Using Bitcoin as Collateral

[complexring]

I am not sure I understand exactly what you mean since I never figured out the SQP but the first thought that came reading this why bitbtc should be treated differently than bitusd. i.e if you think that there is a need for real btc to collateralise bitbtc then real usd should be needed to collaterilize bitusd as well..

The volatility of the BitBTC/BTS market is greater than that of the BitUSD/BTS market so shorts are more likely to get margin called which means they incur the cost of the SQP more often, which in turn creates a premium for BitBTC since shorts are willing to purchase  BitBTC up to a 10% premium in order not to incur the cost of the SQP.

I think that the market could work just as it works with BitBTC or BitCNY markets but the devs/committee/witnesses are unwilling to lower SQP.

Also it is not possible for the Bitshares blockchain  to hold fiat collateral, where as it is possible for the Bitshares blockchain to hold bitcoin collateral,  because all that is necessary is the processing of information. I just don't know how feasible it is to implement.

the concept of the bitshares blockchain locking up real bitcoin inside it is called sidechains.

This would be a huge step forward for bitcoin but hasn't been possible yet. The company trying the hardest to make this a reality is https://blockstream.com/

If and when sidechains work and bitcoincan be moved to other blockchains there will be no need for BitBTC at all.

There will still be a need for BitFIAT though.

(emphasis mine)

 

additionally, this sidechain action could potentially be done with any altcoin.  point is that bitshares could become an interconnecting sidechain for all alts (including btc).

there's no reason a protocol couldn't be developed that does this for bitshares for an arbitrary alt.  for coins that have multisignature, some type of m of n address that is controlled by delegates ?  for other coins that do not have multisig, some other mechanism? would have to think on that last question a bit more. the idea is that we'd want to be able to fluidly move coins in and out of the sidechain with relative ease but in a trustless manner.

there's a very real chance we could implement this prior to a bitcoin sidechain company ...

[clout]

I know longer think that the current market mechanics will lead to a stable peg between BitBTC and BTC.

Do you think the current market mechanics will lead to a stable peg between BitUSD and USD?

What if... BTS was actually bitcoin, and to create "bitshares tokens" you transferred them from the bitcoin blockchain through a two-way peg?

You need market makers to make the peg work. The collateral isn't the problem. Nubits forces the peg with a far less suitable form of collateral. There are too many things that complicate the process of establishing the peg (i.e. SQP and forced settlement).

I would like to see Bitcoin used as collateral, but even in the event that it were, the current market mechanics are not hospitable to shorts and will discourage liquidity and efficiency within these bitasset markets.

[Chronos]

I know longer think that the current market mechanics will lead to a stable peg between BitBTC and BTC.

Do you think the current market mechanics will lead to a stable peg between BitUSD and USD?

What if... BTS was actually bitcoin, and to create "bitshares tokens" you transferred them from the bitcoin blockchain through a two-way peg?

[JonnyB]

I am not sure I understand exactly what you mean since I never figured out the SQP but the first thought that came reading this why bitbtc should be treated differently than bitusd. i.e if you think that there is a need for real btc to collateralise bitbtc then real usd should be needed to collaterilize bitusd as well..

The volatility of the BitBTC/BTS market is greater than that of the BitUSD/BTS market so shorts are more likely to get margin called which means they incur the cost of the SQP more often, which in turn creates a premium for BitBTC since shorts are willing to purchase  BitBTC up to a 10% premium in order not to incur the cost of the SQP.

I think that the market could work just as it works with BitBTC or BitCNY markets but the devs/committee/witnesses are unwilling to lower SQP.

Also it is not possible for the Bitshares blockchain  to hold fiat collateral, where as it is possible for the Bitshares blockchain to hold bitcoin collateral,  because all that is necessary is the processing of information. I just don't know how feasible it is to implement.

the concept of the bitshares blockchain locking up real bitcoin inside it is called sidechains.

This would be a huge step forward for bitcoin but hasn't been possible yet. The company trying the hardest to make this a reality is https://blockstream.com/

If and when sidechains work and bitcoincan be moved to other blockchains there will be no need for BitBTC at all.

There will still be a need for BitFIAT though. 

[clout]

I am not sure I understand exactly what you mean since I never figured out the SQP but the first thought that came reading this why bitbtc should be treated differently than bitusd. i.e if you think that there is a need for real btc to collateralise bitbtc then real usd should be needed to collaterilize bitusd as well..

The volatility of the BitBTC/BTS market is greater than that of the BitUSD/BTS market so shorts are more likely to get margin called which means they incur the cost of the SQP more often, which in turn creates a premium for BitBTC since shorts are willing to purchase  BitBTC up to a 10% premium in order not to incur the cost of the SQP.

I think that the market could work just as it works with BitBTC or BitCNY markets but the devs/committee/witnesses are unwilling to lower SQP.

Also it is not possible for the Bitshares blockchain  to hold fiat collateral, where as it is possible for the Bitshares blockchain to hold bitcoin collateral,  because all that is necessary is the processing of information. I just don't know how feasible it is to implement.

[mf-tzo]

I am not sure I understand exactly what you mean since I never figured out the SQP but the first thought that came reading this why bitbtc should be treated differently than bitusd. i.e if you think that there is a need for real btc to collateralise bitbtc then real usd should be needed to collaterilize bitusd as well..

[clout]

I know longer think that the current market mechanics will lead to a stable peg between BitBTC and BTC. Reducing the SQP would consequently reduce the premium placed on BitBTC, but there is overwhelming support to keep the current SQP in place. (I do not think that SQP helps to prevent black swan occurrences. When the price of BTS reached 0.000005 BTC, there was a blackswan event and many of the undercollateralized positions were not sold.)  If we are to make BitBTC (that is Bitshares version of BTC) work, it will need to be collateralized by real BTC. Is it possible for the Bitshares blockchain to own Bitcoin addresses and send BTC from one account to another?