Privatizing BitAssets

[luckybit]

There needs to be some minimum number of people providing a feed for any asset. And they should not have any incentives to collude.

If it's groups of people instead of people then you reduce the probability of collusion. It's rare for entire groups of people to collude but it's not rare for two people to collude.

[starspirit]

It has been suggested before that BitAssets with feeds produced by private parties would enable greater variety of BitAssets to be created.   I would like to explore this idea further from the perspective of growing adoption.   

Today there is little incentive to market BitUSD because 100% of the profits of marketing BitUSD go to USD holders via yield or BTS holders via trading fees.  If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption.  Assume the manager got to set the market trading fees/transfer fees just like they can with any other user issued asset.

My initial reaction is that the best way to attract users is to get the core market-pegged currency markets operating as good as we can to build critical mass, and not confuse the offering, although I am pretty sure internal and external competition is inevitable down the track, and we may not even be able to control when it happens.

If the key objective is to incentivise price feed submitters to deliver a better and more reliable service, a half-way house is to privatise this service, rather than privatising the ownership of bitAssets. I would support this, because I would also like to see delegates focus on specific mandates on which they are voted rather than being burdened with regulated tasks. I know I probably don't have the greatest idea, but I had some initial thoughts recently that might be built on here...
https://bitsharestalk.org/index.php/topic,15331.msg197641.html#msg197641

What I called the price feed arbiters in that thread are effectively the managers of the price feed, and should probably seed the price feed also to ensure there is always at least one submitter. But the key point of this idea was to provide competition and reward for private submitters.

[bitsapphire]

I think this is a bad idea.

The counterparty risk is too high and it has negative externalities onto people who have not opted into the particular private bitAsset.

A much better way to increase liquidity and collection of fees would be synthetic order books and Minimum Spanning Tree pathfinding between order books on the blockchain itself, similar to how Ripple does it. Arbitrage income could be turned into income for shareholders.

After all, BitShares is technically an advanced FIFO dealer, not an exchange in the traditional sense, we would a dealer want to leave potential arbitrage opportunities up for grabs for non-shareholders?

Edit:
After hearing bytemaster on mumble explain the concept in mode detail it seems that privatized bitAssets combined with synthetic order books and whitelisting would create market conditions for third party platforms and apps to integrate with Bitshares.

We at Bitsapphire would support such a system.

[bitcrab]

I do not like this idea, perhaps it will lead to a ripple-like ecosystem, I don’t think that is the right way for Bitshares.

But I think the rules for issuing pegged assets need some change.

I am now operating a BitCNY gateway transwiser.com. users pay me CNY and I pay them BitCNY back. as you can image, I now find that I am in a dilemma - I have no way to generate BitCNY to cover customers' requirement.

as we are all aware, normally BitCNY are issued by shorting trades when the orders fulfill many conditions, for example, now the feed price is 35.2181BTS/BitCNY. user A can place a short order with price not lower than the feed price, say 35.22BTS/BitCNY. If there’s no other ask orders with price lower than 35.22BTS/BitCNY, another user B can place an bid order to make the trade done and the BitCNY issued.

It is easy to understand that in this scenario user A can play the role of B and trade with him/herself using another BTS id, put 3* value BTS into collateral and get BitCNY back. Actually it seems most of the pegged assets are issued in this way.

But this “shorting to oneself” way does not work when there is an ask order with price lower than its price. And now I find there are robots which keep on placing ask orders with price a little lower than the feed price, this make the “shorting to oneself” way does not work.

Now there is a question – should we make the “shorting to oneself” way always work by changing the rules. I strongly say yes we should. We can enable user to short to him/herself when the price is no lower than the feed price, either there is lower price ask orders or not.   

With this change, gateway operators can issue BitAssets when it is needed and he has enough BTS, and he will actually play the role of banker in Bitshares ecosystem. This will bring much incentive to Bitshares.

[joele]

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

Like Bitcoin, litecoin, peercoin, dogecoin, feathercoin, justacoin, weiredcoin, all the NXT clones, etc.

Yes, and Bitshares is the Blockchain, all these are Assets and they pay fees.

[joele]

pegged assets are already hard enough to convince people to hold .

Now private peg assets with the ability to "fail" , and they'll market it as "the good stuff on BitShares"  under the enormous financial incentive , and avoid promoting BitUSD .

Once most of the private assets starts to fail , people will only remember : The peg theory of BitShares is bullshit .

By then , even you have BitUSD left , BitUSD will be automatically rejected as well by a lot of users who just suffered from private USD .

Ok, that's the negative views, what about the positive views?

Imaging the head line :
Today , "JoeLe_USD is the next generation payment system "
Tomorrow , "wildpig_USD is the next generation payment system "
The day after tomorrow , "BM_USD  is the next generation payment system " .......

Everyone has incentive to promote their USD .

Users : holy cow , what kind of game are you playing ?

What if the Joele_USD become popular is Asia?
Wildpig_USD became the 2nd online currency in Russia.
and BM_USD used by 50% mobile consumers in the US

Because these Assets produced by individually private parties that they promoted and marketed.
and they should peg 1:1  minus fee

[Troglodactyl]

If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption. 

I feel this experiment has been tried in the past, think eGold.  In my untrained opinion, the "manager" in the OP is an Issuer of a security and will be exposed to the full extent of the regulatory enforcement efforts of the pegged asset Issuer.   

The BitShares BitUSD is not issued by anyone; it is included as a feature of released P2P software.  The market for that pegged asset is between individuals with a protocol supporting their transactions. 

Overall I feel the OP introduces too many risks and does not enhance our collaborative community.

Respectfully,
Fox

Agreed, I think this might be an interesting thing to enable for niche markets once our core MPA's are better established and more widely used, but I don't think it's a good idea as a drop in replacement system.  I also see at least BitUSD, BitCNY, BitGold, BitSilver, and BitBTC as core products of BitShares.  Our products are complicated enough without making people choose between a dozen different pegged USD tokens, and liquidity is also an issue.

[jcrubino]

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

Like Bitcoin, litecoin, peercoin, dogecoin, feathercoin, justacoin, weiredcoin, all the NXT clones, etc.

[jcrubino]

There needs to be some minimum number of people providing a feed for any asset. And they should not have any incentives to collude.

Start separating blockchain maintenance duties from product / services duties for one.
Start another set of delegate like roles called "Producers"  that maintain feeds.

Outsourcing marketing and product / services development looks like it will fragment what focused community you have already and dilute overall value of existing assets.  It could be a bump for BTS on the markets and buzz mill but... there will be longer term consequences.

Perhaps, User Pegged Assets can be a DevShares domain.  If it starts to gain sustained traction, open it up to BitShares

Big business would be interesting but... why would they not just fork and build their own platform that they control the feeds, product and marketing for?

[Fox]

If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption. 

I feel this experiment has been tried in the past, think eGold.  In my untrained opinion, the "manager" in the OP is an Issuer of a security and will be exposed to the full extent of the regulatory enforcement efforts of the pegged asset Issuer.   

The BitShares BitUSD is not issued by anyone; it is included as a feature of released P2P software.  The market for that pegged asset is between individuals with a protocol supporting their transactions. 

Overall I feel the OP introduces too many risks and does not enhance our collaborative community.

Respectfully,
Fox

[joele]

So in the future there will be many pegged 'USD' products competing in the system.

Now, with the only bitUSD, we supports it because it's OUR product. With all of us supporting the only one bitUSD, there are still liquidity issues.

In the future, with many USD products, every issuer supports her own USD product. The relationship among BTS holders become competing but not cooperation.

I don't think it's a right thing we should focus on now, or any time soon. We have very very limited resources indeed, why not focus on the core product?

20 Proven Reasons Why Competition Is Good

http://businessgross.com/2013/01/21/business-competition/

You can end up cannibalizing your own customer base and creating a lose-lose situation. Walmart is currently experiencing this problem because they have built many stores too close together.

http://www.investopedia.com/terms/m/marketcannibilization.asp

The negative impact of a company's new product on the sales performance of its existing related products. Market cannibalization refers to a situation where a new product "eats" up the sales and demand of an existing product. This can negatively affect both the sales volume and market share of the existing product. Market cannibalization occurs when a new product intrudes on the existing market for the older product, rather than expanding the company's market base. Rather than appealing to a new segment of the market and increasing market share, the new product appeals to the company's current market, resulting in reduced sales and market share for the existing product.

Your post is 2 products 1 company

The peg Assets is 2 products and 2 private companies competing.  Like same toothpaste, but different company Colgate and Pepsodent.

[jcrubino]

This would be dramatically more successful if a partner with expertise in the field of marketing (financial products) and price feeds would be found? A Bloomberg (like company)? Fidor bank?

They have customers but are they interested yet?

What is the problem with the current price feeds?

[Volker]

There needs to be some minimum number of people providing a feed for any asset. And they should not have any incentives to collude.

[btswildpig]

pegged assets are already hard enough to convince people to hold .

Now private peg assets with the ability to "fail" , and they'll market it as "the good stuff on BitShares"  under the enormous financial incentive , and avoid promoting BitUSD .

Once most of the private assets starts to fail , people will only remember : The peg theory of BitShares is bullshit .

By then , even you have BitUSD left , BitUSD will be automatically rejected as well by a lot of users who just suffered from private USD .

Ok, that's the negative views, what about the positive views?

Imaging the head line :
Today , "JoeLe_USD is the next generation payment system "
Tomorrow , "wildpig_USD is the next generation payment system "
The day after tomorrow , "BM_USD  is the next generation payment system " .......

Everyone has incentive to promote their USD .

Users : holy cow , what kind of game are you playing ?

[Empirical1.2]

So in the future there will be many pegged 'USD' products competing in the system.

Now, with the only bitUSD, we supports it because it's OUR product. With all of us supporting the only one bitUSD, there are still liquidity issues.

In the future, with many USD products, every issuer supports her own USD product. The relationship among BTS holders become competing but not cooperation.

I don't think it's a right thing we should focus on now, or any time soon. We have very very limited resources indeed, why not focus on the core product?

20 Proven Reasons Why Competition Is Good

http://businessgross.com/2013/01/21/business-competition/

You can end up cannibalizing your own customer base and creating a lose-lose situation. Walmart is currently experiencing this problem because they have built many stores too close together.

http://www.investopedia.com/terms/m/marketcannibilization.asp

The negative impact of a company's new product on the sales performance of its existing related products. Market cannibalization refers to a situation where a new product "eats" up the sales and demand of an existing product. This can negatively affect both the sales volume and market share of the existing product. Market cannibalization occurs when a new product intrudes on the existing market for the older product, rather than expanding the company's market base. Rather than appealing to a new segment of the market and increasing market share, the new product appeals to the company's current market, resulting in reduced sales and market share for the existing product.