bitSHARES - As True Shares and Not a Currency!

[yvv]

Implementing this change would not suddenly attract a ton of new people to the exchange, but it would make BTS a pure share token and it would force all trading of that share token to occur internally.

Or, it can just stop all trading. WHAHAHA!!! You never know.

[morpheus]

I still don't get it.  Are bitusd still collateralized the same way they are now or is this different?  Otherwise I don't see any difference in this approach other than you are restricting the transfer of bts, which sounds like a FED mandate.  I also don't see how the peg is managed without a feed unless collateralization is somehow different?

- all exchanges which has bts on their exchange confirmed that they are aware of migration

Not just that, but this:

- all exchanges must force users to withdraw all their BTS or lose it forever

That's not exactly true. If I have BTS on Poloniex post implementation I'd just sell them for bitUSD, withdraw, and buy BTS again on the DEX. It's an extra step but no real loss in value.

Yep. I suppose you'd have to request that the centralized exchange sells the BTS for bitUSD on the DEX on your behalf, then you'd have bitUSD (IOU) on the centralized exchange to do with as you wish. Of course the DEX and the centralized exchange would profit from taking a cut! This seems acceptable to me so long as enough announcements are made long enough before any changes are implemented.

A gateway simply offers to trade POLONIEX.BTS into real BTS in the DEX .. then you can continue trading BTS (IOUs) in poloniex and polo would still have its voting power .. doesn't really solve the problem of  people keeping their funds on centralized exchanges .. but it solves the issue of needing centralized exchanges for a price feed ..

This will go badly.  Those who are paying attention will sell.  Those who aren't paying attention will claim to have been screwed over by bitshares once again and bitshares reputation would be even further in the toilet. 

Also, I don't see how this will magically remove shares from the exchanges and magically create a 1:1 peg.  Don't get me wrong, I like the idea of focusing on 1 bitasset and maintaining a tight peg in that asset to get the system bootstrapped and I like the idea of getting shares removed from exchanges, especially btc38 cold storage, which is the 800 pound gorilla in the room, but I don't think it will go as smoothly as some of you think.

The only way I see this going well is to create a completely separate chain, like others have suggested.  Whether it is ever possible to merge the two together again remains to be seen.  It may be that both chains run indefinitely and the better chain wins.

[donkeypong]

Trying to force liquidity into the internal exchange doesn't solve the root of the problem that is people need a reason to use and trade on the dex in the first place.  Note:  I'm also not sure exactly how you can prevent someone from trading BTS externally on an exchange or peer-to-peer and I'm not so sure that's desirable in the first place.  All two people need to exchange are wallets and a centralized exchange can always have a wallet as they do currently right?

I had the same thought too initially that the idea is 'forcing liquidity into the DEX' and restricting the trading of bts.  As I dived deeper into the concept, I realised it is not so.

The idea is really about changing the crypto-currency model into a true share-based model.  Shares are now based on the value of the co-op and tradable within the internal DEX.  To get into the co-op, you buy bitasset with fiat and get out of the co-op, you sell your bitasset for fiat.  So there is really NO restriction in movement in and out.

When bts shares are only tradeable in the DEX, it will not flow into the outside centralised exchanges.  And for those bts tokens out there before the model switch, they need to retain their values.  IMO, one idea is to have these tokens exchanged to bitassets before they can get into the co-op.  I believe more brainstorming on the idea is needed.

I think it's more about perspective and the language about it being a share-based model that is appealing, but fundamentally we can already be considered that and whether trading happens inside or outside doesn't change the nature of the system fundamentally.   I think the notion of trades only happening in this isolated DEX chamber and the concentrated liquidity that is perceived to come with it sounds appealing to people, but again the root of the issue is that people have to want to use the platform in the first place and businesses still need to create a value proposition for consumers.  Even if desirable and if centralized exchanges that trade BTS pose a big problem (and I don't agree with this notion), I'm curious to know about the implementation of this isolated DEX chamber and how BTS can only be traded within it and not outside.  From one perspective we already have an isolated DEX chamber that people can only exchange bitAssets/UIAs or any tokens for BTS.   The key difference is that somehow trades are restricted on the outside which I'm curious to know how that would work.   

I think the perspective is not about restricting movement or tradability of bts (you term it 'isolated chamber') because the movement in and out of the bts network (co-op) remains free via say bitUSD/bitCNY.   That is, there remains a free movement in and out.

Rather the focus is on bitUSD/bitCNY becoming the main gateway into the network.  External exchanges will be trading bitUSD/bitCNY instead of bts.  One of the problems with bitUSD now is that bitUSD users tend to hog their bitUSD holdings.  The new model means users need to convert their bitUSD for bts to use any operation.  With the shift to bitUSD/bitCNY being the main gateway, the trading of bitUSD/bitCNY would go up because of the increase in demand.  The profit opportunities for trading bitUSD and bitCNY would go up too, attracting more shorters ie producers of new bitUSD/bitCNY.  Once the bitUSD peg holds well because of the increased liquidity, confidence of bitUSD set in and we can expect a cycle of even more liquidity.

Bear in mind that there are now dividends giving out to the users and these dividends are based on real transaction fees earned (and not dilutions).  This is an added value proposition.

And of course, as your rightly pointed out, ultimately the other value parts of the network (on/off ramp, FBA, STEALTH, Prediction Market, Bond etc) continue to be the main pulling force to attract users.

Exactly. BTS would become shares. To be honest, crypto has not evolved the way that some of us thought it would and BTS has never gained any real traction as a currency. Its value has been that it represents the BitShares system. And with this change, we would finally make an explicit choice that BTS is shares, not currency.

But we still could have crypto-tentacles out there in the form of these assets. Gateway drugs.

Implementing this change would not suddenly attract a ton of new people to the exchange, but it would make BTS a pure share token and it would force all trading of that share token to occur internally. Because of the purety of BTS value and the absence of all these drags on it, BTS would become an amazing investment and trading tool.

[puppies]

Under this proposed system what would happen in cases of high demand for bts, and cases of low demand for bts.  I think a couple of thought experiments are in order.

First of all high demand for bts.  Since no one can buy bts directly, they will have to buy bitassets.  As there are more people wanting to buy than to sell the price of these bitassets will rise.  If I really want into bts, but no one is offering a bitusd for $1 of fiat then I might pay $1.10 at some price there will be a seller.  Once I purchase my bitusd I will transfer it to my wallet, and purchase bts with it.  Once again we will assume that there are more people wanting to purchase bts with bitsud internally.  My purchase will push the price of bts vs bitusd up.  Thus a rising of bts price should produce shortages of bitusd for sale on external exchanges, and gluts of bitusd for sale internally. 

How would it work under low demand for bts.  Once again no one can sell their bts directly.  Internally we can assume that there will be more bts for sale and less bitusd for sale.  The price of bts in relation to bitUSD will decline, and the collateral underlying all bitusd will go down in value.  Once I have my bitusd I will transfer it to an external exchange and attempt to trade it for fiat.  We can once again assume that there will be more bitusd for sale on the external exchange and less fiat to purchase it.  This will naturally depress the price of bitUSD in relation to fiat.  This will result in a shortage of bitusd internally and a glut of bitusd externally.  If the price of bts internally falls far enough then shorters will become under collateralized.  They will either add to their collateral, attempt to purchase bitusd to close their short, or get margin called.  If they attempt to purchase bitusd internally to close their position or are margin called this will further add to the internal shortage of bitusd and further reduce the price of bts in relation.  If the price falls far enough then there will be massive buy orders in the internal bitusd market, but the rational decision for most users will not be to sell their bitusd internally for the depreciating bts.  It will be to sell their bitusd externally for fiat.  If conditions get bad enough then many users will be willing to sell their bitusd externally for fiat at a discount.  This will erode confidence in the system, and further the decline.

This may be a worst case scenario, but I think it is likely to happen at some point.  We have already seen the price of bts decline by 50% in a day or two.  the current incarnation survived to lick its wounds.  I am not sure that this new version would.  In short I would say that my argument is that attempting to make entry and exit entirely through market pegged assets will hinder the peg, and increase the fragility of the entire system.

I hope this wall of text wasn't too hard to read.  If you disagree with any of my conclusions please let me know. 

[btstip]

Hey fuzzy, here are the results of your tips...

• tonyk: has been credited 100 BTS
• tonyk: has been credited 10 COPPERTICKET

Curious about ShareBits? Visit us at http://sharebits.io and start tipping BTS on https://bitsharestalk.org/ today!

Source: https://bitsharestalk.org/index.php/topic,21409.msg278492/topicseen.html#msg278492

Created by hybridd

[fuzzy]

Tonyk's idea is getting sweeter.

Do you think he deserves some brownies? Ha hah aha hahahah aha haahhahah ahahahhahahhahha ahah!

best not to insult when possible.  tony did a good job getting the discussions going. so i am personally happy with giving him something of real value as a tip. 

#sharebits "tonyk" 100 BTS
#sharebits "tonyk" 10 COPPERTICKET

[fuzzy]

There is one more possible alternative:

3: Forked bts into a Baby net and test the concept on the Baby net.  Baby net starts with a low valuation and sharedrops 100% on bts.  Once it is proven a success, Baby net can be merged back into the parent bts.

As a low value token, the BabyBTS is unable to support (or create) so much BabyUSD which is needed to pay for witnesses and workers. Without demand, the market become illiquid, then black swain event will occur, then BabyUSD become not fully backed. Then the baby die.

?

We need bootstrap.

All babies cannot feed themselves.  If this idea indeed materialised into a forked Baby net by the bitshares community, I believe there would be a good number of donors and volunteers to be its low-pay witnesses, and to see it grow.

sharedrop a portion of "babyshares" onto other projects to give them a stake in it?

[BunkerChainLabs-DataSecurityNode]

Tonyk's idea is getting sweeter.

Do you think he deserves some brownies? Ha hah aha hahahah aha haahhahah ahahahhahahhahha ahah!

YES!! [emoji2]

[hadrian]

Tonyk's idea is getting sweeter.

Do you think he deserves some brownies? Ha hah aha hahahah aha haahhahah ahahahhahahhahha ahah!

[cube]

A gateway simply offers to trade POLONIEX.BTS into real BTS in the DEX .. then you can continue trading BTS (IOUs) in poloniex and polo would still have its voting power .. doesn't really solve the problem of  people keeping their funds on centralized exchanges .. but it solves the issue of needing centralized exchanges for a price feed ..

While it is possible for poloniex (or any exchange) to hold BTS and provide BTS.IOU trading, the risk of holding its own bts is high.   Majority of the bts would be traded exclusively in the DEX and any big price swing against poloniex can be damaging.  I doubt an exchange would take such a risk.

Being independent of an external price feed is significant.  We are getting a well-pegged bitUSD/bitCNY and independent of a price feed.  Tonyk's idea is getting sweeter.

[BunkerChainLabs-DataSecurityNode]

  to all this.

I can't say much more than what has already been said.

I dub this: "Project Green Light" - The Green Light to Bitshares Brighter Future

In honor of the idea originator

I have a few ideas on how it might be tested but I need to read closer what has already been suggested before I go repeating something already said possibly.

[xeroc]

- all exchanges which has bts on their exchange confirmed that they are aware of migration

Not just that, but this:

- all exchanges must force users to withdraw all their BTS or lose it forever

That's not exactly true. If I have BTS on Poloniex post implementation I'd just sell them for bitUSD, withdraw, and buy BTS again on the DEX. It's an extra step but no real loss in value.

Yep. I suppose you'd have to request that the centralized exchange sells the BTS for bitUSD on the DEX on your behalf, then you'd have bitUSD (IOU) on the centralized exchange to do with as you wish. Of course the DEX and the centralized exchange would profit from taking a cut! This seems acceptable to me so long as enough announcements are made long enough before any changes are implemented.

A gateway simply offers to trade POLONIEX.BTS into real BTS in the DEX .. then you can continue trading BTS (IOUs) in poloniex and polo would still have its voting power .. doesn't really solve the problem of  people keeping their funds on centralized exchanges .. but it solves the issue of needing centralized exchanges for a price feed ..

[hadrian]

- all exchanges which has bts on their exchange confirmed that they are aware of migration

Not just that, but this:

- all exchanges must force users to withdraw all their BTS or lose it forever

That's not exactly true. If I have BTS on Poloniex post implementation I'd just sell them for bitUSD, withdraw, and buy BTS again on the DEX. It's an extra step but no real loss in value.

Yep. I suppose you'd have to request that the centralized exchange sells the BTS for bitUSD on the DEX on your behalf, then you'd have bitUSD (IOU) on the centralized exchange to do with as you wish. Of course the DEX and the centralized exchange would profit from taking a cut! This seems acceptable to me so long as enough announcements are made long enough before any changes are implemented.

[Riverhead]

- all exchanges which has bts on their exchange confirmed that they are aware of migration

Not just that, but this:

- all exchanges must force users to withdraw all their BTS or lose it forever

That's not exactly true. If I have BTS on Poloniex post implementation I'd just sell them for bitUSD, withdraw, and buy BTS again on the DEX. It's an extra step but no real loss in value.

[monsterer]

- all exchanges which has bts on their exchange confirmed that they are aware of migration

Not just that, but this:

- all exchanges must force users to withdraw all their BTS or lose it forever