bitSHARES - As True Shares and Not a Currency!

[fav]

this is the best idea I read here this year. 

[donkeypong]

Fascinating suggestion and discussion. Couldn't this be tested in the DEX with some other coin or asset besides BTS? If the plan was greenlighted, then would it make the most sense to use BTS or to create a new currency to replace BTS? I'm just wondering about all the BTS that is out there, having to recall that, but I guess that replacing it would be no better a PR move than eventually telling people their off-DEX BTS was valueless. The transition would create plenty of friction, but the longterm view would point to quite a lot more freedom for BitShares.

[fuzzy]

As to how i say we test it, that is open for discussion.  I am no expert daytrader and do not have the same skillset that comes along with it, but in my opinion could do the following:

we run it as a test on the testnet might be a good way. 

So we essentially let people.buy into a competition to see who will end up with the most cash from trading the market...use the buy in and maybe double it using a worker reward and then we can even put up a reddit thread inviting people to join in the competition.  get daytraders TRYING bitshares while they are part of the experiment.  Then you will have effectively used a trading competition to bot only rest it but also promote bitshares THE EXPERIMENT (which is an important distinction for those who might want to join forces) at the same time.  Heck it might even recruit people who have answers i and the rest of the forum may never give you...

[puppies]

PS
Some more detailed explanation on the mechanics of the bitUSD deviation from the 1:1 peg will help me explain why I think it will not happen/or help me understand where my theory is wrong.

I'll think about it tonight and type up something tomorrow.

[fuzzy]

Lets test it.  Can we discuss how this might be done?  as this shapes up the idea looks like something that is pretty elegant and almost seems as though it should have been obvious before.  but we really need to start testing big changes before making them so we can assess what we may or may not know about that might be problematic. 

love the idea and looking forward to seeing a successful test

Well, fist of all when did you get me off your ignore list? 

Second of all, I am truly aware that I am #4 on your most dangerous list [shortly after CH, eth and the gov]. I do not know who give you that I idea...and it does not really matter if it was someone that "has a real good vision and wide wing span" or it was your own imagination. What  matters is that it is totally not true!

And third but the only real important question is : How you see this test playing out in real life? [and when you see those choses I am sure You will not be eager to jump in either scenario too soon]

Cause for me there are only 2 choice, really.
1. BM: "dShares just got more interesting."
or
2. TK: "BM is not on board as chief dev. So we are forking and keeping 5-7% as a development fund. The rest is 100% dropped on BTS"

This is not really the thread to talk through it man. There have been many pms ago when i gave up on thinking anything would change on that front.  Though in fairness it should be obvious i do not ignore ALL of your posts (the ones searching for solutions are the ones i feel merit my time, energy and cognitive faculties).

[tonyk]

I don't think the price of bitUSD (on the external market) would be consistent enough.  If bitUSD is in high demand then the price will be very high, and if bitUSD is in low demand then the price will be very low.  Because this buy and sell pressure will be caused by people entering or exiting the market I think there will be a tendency for much greater swings (compared to external price of USD) than today.  If people get scared they will sell at a loss which will further increase the selling pressure.  This could reduce the price of bitUSD to a real world price that would be hard to recover from.

I would love to be proven wrong on this, as your idea is a graceful solution to many of our problems. 

I may also just not understand why you are not concerned with price of bitUSD on external exchanges.

First off, I am glad to see that you recognize that this idea (potentailly) solves a lot of our problems.

I think the meat of your concerns are stated here:

I may also just not understand why you are not concerned with price of bitUSD on external exchanges.

For me it is a matter of taking another point of view. That is to say 1 bitUSD is really one USD. ( I realize you think it may swing from this one to one peg).
I just believe it will be one to one, (and any tiny deviation will be fixed by arbitrage on external exchanges / DEX pair). What will swing (possibly widely at first) is the value/price of BTS shares in the DEX.

PS
Some more detailed explanation on the mechanics of the bitUSD deviation from the 1:1 peg will help me explain why I think it will not happen/or help me understand where my theory is wrong.

[tonyk]

Lets test it.  Can we discuss how this might be done?  as this shapes up the idea looks like something that is pretty elegant and almost seems as though it should have been obvious before.  but we really need to start testing big changes before making them so we can assess what we may or may not know about that might be problematic. 

love the idea and looking forward to seeing a successful test

Well, fist of all when did you get me off your ignore list? 

Second of all, I am truly aware that I am #4 on your most dangerous list [shortly after CH, eth and the gov]. I do not know who give you that I idea...and it does not really matter if it was someone that "has a real good vision and wide wing span" or it was your own imagination. What  matters is that it is totally not true!

And third but the only real important question is : How you see this test playing out in real life? [and when you see those choses I am sure You will not be eager to jump in either scenario too soon]

Cause for me there are only 2 choice, really.
1. BM: "dShares just got more interesting."
or
2. TK: "BM is not on board as chief dev. So we are forking and keeping 5-7% as a development fund. The rest is 100% dropped on BTS"

[puppies]

I don't think the price of bitUSD (on the external market) would be consistent enough.  If bitUSD is in high demand then the price will be very high, and if bitUSD is in low demand then the price will be very low.  Because this buy and sell pressure will be caused by people entering or exiting the market I think there will be a tendency for much greater swings (compared to external price of USD) than today.  If people get scared they will sell at a loss which will further increase the selling pressure.  This could reduce the price of bitUSD to a real world price that would be hard to recover from.

I would love to be proven wrong on this, as your idea is a graceful solution to many of our problems. 

I may also just not understand why you are not concerned with price of bitUSD on external exchanges.

[tonyk]

With this elaboration, I am beginning to see the beauty of the idea.  What the idea implies is that bitshares would transform into the de-facto shares of a big decentralised co-op instead of a tradable crypto-currency now.  These shares can be easily traded in and out via bitassets and bitassets become our interface with the world (instead of bts).  The value of the co-op will translate into the value of the shares.  The higher the value, the higher the share price.

YES!!!

PS
And poor me  trying to stress this in the title by saying "The shares! Getting rid of any token connections ".
If even one of the brightest amongst us (cube) does not get any clue of one of the main points... the title needs a change!

[fuzzy]

Lets test it.  Can we discuss how this might be done?  as this shapes up the idea looks like something that is pretty elegant and almost seems as though it should have been obvious before.  but we really need to start testing big changes before making them so we can assess what we may or may not know about that might be problematic. 

love the idea and looking forward to seeing a successful test

[cube]

It is cool, I skim over 75% of the posts myself. That being said I think you missed/misunderstood (I blame my poor English and explanatory skills  for that btw) that BTS are not locked up!!! You can still trade them! You sell them for bitUSD (the most likely but not the only path) and exchange the bitUSD received for USD at say Ronnie's OpenL Exchage. The only thing is, you can do this sell on the co-op's DEX only. But it is design feature and not a bug. Business entities which require first offering the 'share' to the rest of the partners and/or not allowing selling one's partnership interest at all,  are not unheard of. The proposal is somewhere between that extreme and the trade-able everywhere one.

With this elaboration, I am beginning to see the beauty of the idea.  What the idea implies is that bitshares would transform into the de-facto shares of a big decentralised co-op instead of a tradable crypto-currency now.  These shares can be easily traded in and out via bitassets and bitassets become our interface with the world (instead of bts).  The value of the co-op will translate into the value of the shares.  The higher the value, the higher the share price.  Brilliant!

ps: IMO, the bitasset peg would hold well because bitasset becomes the only interface for users to get into/out of the bts co-op. And bitasset holders would not hog their bitassets (as compared to the situation now) because they need to convert them to bts in order to perform any DEX operation/transaction.

[tonyk]

This idea would work if there are values in the DEX co-op so much so that users want to get in.  Otherwise the effect can be detrimental.  I think we are still building values and liquidity on the blockchain and it is too early to consider such a move.

 

Are you saying we are all buying into valueless BTS token right now? [or the very least overpaying for the value that there is in the system]

I am not suggesting bts does not have value but rather it may not have sufficient value to pull users in such that they are happy with their bts being locked up.  I am thinking along the line of more liquid bitasset markets, a more developed prediction market, and a new bond market.

I somehow missed your point on users getting dividends from the bitasset transaction fees.  Well, this is a cool value added to the system given the low interest rate environment all over the world.  The sweet dividends will provide another value to attract users into the co-op.   Your idea may work after all.

It is cool, I skim over 75% of the posts myself. That being said I think you missed/misunderstood (I blame my poor English and explanatory skills  for that btw) that BTS are not locked up!!! You can still trade them! You sell them for bitUSD (the most likely but not the only path) and exchange the bitUSD received for USD at say Ronnie's OpenL Exchage. The only thing is, you can do this sell on the co-op's DEX only. But it is design feature and not a bug. Business entities which require first offering the 'share' to the rest of the partners and/or not allowing selling one's partnership interest at all,  are not unheard of. The proposal is somewhere between that extreme and the trade-able everywhere one.

[cube]

This idea would work if there are values in the DEX co-op so much so that users want to get in.  Otherwise the effect can be detrimental.  I think we are still building values and liquidity on the blockchain and it is too early to consider such a move.

 

Are you saying we are all buying into valueless BTS token right now? [or the very least overpaying for the value that there is in the system]

I am not suggesting bts does not have value but rather it may not have sufficient value to pull users in such that they are happy with their bts being locked up.  I am thinking along the line of more liquid bitasset markets, a more developed prediction market, and a new bond market.

I somehow missed your point on users getting dividends from the bitasset transaction fees.  Well, this is a cool value added to the system given the low interest rate environment all over the world.  The sweet dividends will provide another value to attract users into the co-op.   Your idea may work after all.

[Empirical1.2]

I never understand these things at first but today we have the problem that shorts don't want to create BitUSD at 1-1 and demand a huge premium because BTS price expectations are neutral to negative and they can be force settled/margin called pretty easily.

This solution seems to require equal/more collateral from BitUSD creators, so the problem will remain/be exasperbated and very little BitUSD will be created?

I do not claim this proposal to be perfect. It just solves (well seems to solve) a bunch of issues and delivers improvements on several fronts. Until it is implemented it will remain just a theory [and as you might know there are people that use the "It is just a theory" and not a 'fact' argument even against Darwinism].

Besides the things already mentioned in the OP:

- It removes the BTS from the centralized exchanges. Something arguably very desirable.

- It moves all the BTS trading in the DEX... this might not be the 40,000 BTC a day trading volume ETH has, but is a great start for the DEX

- The fee structure and bitUSD being the 'core/fee token' aims at among other things increasing the bitUSD in existence (and so arguably liquidity). How?
Let's say on day one bitUSD still trades with 7% premium (which is misnomer in this system as I explained earlier), but let's say that a person  thinks BTS should be 7% higher right now. So instead of buying 50 bitUSD in the market, he issues 50 bitUSD to himself (using his 1/2 mill in BTS account, puts 17x collateral behind his 50 bitUSD borrowed!!!) and  buys the name  "Empirical888" for his token. The fee to create this asset, must be paid in bitUSD, so 50 bitUSD fee is collected by the system. 30 days later this 50 bitUSD (and all other fees all in bitUSD) are spread to all BTS holders as dividend.
Results: not only bitUSD creation is encouraged and more bitUSD start circulating in the system, but most importantly a use case for bitUSD is created (other then hedging against BTS price drops).

  The other advantages seem very good, it's very interesting.

[tonyk]

This idea would work if there are values in the DEX co-op so much so that users want to get in.  Otherwise the effect can be detrimental.  I think we are still building values and liquidity on the blockchain and it is too early to consider such a move.

 

Are you saying we are all buying into valueless BTS token right now? [or the very least overpaying for the value that there is in the system]