A Practical Example - Getting Gold In & Out of The Exchange??

[phoenix]

No gold ever needs to exist in the hands of any user. BitGold will have the purchasing power of gold but is not a promise to pay gold.

How do you expect people to honor the purchasing power of gold without the promise to pay gold?

If you haven't grasped this detail of BitShares and are already a huge fan, then when this finally sinks in you will really appreciate how valuable BTS will be

BitGold is lent into existence like a Gold Bank Note from back in the day.  When you went to get a mortgage on your house you promised to pay the bank 100 oz of Gold and pledged your house as collateral.  In exchange the Bank promises to pay you 100 oz of Gold On Demand by either giving you bank notes or a balance in your checking account.  They never actually gave you the gold you supposedly borrowed from the bank and instead played a fancy game of IOU swapping.   An IOU from the bank is worth more than a personal IOU and therefore the bank charges you interest.   The bank also demands collateral because they need to have the ability to make good on their IOU or there will be a bank run.  Namely, if you don't pay the bank is still solvent so long as the collateral can be seized and sold to cover the loan. 

BitGold is like a bank note backed by Stock in Bank of BitShares.   Someone had to borrow it and pledge Stock as collateral.  Just like with a real bank loan, you can only borrow up to 50% of the value of the collateral.  Just like a real bank loan, if the value of the collateral starts to fall the bank can foreclose or demand you put up extra money.   Unlike traditional bank loans, Stock in Bank of BitShares is far more fungible and liquid than title to a unique house.    In effect, a 'bank run' just means loans get called and a short squeeze begins, the short squeeze represents an opportunity to open a new short position and profit when the price settles down post-squeeze.   

In other words, BitGold is a promise to pay 1 oz of gold worth of BitShares.   From day to day the number of BitShares you receive for your BitGold will change, but those BitShares will always equal about the same value as 1 oz of gold.   The way the price tracks is very similar to how prediction markets can track the value of abstract ideas.

One word describes my feelings about this: "WOW!" This is awesome, I can't wait to get my Bitshares! Happy New Year!

[hasher]

No need to track IOUs like ripple.  In ripple someone can default, in BTS it cannot default.

Bytemaster, its mean to me like real knowhow, i crossed my fingers and hope your team doing something great, and i wish you success in New Year.

I suspect your english translation didn't work well.  We will do our best to deliver great things.

bytemaster, you right, i have some problems with translation of whitepaper and your posts here, and today, i have looked them more closely with dictionary (even with experience in futures/stocks trading its not easy) and finally i got your concept!
Its huge, and banksters would be unhappy about all of this!

[bytemaster]

No need to track IOUs like ripple.  In ripple someone can default, in BTS it cannot default.

Bytemaster, its mean to me like real knowhow, i crossed my fingers and hope your team doing something great, and i wish you success in New Year.

I suspect your english translation didn't work well.  We will do our best to deliver great things.

[bytemaster]

No gold ever needs to exist in the hands of any user. BitGold will have the purchasing power of gold but is not a promise to pay gold.

How do you expect people to honor the purchasing power of gold without the promise to pay gold?

If you haven't grasped this detail of BitShares and are already a huge fan, then when this finally sinks in you will really appreciate how valuable BTS will be

BitGold is lent into existence like a Gold Bank Note from back in the day.  When you went to get a mortgage on your house you promised to pay the bank 100 oz of Gold and pledged your house as collateral.  In exchange the Bank promises to pay you 100 oz of Gold On Demand by either giving you bank notes or a balance in your checking account.  They never actually gave you the gold you supposedly borrowed from the bank and instead played a fancy game of IOU swapping.   An IOU from the bank is worth more than a personal IOU and therefore the bank charges you interest.   The bank also demands collateral because they need to have the ability to make good on their IOU or there will be a bank run.  Namely, if you don't pay the bank is still solvent so long as the collateral can be seized and sold to cover the loan. 

BitGold is like a bank note backed by Stock in Bank of BitShares.   Someone had to borrow it and pledge Stock as collateral.  Just like with a real bank loan, you can only borrow up to 50% of the value of the collateral.  Just like a real bank loan, if the value of the collateral starts to fall the bank can foreclose or demand you put up extra money.   Unlike traditional bank loans, Stock in Bank of BitShares is far more fungible and liquid than title to a unique house.    In effect, a 'bank run' just means loans get called and a short squeeze begins, the short squeeze represents an opportunity to open a new short position and profit when the price settles down post-squeeze.   

In other words, BitGold is a promise to pay 1 oz of gold worth of BitShares.   From day to day the number of BitShares you receive for your BitGold will change, but those BitShares will always equal about the same value as 1 oz of gold.   The way the price tracks is very similar to how prediction markets can track the value of abstract ideas.

is there would be possibility to track ious like in ripple?

No need to track IOUs like ripple.  In ripple someone can default, in BTS it cannot default.

[bytemaster]

No gold ever needs to exist in the hands of any user. BitGold will have the purchasing power of gold but is not a promise to pay gold.

How do you expect people to honor the purchasing power of gold without the promise to pay gold?

If you haven't grasped this detail of BitShares and are already a huge fan, then when this finally sinks in you will really appreciate how valuable BTS will be

BitGold is lent into existence like a Gold Bank Note from back in the day.  When you went to get a mortgage on your house you promised to pay the bank 100 oz of Gold and pledged your house as collateral.  In exchange the Bank promises to pay you 100 oz of Gold On Demand by either giving you bank notes or a balance in your checking account.  They never actually gave you the gold you supposedly borrowed from the bank and instead played a fancy game of IOU swapping.   An IOU from the bank is worth more than a personal IOU and therefore the bank charges you interest.   The bank also demands collateral because they need to have the ability to make good on their IOU or there will be a bank run.  Namely, if you don't pay the bank is still solvent so long as the collateral can be seized and sold to cover the loan. 

BitGold is like a bank note backed by Stock in Bank of BitShares.   Someone had to borrow it and pledge Stock as collateral.  Just like with a real bank loan, you can only borrow up to 50% of the value of the collateral.  Just like a real bank loan, if the value of the collateral starts to fall the bank can foreclose or demand you put up extra money.   Unlike traditional bank loans, Stock in Bank of BitShares is far more fungible and liquid than title to a unique house.    In effect, a 'bank run' just means loans get called and a short squeeze begins, the short squeeze represents an opportunity to open a new short position and profit when the price settles down post-squeeze.   

In other words, BitGold is a promise to pay 1 oz of gold worth of BitShares.   From day to day the number of BitShares you receive for your BitGold will change, but those BitShares will always equal about the same value as 1 oz of gold.   The way the price tracks is very similar to how prediction markets can track the value of abstract ideas. 

[phoenix]

No gold ever needs to exist in the hands of any user. BitGold will have the purchasing power of gold but is not a promise to pay gold.

How do you expect people to honor the purchasing power of gold without the promise to pay gold?

[bytemaster]

No gold ever needs to exist in the hands of any user. BitGold will have the purchasing power of gold but is not a promise to pay gold.


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[hasher]

Actually, I expect that the easiest way to trade in person is BitGold for Gold because you have reduced the spread to within the realm of a normal transaction fee. 

The reason LocalBitcoins is not used more often is because you have to pair bid/ask/location which is a much smaller market and thus wider bid/ask spread.

..There are so many problems poping out, with trust, with scaleablility, with speed of exchange of Bitgold for Gold..
if somebody would cheat with and inject to system 1kg of gold, but then disappear (or maybe dead or stolen), how we manage such problems?

[bytemaster]

Actually, I expect that the easiest way to trade in person is BitGold for Gold because you have reduced the spread to within the realm of a normal transaction fee. 

The reason LocalBitcoins is not used more often is because you have to pair bid/ask/location which is a much smaller market and thus wider bid/ask spread.   

[pvaladares]

Nowadays Bitcoin is equivalent to eDollar, liquid eCash, universally accepted.

[phoenix]

The main issue will be finding somebody that will accept your BitShares as payment. It'll probably be a lot easier to just sell them for Bitcoins, on the BitShares exchange of course, and then buy the real gold with BitCoin

[Sage]

Still wrapping my head around this.  One aspect I don't understand is how to turn BitGold into physical gold...

Say I have 1oz gold.  I want to turn it into BitGold.

I sell my 1oz gold for the equivalent value of Bitshares.  Someone gets my gold.  I get the Bitshares.  Bitshares then collateralize my BitGold.  So now someone shorting BitGold has my Bitshares.  I now have their BitGold.

So far so good?

So the Bitgold supply should equal the gold sold into the system.  How is this BitGold created from a short side of my long BitGold buy?

I hold that BitGold, and get dividends.  Dividends come from processing fees, mining inflation, and forced margin call fees... and/or inactivity fees.

How are those dividends divided up among assets?  I imagine they are all calculated based on the Bitshares value collateralize the BitGold?

Now I want my physical gold.

I sell my BitGold and get Bitshares.  I then have to sell those Bitshares to a physical gold dealer to get my Gold?

Am I missing anything?

P.S. This is just way too cool if it all works.