Questions from a beginner

[Ander]

Thanks guys, very impressed with all the answers. Its a good community it seems. I am sure I will have more questions in the coming days as I think over investing, but for starters.

Glad to have you!  I respect ripple as well, its a good technology that's actually being put to use.
If it had a market cap more similar to BTS, I would have bought a lot of ripple.  But as it is, with an eventual supply of 100B XRP, counting the ripple labs stake, the true market cap is about $850M or so now, or about 50-60x the market cap of BTS.  As a result I consider BTS severely undervalued in comparison.  (Though I do think Ripple should be worth more at present, because it is further along.  Bitshares is still a beta product awaiting release).  Is ripple really 50 times more likely to succeed than BTS?  Thats what the market cap valuation is saying currently.  I disagree, therefore I hold BTS.  But if BTS was worth $850M and ripple was worth $15M, I'd sell some BTS to buy XRP.  I do own a few ripple because I like to own a bit of any decent cryptocurrency with good features.  NXT also, and some others.

1.) Ripple is centralized now, yet they are in the process of testing and creating decentralized nodes to remove this centralization. I am no die hard XRP fan boy trying to spread FUD into the BTS community, but when this occurs, what benefit will BTS have over XRP? XRP has the same abilities to create IOU's and pegged assets. To me it seems the best angle BTS has would be to go the consumer/public route while Ripple continues to make way with FI's.

Thats a good step.  Benefits of BTS over ripple that I see are:
* No centralized control of the supply.  The largest holder is probably the ~3% that the lead dev controls.  There are probably a couple entities around this range.  Thats less than Satoshi owns, so imo it is a reasonable distribution.
* Financial Institutions have incentive to use Bitshares and convert all of their customers into Bitshares users, because in bitshares 2.0 they get a cut of all the fees of those they refer, up to 80%.  Therefore a financial institution that uses Bitshares as its backend gets 80% of the fees.  The bitshares blockchain gets the other 20%.  Compare this to ripple where a financial institution adopting the ripple protocol, which is asked to buy XRP tokens in order to use ripple.
* Bitshares 2.0 claims to be able to support 100k transactions per second at 1 second confirmation time. 
* Perhaps most importantly, again, BTS is 1/50 the price of XRP for the same percent stake in the network, so even if XRP is better, if you think its less than 50x better than BTS, you would be justified in at least diversifying some.

2.) Using XRP as an example, $1 is widely considered the bench mark of success, the end value so to speak. However the broader range I have seen has been between 1 and 7 USD. Mathematically speaking, I believe like ~$20 dollars is the uppermost limit of feasibility. Do you guys have any such speculative values for BTS? What is your "end value"?

There is only about 1 BTS per 40 XRP in eventual existence.  Or maybe 30:1 if you count possible future BTS inflation (if shareholders vote for it).  So if Bitshares succeeds at the same level you are hoping for $1 XRP, you would be looking at $30-40 BTS.  That said, $1 would be plenty to blow the minds of most BTS holders, I think.

If you consider that BTS is the collateral used to support the creation of market assets in the Bitshares blockchain, and thus a minimum value of BTS is required to support the existence of these assets, if you imagine that Bitshares was to completely, 100% succeed, and gain a significant chunk of the trade of current financial systems such as forex, nasdaq, etc, then to represent all these assets on the bitshares blockchain, the value of BTS would need to be huge. 
Back in the day (last summer), when BTS valuation was decent and people were excited about hte price, there was a saying among the chinese BTS community "BTS is worth 500 dollars properly properly".  Because the chinese character for dollars and the character for knives is similar (?), this would get mistranslated as "500 knives properly properly", which was pretty funny.  So someone would ask what people thought one BTS would be worth if it succeeded, and they would answer "500 knives".

Fantasizing about future BTS prices has sadly been lost in the brutality of the bear market.  The price now is at a massive discount to where most of the community got in.  A significant discount to the IPO price even.  Newcomers get in so cheap nowadays.

[cylonmaker2053]

i also dream of a $1 BTS

This is a virtual certainty.  The USD has been coming down to meet us on the way up for the past 100 years. 

LOL yes true...i suppose that even if BTS stays exactly where it is right now, the USD will certainly devalue to parity!

[cylonmaker2053]

Do you guys have any such speculative values for BTS? What is your "end value"

We can all dream. BitShares' functionality is far superior to Bitcoin, so it should be worth well north of that. If this even got near that point, its many advantages and features would solidly appear on mainstream radar screens, and at that point it certainly would have a chance to take a leading role as the future blockchain of choice for wide-scale adoption. Many of us believe we will achieve that critical mass. In the end, no one really knows; things move very fast in crypto. Looking a few months into the future, much less a few years, seems like pure speculation.

  ...i agree...i heart the Bitshares experiment and think it has tremendous potential if adopted by even a fraction of its potential customers, but these things are impossible to predict; any number of things--good or bad--could happen in between.

[Shentist]

you get a good overview on the google+ community https://plus.google.com/u/0/communities/104193073958834457881

[Stan]

i also dream of a $1 BTS

This is a virtual certainty.  The USD has been coming down to meet us on the way up for the past 100 years. 

[Stan]

Thanks guys, very impressed with all the answers. Its a good community it seems. I am sure I will have more questions in the coming days as I think over investing, but for starters.

1.) Ripple is centralized now, yet they are in the process of testing and creating decentralized nodes to remove this centralization. I am no die hard XRP fan boy trying to spread FUD into the BTS community, but when this occurs, what benefit will BTS have over XRP? XRP has the same abilities to create IOU's and pegged assets. To me it seems the best angle BTS has would be to go the consumer/public route while Ripple continues to make way with FI's.

Ripple can't touch this:

How the BitShares Exchange Network will Amplify the Prospects of its Members

[donkeypong]

Do you guys have any such speculative values for BTS? What is your "end value"

We can all dream. BitShares' functionality is far superior to Bitcoin, so it should be worth well north of that. If this even got near that point, its many advantages and features would solidly appear on mainstream radar screens, and at that point it certainly would have a chance to take a leading role as the future blockchain of choice for wide-scale adoption. Many of us believe we will achieve that critical mass. In the end, no one really knows; things move very fast in crypto. Looking a few months into the future, much less a few years, seems like pure speculation.

[bobmaloney]

[cylonmaker2053]

Thanks guys, very impressed with all the answers. Its a good community it seems. I am sure I will have more questions in the coming days as I think over investing, but for starters.

1.) Ripple is centralized now, yet they are in the process of testing and creating decentralized nodes to remove this centralization. I am no die hard XRP fan boy trying to spread FUD into the BTS community, but when this occurs, what benefit will BTS have over XRP? XRP has the same abilities to create IOU's and pegged assets. To me it seems the best angle BTS has would be to go the consumer/public route while Ripple continues to make way with FI's.

2.) Using XRP as an example, $1 is widely considered the bench mark of success, the end value so to speak. However the broader range I have seen has been between 1 and 7 USD. Mathematically speaking, I believe like ~$20 dollars is the uppermost limit of feasibility. Do you guys have any such speculative values for BTS? What is your "end value"

i also dream of a $1 BTS

[National]

Thanks guys, very impressed with all the answers. Its a good community it seems. I am sure I will have more questions in the coming days as I think over investing, but for starters.

1.) Ripple is centralized now, yet they are in the process of testing and creating decentralized nodes to remove this centralization. I am no die hard XRP fan boy trying to spread FUD into the BTS community, but when this occurs, what benefit will BTS have over XRP? XRP has the same abilities to create IOU's and pegged assets. To me it seems the best angle BTS has would be to go the consumer/public route while Ripple continues to make way with FI's.

2.) Using XRP as an example, $1 is widely considered the bench mark of success, the end value so to speak. However the broader range I have seen has been between 1 and 7 USD. Mathematically speaking, I believe like ~$20 dollars is the uppermost limit of feasibility. Do you guys have any such speculative values for BTS? What is your "end value"

[cylonmaker2053]

Nice collection of answers everybody!

I'd also recommend newbies visit the main web site at bitshares.org
It gives a pretty comprehensive overview these days.

Also check out bitsharesblocks.com if you want to see the real-time stats in all their glory...

Then, of course, there's BitShares TV where the latest new features are discussed in 5 minute interviews...

Links to All Seven Episodes

[/quote]

yeah, Max does a great job with BitsharesTV...highly recommend

[Stan]

Nice collection of answers everybody!

I'd also recommend newbies visit the main web site at bitshares.org
It gives a pretty comprehensive overview these days.

Also check out bitsharesblocks.com if you want to see the real-time stats in all their glory...

Then, of course, there's BitShares TV where the latest new features are discussed in 5 minute interviews...

Links to All Seven Episodes

[/quote]

[donkeypong]

Welcome. Ask anyone what BitShares is and you'll get a somewhat different answer. That's because it is far and away the most impressive and practical crypto currency and payment system in the world, hands down. There are probably 5-7 features which kick so much ass that any one of us can get excited about just one or two of them. Personally, I am thrilled that it allows anyone, anywhere in the world, to send money (via BitUSD or any BitAsset "play money", which is exchangeable) to anyone else in the world, for pennies, and the transactions are nearly instant. Bitcoin can take 45 minutes to confirm while your pizza cools; BitShares takes about a second for a transaction to clear. That doesn't even touch the other features and possibilities. It's the blockchain, evolved way beyond what Bitcoin did. There's TONS to like here. Stick around, ask questions, and take part in the discussions. You will learn a lot and probably you can teach us something too.

[Ander]

Hello everyone,

I am new to BTS. I know its a bit much to ask, and I could most likely look it all up, but in the interest of saving some time, can anyone answer a few of these questions:

1.) Simplistically, what is BTS, and what gives it potential?
2.) What is the consensus on the speculative value of BTS?
3.) Can you compare BTS to NXT?

I have a large investment in XRP and that is what I am most familiar with, so feel free to bring up XRP or tie it in at any point. In addition to xrp, and through the ripple platform, I am invested in Grantcoin (GRT) and BTC as well. I have also been very interested and slightly invested in Maidsafe. Besides that I have some smaller investments into CANN and for ish and giggles, HTML5.

BTS is the token that represents one's stake in the Bitshares blockchain.
The bitshares blockchain is a DAC, it aims to make a profit through transaction fees, etc.  Profits occur in the form of some of the BTS being burned for fees.  (There are various sources of fees, they result from users utilizing the various features of the network).

As BTS is burned in this way, it acts as a dividend to all holders.  This is very similar to XRP in ripple, as XRP is slowly burned, making the remaining XRP more valuable.


Currently BTS is slightly inflationary, because new BTS is created to pay for people to develop and promote Bitshares, at a greater rate than it is burned for fees.  The inflation rate is currently under 2%, so it is better than most alts.  There is a maximum possible inflation rate which is currently around 6%.

If Bitshares achieves adoption and becomes big, it should become deflationary.



2) BTS has value both as a store of value (like Bitcoin or Gold), and as stake in a potential profitable enterprise.  People seem to be more focused on the profit potential than the store of value potential at this time.   The main problem Bitshares has had recently is in



Bitshares has similarities to ripple, but it is decentralized instead of controlled primarily by Ripple Labs.  (At the present time, the core dev team does have significant sway over BTS.  But this is more of an artifact of its current smallness, and that it is still a beta product and they have not yet released the finished version yet).  Bitshares 2.0 should release in a few months, which will be the release product.  (Search for Bitshares 2.0 for details).

The bitshares consensus mechanism is DPOS, or Delegated Proof of Stake.  BTS holders elect delegates who produce blocks.  In the future I think these will be called 'witnesses'. 

Many of us have said things like "Bitshares is decentralized Ripple" to attempt to explain it. 




3) BTS has similarities to NXT as well.  Both are platforms that allow the creation and trading of assets (SmartCoins).  For Bitshares there are user issued assets, like NXT assets, but there are also market pegged assets, aka bitAssets, aka SmartCoins.

SmartCoins, such as bitUSD, bitGold, etc, the value of the coin is pegged to a specific value (1 dollar for bitUSD, one ounce of gold for bitGold, etc).  These assets are redeemable for BTS of this value.  BTS is the collateral which backs these assets.  These pegs have held up well for almost a year now, even though BTS has declined significantly in value. 



There are many more topics to discuss in all this, and TBS also has more features like voting, dns, smart contracts, etc, but for now I would go search for "Bitshares 2.0" and read those announcements.

[rgcrypto]

The best one stop shop would be the interview with Adam of LTB called "Some Other Castle".

Welcome to Bitshares!

[Permie]

In a nutshell: BitShares is like ripple without the centralized controlling authority (No ripple labs equivalent) and holders of bts vote as to how the blockchain operates.

A little out of date and quite long but I wrote a piece on why BitShares should increase in value and dominate some markets.

I've cut quite a lot out, so if you want to read more follow through to the post itself.

TL;DR: There is a market niche for a global unbounded corporation organization that efficiently adapts and morphs to the needs of the market and the desires of it's shareholders.
I believe BitShares is that corporation organization.
The upper limit of this corporation is bound only by the size of the global economy. The current main use for trading tokens of value are financial derivatives purchased by large institutions and well educated individuals who reside in geographical locations favoured by financially powerful nations who have capital to risk.
A system that can drop the barriers to entry and allow everyone in the world access to the global economy will rapdily expand the total value of the economy.
BitShares will not only rapidly grow to meet the existing market, it will rapidly grow the size of the market itself.
Currently this potential is valued at around $20M.

============================================================
BitShares aims to replace all centralized exchanges into one decentralized, open ledger with a shared orderbook resulting in the combined liquidity of all participating exchanges, who reduce costs and increase profits by joining the BitShares exchange.

There are several main issues that result in numerous competing exchanges existing in today's financial market and if all of these issues were solved then only one exchange would be needed to meet the needs of the market.

Counterparty risk mitigation -  holding value on several exchanges.

A single party guaranteeing the IOUs traded on its exchange carries counterparty risk – that they may default on their obligations.
The risk is factored into the cost of doing business with this exchange.
A reduction in counterparty risk results in a reduction in cost of doing business there.
If counterparty risk is eliminated from an exchange then separate exchanges cannot compete on mitigating this risk.
A decentralised exchange where ONLY the users are able to spend their own funds (hold their private keys) and that has many parties providing price-feeds has negligible counterparty risk.

Competition of fees that each exchange charges.

If fees required to trade on an exchange are negligible <£0.0025 and much lower than the total value of the trade then separate exchanges cannot compete on fees unless they offer
significant advantages to entice customers away from the established exchange that has the
largest market depth/liquidity.
Would you rather pay 0.25p to trade on the largest, longest running exchange with the highest liquidity – or would you choose to trade on a newer exchange if it could offer fees of 0.2p? Bearing in mind that transaction fees pay to keep the network (exchange) secure against attack.

Systemic risk in the trading platform - The code might get hacked and trick users.

The risk that a fatal bug in the code exists but has not yet been exploited decreases over time and with the number of people auditing the open source code.
A separate competing exchange cannot surpass the incumbent/leading decentralised exchange without significantly simpler code (less potential bugs) and without being active for a sufficient amount of time. During which time the incumbent has attracted even more capital due to an even greater reduction in risk (due to increased uptime with no fatal flaws). The competitor would have to be much better in order to catch up.
   
Laws in different geographical regions - bureaucracy involved in global transfer.

Cryptocurrency can be transferred globally in seconds. There is no inefficiency in moving funds between jurisdictions except when 'cashing out'.
Separate 'gateways' to real world assets will still exist and they will be able to issue derivatives on the decentralised exchange that track the spot price given by the external 'gateway'. This allows arbitrage between spot prices from several gateways all within the decentralised exchange ecosystem.

Arbitrage

Currently, due to the time delays in moving funds from one centralized exchange to another (days with fiat, 10-60 minutes with bitcoin) a trader wanting to take advantage of arbitrage opportunities must hold value across several different centralized exchanges.
With the ability for a decentralised exchange to hold derivatives of the spot prices given by centralized exchanges there is no longer any need to hold value on separate centralized exchange that present counterparty risk.

Competition for market share

A decentralised exchange based on cryptocurrency allows anyone to hold shares in the exchange itself so all participants profit as the value traded on the exchange increases. There is no need to set up a competing decentralised exchange because there is more profit to be made by assimilating and bringing value to the existing market-leading exchange.


================================================================

With decreasing demand for separate exchanges comes an increase in the liquidity and market depth offered by the most successful exchange.
This leads to an increase in its market share, which in turn breeds even more liquidity making it even more attractive as THE place to trade value.

For the reasons stated above the most successful exchange will be:
A Decentralized Autonomous Corporation (DAC) with (low) fees that adequately cover the expenses of securing the network.

This DAC (likely to be Bitshares) will:

Be Decentralized
Counterparty risk (of maliciously quoted prices) decreases as the number of 'nodes' offering price feed data increases and is almost eliminated completely if the DAC/exchange holds no custodial funds.

Have very low fees
A DAC exchange built with a cryptocurrency can transfer the underlying collateralizing asset irreversibly in seconds for very little cost.


Be a Corporation with shareholder voting rights
The most successful exchange will adapt to market conditions and customer desires fastest.
Shareholders are anyone who holds the cryptocurrency, bts

Be Autonomous
Top down central planning is an inefficiency.
Shareholders vote directly for blockchain parameters and the direction BitShares takes


Cater to as large a market as possible
The current main use for trading tokens of value are financial derivatives purchased by large institutions and well educated individuals who reside in geographical locations favoured by financially powerful nations who have capital to risk.
With cryptocurrency comes the ability for the tokens of value to contain data that can only be utilised by the current holder of the token. This brings countless new use cases for these derivatives/tokens of value.

One example is Peer Tracks – a company using a DAC to issue scarce tokens that represent a share in the value of music sales made by a particular artist. It aims to be a competitor to Spotify that instead of paying artists with advertising income it encourages artists to crowd-sale shares in their future career. A user who finds talent they like can invest in their career. If they make it big the value of the tokens they hold will have increased dramatically. 'Hipsters' are now financially incentivized to invest and advertise music they think will be the next big thing.
How many more genres of music do you think there will be if a record label is no longer needed and musicians do not need to 'sell out' to appeal to a mass market large enough to be worth the investment of said record labels?

The DAC can provide banking services to internet connected users (individuals or businesses) with no questions asked as there are no compliance costs as no custodial funds are held.

Enable businesses to use the DAC ecosystem for their own needs. 'User Issued Assets' are not backed by collateral but by the assurances made by the party/business that issues them.

Provide Identity Verification services so that things like user website login and proving you are a human user and not a bot can all be controlled from within the DAC.

Provide gateways to external services

Provide Price-Feeds and Validate Transactions

Honesty is heavily rewarded and malevolence is punished swiftly.


Provide ease of use and secure account recovery for the user.


=============================================================

The current state of BitShares and the risks of a competitor
Only 2.5 billion currently exist and they are highly divisible so there is no upper limit to the number of trades this total supply can support.
E.g A $1 derivative could be collateralized with 0.00001 bitshares one day in the future if bitshares were valuable enough.

The theoretical maximum supply of BitShares is 3.7 Billion. The 1.2 B yet unissued shares are kept in a reserve-pool and every day a fraction of these funds are directed where the shareholders deem most useful. There is a hard-limit on the number of reserve-pool funds available each day, and the yet-undesignated reserve-pool funds cannot be spent by anyone.
They can either be: burned and removed from the supply forever, recycled and sent back to the reserve-pool for use later, or pledged to Worker Proposals as payment to complete shareholder desired tasks.

Each BitShare is currently worth $0.0046 (21/04/15)
The current market cap of bitshares is $11.5M




=================================================================

Questions
How many more people and how much more capital can benefit from exposure to a derivatives market in this new system compared to the old system?

Will there be as much competition between exchanges if the main exchange is highly trustworthy, highly secure and has negligible fees?
It is much cheaper to assimilate and provide value to the customers of the existing BitShares DAC than it is to create a competing ecosystem, which the bitshares DAC would bridge to anyway.
This is much the same as starting an internet company to benefit internet connected customers instead of trying to design a replacement for the internet itself.
Separate ventures that DO NOT compete as a derivatives market but instead

It is estimated that there are currently less than 1 million Bitcoin holders. That leaves 99.985% of the population who are yet to hear about and benefit from cryptocurrency. If they all understood what they could get out of it, how much more value would be within the crypto ecosystem?
It is my researched opinion that the systemic risk of Bitcoin or BitShares failure is far outweighed by the systemic risk of counterparty default in the traditional banking system.
Bitcoin and BitShares are just more volatile in the short to medium term. Such volatility can be solved by holding market-pegged SmartCoin assets to stable commodities of the users choice. Funds never need leave the BitShares ecosystem.

The reason that Bitcoin and Bitshares have such low valuations is PR. The global advertising campaign is yet to take place.
With the BitShares referral system, marketers are encouraged to attract new users and will be paid up to $80 to do so.

So, do you think BitShares will increase in value?

[cylonmaker2053]

Bitshares' core functionality is a p2p asset exchange for market-pegged assets, BTS being both shares in the organization and the currency over which the bitassets are synthesized and exchanged. for instance, our best products are bitUSD and bitCNY, but we also offer bitBTC, bitGOLD, and bitSILVER, as well as a variety of other less liquid products.

Understanding how the bitassets are created can be illustrative of the entire business model:

-someone wants to buy a digital version of USD, bitUSD. there are a variety of reasons someone might want this product: (1) it's digital and has all the beneficial characteristics of blockchain assets wrt transferability, fungibility, etc. (2) it earns an above average interest rate (currently ~5.6% for bitUSD), and (3) going long bitUSD is equivalent to going short BTS.

-someone wants a leveraged long bet on BTS, so they short bitUSD into existence and sell it to the buying party. this speculator offers an interest rate to attract buyers and has to put up collateral that automatically triggers a margin call if the price exceeds 300% of the shorted amount. The collateral is held in escrow on the blockchain and algorithmically released with either a margin call or covering the position. This process significantly reduces counterparty risk.

-Price feeds are used for each asset and updated frequently to manage the collateral system.

This is just one of the core functions of the Bitshares network, but it's what i consider the real innovation and value proposition of the system. i'm sure others can fill you in briefly on additional operations that could add value to the network.

[National]

Also, can someone explain the currency/commodity system. For example, I know there is bitshares.usd and others. How does that work. Is there anyway to invest into one natvie currency or do you choose from the whole variety?

[National]

Hello everyone,

I am new to BTS. I know its a bit much to ask, and I could most likely look it all up, but in the interest of saving some time, can anyone answer a few of these questions:

1.) Simplistically, what is BTS, and what gives it potential?
2.) What is the consensus on the speculative value of BTS?
3.) Can you compare BTS to NXT?

I have a large investment in XRP and that is what I am most familiar with, so feel free to bring up XRP or tie it in at any point. In addition to xrp, and through the ripple platform, I am invested in Grantcoin (GRT) and BTC as well. I have also been very interested and slightly invested in Maidsafe. Besides that I have some smaller investments into CANN and for ish and giggles, HTML5.