I truly feel like I'm missing something here...

And I have yet to see anything that TruthCoin offers that supposedly makes it so much more awesome than BTS. Just prediction markets? (Which I admittedly don't fully understand). If they're that amazing surely BTS would implement them sooner or later?

This feels like a TruthCoin pump thread or something, lol.
Bts is different and pm are different.. He has done the research noone has simple as that. I would put stock into his decisions abouts pm going forward over anyone elses hacked implementation.

The idea is to use bts to do it not compete against bts
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Offline CLains

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Truthcoin is underrated. I tried to jumpstart an independent effort with only basic support and it fizzled. We have a c++ implementation of the critical features but no resources to build it.

I love you man, but you need to step up and realize that the shortest way to Mars went through PayPal. Trillion dollar DACs are within reach. The whole team needs to think hard about what this means: Everything else is insignificant.

5 years from now you could be a billionaire, that means, you could employ 1000 people with a yearly salary of 100 000$ working 10 hours a day for 200 days each year, for ten years.

Offline nomoreheroes7

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It makes since to pay attention to him since hes a decision maker

...? The way some of you guys are referring to this guy makes him sound like some legendary mastermind. I truly feel like I'm missing something here...

And I have yet to see anything that TruthCoin offers that supposedly makes it so much more awesome than BTS. Just prediction markets? (Which I admittedly don't fully understand). If they're that amazing surely BTS would implement them sooner or later?

This feels like a TruthCoin pump thread or something, lol.

Offline monsterer

Sorry, but I have to rant some more about this :P. Neither of those arguments make any sense to me from a business point of view. The efficient market will not necessarily create arbitrage opportunities because without price feeds the only relation bitUSD has with USD is the name. A severe, but temporary, loss of confidence or perhaps a large-scale speculative attack against the bitasset could make it rapidly go to zero, permanently destroying it.

Well, this is obviously not possible at the moment because of the very poor liquidity and lack of decent on/off ramps to actual USD. But once these are in place, and liquidity is decent enough, the likelihood of this kind of attack succeeding diminishes because the advantage to be gained through arbitrage will be huge.

Quote
The general dismissal of price feeds seems to me like another religious fallacy that only exists due to the extremist beliefs of bitcoiners (everything must be non-profit and everything must have maximized decentralization or its a scam and evil!!11), it doesn't actually have a real basis in economics or business practice. /endrant

The price feed and the way shorts work is an artificial mechanism designed to make up for the lack of liquidity and resilience in the market.

I'm not sure what economics or business practices you are referring to?
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