Author Topic: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD  (Read 8081 times)

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Offline bytemaster

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #30 on: January 16, 2014, 02:32:00 am »
Geneko, your statement "They are peace of bet from every market move." does not describe how the peg works and 'they' is ambiguous in your statement. 

Ok I all try with something more accurate. How about:

They are insurance policies against future Bitusd and Usd price difference.

"They are insurance policies against future Bitusd and Usd price difference." ... this is getting closer, but "They" is still undefined and BitUSD and USD price difference shouldn't ever be much..
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Offline bytemaster

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #31 on: January 16, 2014, 02:33:20 am »
Buying BitUSD within BitShares X is like buying part of an index fund that tracks the USD value of a share(s) of the stock exchange itself (BTS).

This seems like it is going in the right direction... but doesn't quite seem accurate for me.
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Offline bytemaster

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #32 on: January 16, 2014, 02:33:50 am »
Bitcoin rise and fall dramatically , but BitUSD can keep rise moderately

This describes what, but not how.
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Offline wasthatawolf

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #33 on: January 16, 2014, 03:02:17 am »
More like an ETF?  This analogy might make more sense using BitGold:


BitGold is pegged to the price of gold much like the SPDR Gold Trust ETF (GLD) is pegged to the price of gold. 

A share of BitGold is valued in BTS on BitShares X while a share of GLD is valued in USD on the NYSE.

Offline HackFisher

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #34 on: January 16, 2014, 03:04:18 am »
我有一个理解和假设,不知道对不对,为了方便理解,我用金本位相关例子来说明:

也许BitUSD和USD的1:1价格关联,在第一笔BitUSD被创造出来的时候就锚定了,就像早期银本位时发行出来的银元券一样,1银元券可以后面有等价1两银子作为背书,1个单位的BitUSD在被发行时也有1USD等价的BTS作为保证金(根据外部市场价格,这些BTS是可以兑换到1USD),这种本位机制是市场的依据,如果外部市场1BTS所能兑换到的USD单位数量变化了,那么在BEX中,1BTS对应的BitUSD价格也跟着相同方向变动。

 举个例子,比如原来1BTS=10USD,1BTS=10BitUSD,如果外部市场波动美元上涨变成1BTS=5USD,那么原来10BitUSD所对应的BTS保证金等价的只有5USD,相当于增大了风险因为没有了等价10USD的BTS本位保证,那么BEX中BTS对BitUSD的价格会怎样呢?  如果BitUSD价格保持不变或者继续下跌,那么做空者的风险就会越来越大被强制平仓,所以为了避免被强制平仓,做空者会选择回补买入更多BitUSD导致价格上涨,直到保证金可以保证围绕着外部美元等价BTS本位。

Sorry about quoting some of my Chinese explanation posted 3 days ago. I'll try to translate them, sorry for my poor English.

BitUSD is like Gold standard system of earlier central bank, endorsed by Gov credit, e.g. one USD is endorsed by equal priced Gold. But BitUSD is endorsed by the similar concept of BTS(priced in USD for BitUSD) standard system, driven by margin and the market consensus created when some one created "BitUSD" relative to USD, gave the "USD" name, and the others followers. Any tend  to deviate BitUSD price from USD will create long/short chance for the supporters/believers of the USD priced BTS standard system, which should be the mainstream market player of BTS X to avoid 51% attack to the BitUSD price feed.
« Last Edit: January 16, 2014, 03:17:23 am by HackFisher »
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Offline oco101

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #35 on: January 16, 2014, 04:50:10 am »
A non technical example for newbies

To buy 1 bitshare from a exchange cost you 10 USD , each bitshare  gives you 10 BitUSD.
If the buying price of 1 bitshare goes down to 5 USD then your bitshare will only be worth 5 BitUSD. So it does not matter how the price of bitshare fluctuates 1 BitUSD it will always be equal to 1 real USD.

Bitshares X it is a set of rules that use market consensus to force the value of a bitasset to always be equal to the value of the object that represents ex: BitUSD.

Offline bytemaster

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #36 on: January 16, 2014, 04:59:43 am »
A non technical example for newbies

To buy 1 bitshare from a exchange cost you 10 USD , each bitshare  gives you 10 BitUSD.
If the buying price of 1 bitshare goes down to 5 USD then your bitshare will only be worth 5 BitUSD. So it does not matter how the price of bitshare fluctuates 1 BitUSD it will always be equal to 1 real USD.

Bitshares X it is a set of rules that use market consensus to force the value of a bitasset to always be equal to the value of the object that represents ex: BitUSD.

The second paragraph states what happens and doesn't help explain how. 

The 3rd paragraph says how in the most vague way possible to the point of not being helpful to newbies other than accepting it on faith.  "market consensus to force value to always be equal"

This is a very challenging thing to explain concisely which is why this bounty is here. 
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Offline FBI

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #37 on: January 16, 2014, 05:01:04 am »
They are peace of bet from every market move.

I like this.

BitShares provide a decentralized price feed. The only common point people all across the network have is that the "BitUSD" asset has the words "USD" in it. If someone wants to "attack" this price feed and cause it to deviate from real USD/BTS, and they don't have a large majority of BTS, the opposing market forces from the rest of the network are enough to push the price down and take money from the attacker, because everyone else has the choice of either "cooperate towards USD and make money if other do too" or "defect and hope to make money if enough people coincidentally defect in the same direction as you".

Toast gets a 1 PTS tip... this is an accurate description though it is can certainly be improved upon...  note this bounty pays for multiple answers...


I thought The Bounty was for an "analogy", not an explanation...
bitsharesxt : guru

Offline bytemaster

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #38 on: January 16, 2014, 05:14:15 am »
Analogy for How
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Offline alt

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #39 on: January 16, 2014, 05:23:30 am »
After all, I have to change real USD with my bitUSD, because I can't buy food with my bitUSD.
But  who can guarentee the exchange?maybe 1k bitUSD, maybe 100k bitUSD.
 If nobody buy my bitUSD, should I sell it more cheaper?

A non technical example for newbies

To buy 1 bitshare from a exchange cost you 10 USD , each bitshare  gives you 10 BitUSD.
If the buying price of 1 bitshare goes down to 5 USD then your bitshare will only be worth 5 BitUSD. So it does not matter how the price of bitshare fluctuates 1 BitUSD it will always be equal to 1 real USD.

Bitshares X it is a set of rules that use market consensus to force the value of a bitasset to always be equal to the value of the object that represents ex: BitUSD.

Offline alt

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #40 on: January 16, 2014, 05:31:24 am »
I think we need more benefit to attract the bank to offer the exchange service.
And we need some methord to guarentee the exchange not depend on trust,  so we can exchange with anybody. but I don't know howto implement this.

After all, I have to change real USD with my bitUSD, because I can't buy food with my bitUSD.
But  who can guarentee the exchange?maybe 1k bitUSD, maybe 100k bitUSD.
 If nobody buy my bitUSD, should I sell it more cheaper?

A non technical example for newbies

To buy 1 bitshare from a exchange cost you 10 USD , each bitshare  gives you 10 BitUSD.
If the buying price of 1 bitshare goes down to 5 USD then your bitshare will only be worth 5 BitUSD. So it does not matter how the price of bitshare fluctuates 1 BitUSD it will always be equal to 1 real USD.

Bitshares X it is a set of rules that use market consensus to force the value of a bitasset to always be equal to the value of the object that represents ex: BitUSD.

Offline toast

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #41 on: January 16, 2014, 05:33:19 am »
Suppose some musicians make bets about whose instrument is the most in tune. They all bet about whether anyone will be out of tune, and anyone who is not gets rewarded. They decide who is out of tune by comparing each individual to the average pitch of everyone playing together.

Every musician can either use his various reference instruments and tuners to try to get the pitch as close to "correct" as possible, but they can't share such reference points between them directly. "correct" means the closest to the pitch that people named "A#" or whatever the current bet is, notice how that can mean slightly different things to different people in different regions but they're close enough that they can average out to some sort of global consensus.

To be malicious, you have to collude with the majority of musicians by stake (stake could be like, volume of their instrument) to play a particular named pitch "incorrectly". Only then can divert the price and screw someone over, but if you try to do so without such secret supermajority collusion you'll just lose money because people will still just think you're out of tune based on their "locally credible" sources.

That's the theory, anyway.
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Offline bytemaster

Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #42 on: January 16, 2014, 05:36:57 am »
Suppose some musicians make bets about whose instrument is the most in tune. They all bet about whether anyone will be out of tune, and anyone who is not gets rewarded. They decide who is out of tune by comparing each individual to the average pitch of everyone playing together.

Every musician can either use his various reference instruments and tuners to try to get the pitch as close to "correct" as possible, but they can't share such reference points between them directly. "correct" means the closest to the pitch that people named "A#" or whatever the current bet is, notice how that can mean slightly different things to different people in different regions but they're close enough that they can average out to some sort of global consensus.

To be malicious, you have to collude with the majority of musicians by stake (stake could be like, volume of their instrument) to play a particular named pitch "incorrectly". Only then can divert the price and screw someone over, but if you try to do so without such secret supermajority collusion you'll just lose money because people will still just think you're out of tune based on their "locally credible" sources.

That's the theory, anyway.

And another one for the toast master! 
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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Liberty

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #43 on: January 16, 2014, 07:20:30 am »
Suppose some musicians make bets about whose instrument is the most in tune. They all bet about whether anyone will be out of tune, and anyone who is not gets rewarded. They decide who is out of tune by comparing each individual to the average pitch of everyone playing together.

Every musician can either use his various reference instruments and tuners to try to get the pitch as close to "correct" as possible, but they can't share such reference points between them directly. "correct" means the closest to the pitch that people named "A#" or whatever the current bet is, notice how that can mean slightly different things to different people in different regions but they're close enough that they can average out to some sort of global consensus.

To be malicious, you have to collude with the majority of musicians by stake (stake could be like, volume of their instrument) to play a particular named pitch "incorrectly". Only then can divert the price and screw someone over, but if you try to do so without such secret supermajority collusion you'll just lose money because people will still just think you're out of tune based on their "locally credible" sources.

That's the theory, anyway.

And another one for the toast master!

Toast very nicely describes BitUSD as a bet that rewards proximity to consensus at close (like a spread option), but what does it mean then to own BitUSD? I somehow came to think of BitUSD as more asset than option/bet but then I'm stuck with reconciling how it could be both an underlying asset that grows in value and also an option that rewards proximity to USD. Could it be said that PTS&AGS ownership will earn a number of shares of BitUSD bets on a change in value between BitShares and USD such that BitShares are paid if USD value decreases and BitUSD ownership is reduced if USD value increases? I need a refresher on how these prediction markets are supposed to work because I suspect I'm way off.

Offline toast

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Re: 1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD
« Reply #44 on: January 16, 2014, 07:44:38 am »
A bitUSD exists only if the market has found a bitusd/btc ratio and people have different beliefs about the sign of the first derivative of that ratio

Owning a bitusd is like owning a piece of paper that says the bank will buy back the bitusd for $1 worth or bts, which means taking collateral from short positions on the prediction market if the value of bts starts falling relative to usd
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