BitAsset Predictions & Speculation

[clout]

You should read the whitepaper, the whole value proposition of BTS X is having assets that track other assets.

Sure. I will.

If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?

If anything works at all, then yes.

But I'll make sure to sell my PTS first.

Well that would be foolish unless you plan on subsequently accumulating ags

[isza]

You should read the whitepaper, the whole value proposition of BTS X is having assets that track other assets.

Sure. I will.

If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?

If anything works at all, then yes.

But I'll make sure to sell my PTS first.

[toast]

Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD?  We would then at least see the price of ProtoBitUSD.

Lol.. because I cannot make that promise

Maybe you don't even need to make a promise. The fact that the name ProtoBitUSD contains the string BitUSD is more than enough for it to track the price, isn't it?


Okay, this was obviously a joke. But I really don't get the concept of BitUSD.

You should read the whitepaper, the whole value proposition of BTS X is having assets that track other assets.

If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?

If anything works at all, then yes.

The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.

Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.

The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.

The whole point of BTS X is the BitAssets. Without BitAssets, BTS X is just another shitcoin and we'd all be wasting our time here.

[clout]

The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.

Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.

The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.

The viability of crypto currencies is contingent upon their evolution. No currency is viable if its value cannot remain stable. It doesnt matter what you think it is relatively more secure or serves as a better medium of exchange. A currency must maintain its usefulness as a store of value, otherwise it is not a valid currency. If you think people are obsessed with bitUSD you missed the point. Bitshares isnt simply a PoS coin that takes out the need for mining, it is a bank with 200% reserves that gaurantees that any bitUSD or any bitAsset retains the value (or highly correlated value) of the real world asset from which it is derived. The notion of bitUSD or any other asset allows for price stability in the network even as the underlying currency of the network may be subject to volatility. The whole point of the experiment is bitUSD. If the price of bitUSD to bitshares does not reflect the price of real USD to bitshares, then bitshares is worthless.

I'm curious as to what you think is the core concept of cryptocurrencies.

[zavtra]

The fact that everyone is obsessed with bitUSD signifies to me that bit only do the majority of you not even believe in the core concept of Cryptocurrencies, but in addition, you are also becoming too greedy to ever make this succeed.

Face it, you are all really just trying to figure out how many dollars you can sell your bitshares for. Frankly, anyone doing so has missed the point entirely, and the more I see speculation about it, the less and less confidence I have in this whole system.

The dollar price of a bitshare should be enough for you. You shouldn't have to worry about bitUSD.

[isza]

Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD?  We would then at least see the price of ProtoBitUSD.

Lol.. because I cannot make that promise

Maybe you don't even need to make a promise. The fact that the name ProtoBitUSD contains the string BitUSD is more than enough for it to track the price, isn't it?

Okay, this was obviously a joke. But I really don't get the concept of BitUSD. If we renamed BitUSD to BitCENT (with everything else unchanged, just the name), would it start tracking the price of a cent instead?

[bytemaster]

Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD?  We would then at least see the price of ProtoBitUSD.

Lol.. because I cannot make that promise

[isza]

Why don't you just create a tradable asset called ProtoBitUSD and promise that you will give 1 BitUSD for each ProtoBitUSD?  We would then at least see the price of ProtoBitUSD.

[bytemaster]

Although it was proposed that multiple Bitshares X be released that incorporate varying interest rate. I think it is more imperative to incorporate varying levels of collateral.

Interesting variable to play with.   The market will find the best solution.

[clout]

Although it was proposed that multiple Bitshares X be released that incorporate varying interest rate. I think it is more imperative to incorporate varying levels of collateral.

[clout]

How is it not relative to short positions on BitUSD. The short position is the supply side and the BitUSD is the demand. Even if I am bullish on Bitshares I run the risk that if bts goes down I not only lose money from the decreasing price of bts but also lose my stake in the network. My loss is twice that of holding bts. I think that short positions will lend BitUSD into existence at a higher price than USD and demand will meet that higher price for BitUSD because of the volatility of the network. That is all I am saying. The markets will decide, but that is my prediction. Once you've invested in the network you already assume that 50% decline in the price of bts is not going to happen.

With that being said, why is the collateral provided not greater than 200%? The greater the collateral backing of BitAssets the greater the price of Bts in the longrun, as the network would require the price of BTS to be greater in order to supply the same amount of BitAssets

[Markus]

I don't understand how BitUSD comes with more risk than simply holding bitshares, not to mention taking the position of shorting one of the derived assets. Bts constitutes a stake in the network and validates you're belief in its utility. If bitshares x does not work than price of Bts outside of the network will go down, but the price of a BitAsset will not. In holding BitUSD there is no risk that you will loose money only the risk of a greater opportunity cost due to pegging your stake in the network to some other asset. I think if there should be a fee/interest rate at all it should fall on the person holding the BitAsset since after all it is the BitAsset that is being "lent" into existence not the other way around. I think there should be a premium for holding BitAssets because those shorting the price of other assets are inherently providing a service through there collateral. The notion that a hard coded 5% interest rate or any other rate is kind of silly now that I think about it. The price within the market will correct to include any premium that should be paid for the BitAsset. By not hard coding an interest rate you consequently provide a floating interest rate, as the premium that people pay for BitAssets constitutes that rate. The floating interest rate is thereby: (price of BitAsset - price of real asset) / price of the real asset. The interest rate will be greatest when the demand for BitAssets is higher relative to Bts and low (probably negative) when demand for Bts is higher than demand for BitAssets. In early stages when there is uncertainty around Bitshares success there will be greater demand for BitAssets. I think the interest rate people will pay for them will be higher than even 5%. As Bitshares X proves it success more people will want to cash in on that success so there will be less demand for BitAssets and more demand for Bts so the interest rate will be negative and there may be very few holders of BitAssets.

Where my understanding of this exchange system got lost was in the analogy of BitShares being a bank. It can serve that purpose but it more simply allows participants in the network to make contracts with each other in order to redistribute risk. Short positions take all the risk/reward associated with the volatility of the networks underlying currency while holders of BitAssets peg the their stake in the network to some other asset and are thereby only subject to the price volatility of that asset. There is now borrowing, there is no lending, there is simply this underlying contract.

In terms of early adoption phases I think it behooves everyone to short BitAssets as much as they can because if the price of bitshares ever drops by 50% the experiment is over and Bitshares X is valueless and so is any stake within that network.

The risk in holding BitUSD is not relative to holding/shorting Bitshares but relative to holding FedUSD. Where that risk comes from you explained in your last sentence.

[clout]

    I believe the prediction market will grow the supply of BitUSD to meet all demand and thus keep the price pegged near parity.  Even if short-sellers have to pay interest (so longs can receive it) I believe that interest fees are just part of the risk/reward and the consensus will still be tied near parity. 

Hypothesis 4) BitUSD will sell at a discount because it comes with extra risk. 
   

I don't understand how BitUSD comes with more risk than simply holding bitshares, not to mention taking the position of shorting one of the derived assets. Bts constitutes a stake in the network and validates you're belief in its utility. If bitshares x does not work than price of Bts outside of the network will go down, but the price of a BitAsset will not. In holding BitUSD there is no risk that you will loose money only the risk of a greater opportunity cost due to pegging your stake in the network to some other asset. I think if there should be a fee/interest rate at all it should fall on the person holding the BitAsset since after all it is the BitAsset that is being "lent" into existence not the other way around. I think there should be a premium for holding BitAssets because those shorting the price of other assets are inherently providing a service through there collateral. The notion that a hard coded 5% interest rate or any other rate is kind of silly now that I think about it. The price within the market will correct to include any premium that should be paid for the BitAsset. By not hard coding an interest rate you consequently provide a floating interest rate, as the premium that people pay for BitAssets constitutes that rate. The floating interest rate is thereby: (price of BitAsset - price of real asset) / price of the real asset. The interest rate will be greatest when the demand for BitAssets is higher relative to Bts and low (probably negative) when demand for Bts is higher than demand for BitAssets. In early stages when there is uncertainty around Bitshares success there will be greater demand for BitAssets. I think the interest rate people will pay for them will be higher than even 5%. As Bitshares X proves it success more people will want to cash in on that success so there will be less demand for BitAssets and more demand for Bts so the interest rate will be negative and there may be very few holders of BitAssets.

Where my understanding of this exchange system got lost was in the analogy of BitShares being a bank. It can serve that purpose but it more simply allows participants in the network to make contracts with each other in order to redistribute risk. Short positions take all the risk/reward associated with the volatility of the networks underlying currency while holders of BitAssets peg the their stake in the network to some other asset and are thereby only subject to the price volatility of that asset. There is now borrowing, there is no lending, there is simply this underlying contract.

In terms of early adoption phases I think it behooves everyone to short BitAssets as much as they can because if the price of bitshares ever drops by 50% the experiment is over and Bitshares X is valueless and so is any stake within that network.

[gordonhucn]

For 2) when one side of bitUSD owner wins all , why can't we simply give the winer all the BTS and destroy the winer's bitUSD. If the winer wants to keep going with bitUSD, he can just bet again with someone else.

Because this isn't a pairing system, BitUSD is fungible for all users in the system.   What I do is use 100% of the BTS to BUY as much BitUSD on the market as I can and that is functionally equivalent... so instead of the loss being born by a single BitUSD holder it is spread across all BitUSD holders.

In a system that has all users' asset cost and holding-time, when the loss goes above the line then the system knows who(both wining side and losing side) should be kicked out of the game base on a weighted-evaluation rule over the cost / holding-time of everyone's asset. In such way every contract is backed which is assured by the system.

So it is not exactly equivalent , your way offers choices to the winers, the market and players with different expectation will solve the PEG eventually.

[bytemaster]

By your last argument, points 5 and 6 are equal and the same hypothesis... BitAssets either track or they have no value.... they cannot have some 'other value' that is not correlated in any way.