1 PTS Analogy Bounty for How BitShares X works to peg BitUSD to USD

[HackFisher]

Another attempt to work this out logically...

What gives BitUSD a specific value in USD?

BitUSD is a contract with a fixed USD value backed by a promise to pay that corresponding USD value in BitShares.  The Bitshares network then provides a mechanism to ensure that all BitUSD is fully collateralized or that promise to pay is exercised. This leads to the next question, what gives a BitShare a specific USD value? 

Bitshares themselves can be traded on a cryptocurrency exchange for USD in the same way Bitcoin is bought and sold for USD on Bitstamp or Mt. Gox.  Bitshares have value because, like Bitcoin, they facilitate participation in the BitShares network while also providing equity in the network.

I think this is simplest explanation so far.

It is very clear and simple indeed great explanation,  but to me still does't explain the "how" as in "Bitshares network then provides a mechanism ". As I understand it the analogy is for the mechanism of " pegging".
Toast and the musicians analogy explain  the "how".

, how the Bitshares mechanism take effect? except the "USD" name telling people to form a consensus, or avoid price feed attack, it seems not so strong to me.

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[oco101]

Another attempt to work this out logically...

What gives BitUSD a specific value in USD?

BitUSD is a contract with a fixed USD value backed by a promise to pay that corresponding USD value in BitShares.  The Bitshares network then provides a mechanism to ensure that all BitUSD is fully collateralized or that promise to pay is exercised. This leads to the next question, what gives a BitShare a specific USD value? 

Bitshares themselves can be traded on a cryptocurrency exchange for USD in the same way Bitcoin is bought and sold for USD on Bitstamp or Mt. Gox.  Bitshares have value because, like Bitcoin, they facilitate participation in the BitShares network while also providing equity in the network.

I think this is simplest explanation so far.

It is very clear and simple indeed great explanation,  but to me still does't explain the "how" as in "Bitshares network then provides a mechanism ". As I understand it the analogy is for the mechanism of " pegging".
Toast and the musicians analogy explain  the "how".

 

[wasthatawolf]

Another attempt to work this out logically...

What gives BitUSD a specific value in USD?

BitUSD is a contract with a fixed USD value backed by a promise to pay that corresponding USD value in BitShares.  The Bitshares network then provides a mechanism to ensure that all BitUSD is fully collateralized or that promise to pay is exercised. This leads to the next question, what gives a BitShare a specific USD value? 

Bitshares themselves can be traded on a cryptocurrency exchange for USD in the same way Bitcoin is bought and sold for USD on Bitstamp or Mt. Gox.  Bitshares have value because, like Bitcoin, they facilitate participation in the BitShares network while also providing equity in the network.

I think this is simplest explanation so far.

1 PTS for wasthatawolf

Awesome!  Here's my PTS address: PYDhxRmdd8YQdYLD757s7robuvafFdMARi

[bytemaster]

Another attempt to work this out logically...

What gives BitUSD a specific value in USD?

BitUSD is a contract with a fixed USD value backed by a promise to pay that corresponding USD value in BitShares.  The Bitshares network then provides a mechanism to ensure that all BitUSD is fully collateralized or that promise to pay is exercised. This leads to the next question, what gives a BitShare a specific USD value? 

Bitshares themselves can be traded on a cryptocurrency exchange for USD in the same way Bitcoin is bought and sold for USD on Bitstamp or Mt. Gox.  Bitshares have value because, like Bitcoin, they facilitate participation in the BitShares network while also providing equity in the network.

I think this is simplest explanation so far.

1 PTS for wasthatawolf

[Geneko]

Another attempt to work this out logically...

What gives BitUSD a specific value in USD?

BitUSD is a contract with a fixed USD value backed by a promise to pay that corresponding USD value in BitShares.  The Bitshares network then provides a mechanism to ensure that all BitUSD is fully collateralized or that promise to pay is exercised. This leads to the next question, what gives a BitShare a specific USD value? 

Bitshares themselves can be traded on a cryptocurrency exchange for USD in the same way Bitcoin is bought and sold for USD on Bitstamp or Mt. Gox.  Bitshares have value because, like Bitcoin, they facilitate participation in the BitShares network while also providing equity in the network.

I think this is simplest explanation so far.

[wasthatawolf]

Another attempt to work this out logically...

What gives BitUSD a specific value in USD?

BitUSD is a contract with a fixed USD value backed by a promise to pay that corresponding USD value in BitShares.  The Bitshares network then provides a mechanism to ensure that all BitUSD is fully collateralized or that promise to pay is exercised. This leads to the next question, what gives a BitShare a specific USD value? 

Bitshares themselves can be traded on a cryptocurrency exchange for USD in the same way Bitcoin is bought and sold for USD on Bitstamp or Mt. Gox.  Bitshares have value because, like Bitcoin, they facilitate participation in the BitShares network while also providing equity in the network.

[rysgc]

Didn't know what peg or pegging meant so I googled on 'pegging', I'll spare you the description haha. Although looking a bit further I now got it :p

[HackFisher]

Let me see is this fits:

BitShares X is table where are placed bets for future Bts and Usd price ratio.The averidge of those bets are considered Bitusd. Bts are also means for chips in that game.

I think it is bet between bts and bitusd, not usd.

[Geneko]

Let me see is this fits:

BitShares X is table where are placed bets for future Bts and Usd price ratio.The averidge of those bets are considered Bitusd. Bts are also means for chips in that game.

[sumantso]

'Bitshares is gonna make me rich'

I guess thats simple enough

[toast]

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

[Liberty]

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.

[bytemaster]

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]

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.

[alt]

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.