BitUSD question?

[bytemaster]

thought the q was more like can you trade them directly i.e bitUSD to bitGold or you have to go bitUSD to BTS to bitGold

You can trade them directly

[tonyk]

thought the q was more like can you trade them directly i.e bitUSD to bitGold or you have to go bitUSD to BTS to bitGold

[bytemaster]

Short bitUSD=long BTS
Long bitUSD= short BTS

Incorrect!

=====   +++++ ===== +++++ ======


Once you have bought bitUSD, will you be able to then buy bitGold or bit*?* with it?
That is question for Dan. Generally it is possible, and if I remember correctly his last response was that it will be possible...

Short BitUSD = Leveraged Long BTS
Long BitUSD  = Hedged BTS
Long BTS      = Neutral (with respect to the system)
Short BTS      = Not Possible

BitUSD will have the purchasing power of a dollar, BitGold will have the purchasing power of 1 oz of gold.   

[tonyk]

Short bitUSD=long BTS
Long bitUSD= short BTS

Incorrect!

=====   +++++ ===== +++++ ======


Once you have bought bitUSD, will you be able to then buy bitGold or bit*?* with it?
That is question for Dan. Generally it is possible, and if I remember correctly his last response was that it will be possible...

[NewMine]

Short bitUSD=long BTS

Long bitUSD= short BTS

Once you have bought bitUSD, will you be able to then buy bitGold or bit*?* with it? Will these units be all inter changeable through he exchange? I always assumed BTS-X to be something like a combination of the ICE, CME, CBOE, NYSE, NASDAQ, Hang Seng, Nikkei, LSE etc.  when it's in its prime.

[tonyk]

Yes, you are correct bitUSD is created out of thin air… or just by the will power of the shorts… whatever explanation works for you…

But do not associate this with anything negative… soon I will be adding more info on other, well established market, working with the same ‘out of thin air’ asset creations here: https://bitsharestalk.org/index.php?topic=4575.0

[NewMine]

Okay, I didn't figure that bitUSD was just going to be created out of nothing. I was thinking for some reason that the only way to get bitUSD was to convert BTS to bitUSD.

Thanks guys!

[tonyk]

You can say I get the BitUSD when I short BitUSD it if you split the the whole process into logical blocks.

But in real "getting" the 10 BitUSD that where created out of nothing for you having to put up 2x BitUSD value as collateral is only possible when at the same time there is someone who takes the 10 BitUSD and buys them with half of what you put up as collateral. 

Seams correct if: by ‘buys them with half of what you put up as collateral’ , you mean ‘buys them with his own BTS for/@ a price equal to ½ of the collateral'.


 2 liquid bts = 2 illiquid bts + 10 bitusd (given an exhange rate of usd/bitusd to bts of 0.1 to 1) <-- plus you can always switch between that at any time. You can also sell the 10 bitusd for bts (and wait till less bts are necessary to buy the bitusd back). 

is actually more like:
2 liquid bts = 2 illiquid bts OR (as in XOR) 10 bitusd  (assuming the price is 5 bitUSD/BTS)

[santaclause102]

delulo,
Read toast or mine post above (whichever is more comprehensible)

‘…I give up 2 bts in liquidity and get 0.5x the amount of bitusd…’
You do not get bitUSD when you short bitUSD. If anything you give/sell bitUSD.


I am also working on an entry level explanation here:
https://bitsharestalk.org/index.php?topic=4575.msg57561#msg57561

You can say I get the BitUSD when I short BitUSD it if you split the the whole process into logical blocks.

But in real "getting" the 10 BitUSD that where created out of nothing for you having to put up 2x BitUSD value as collateral is only possible when at the same time there is someone who takes the 10 BitUSD and buys them with half of what you put up as collateral. 

[tonyk]

delulo,
Read toast or mine post above (whichever is more comprehensible)

‘…I give up 2 bts in liquidity and get 0.5x the amount of bitusd…’
You do not get bitUSD when you short bitUSD. If anything you give/sell bitUSD.


I am also working on an entry level explanation here:
https://bitsharestalk.org/index.php?topic=4575.msg57561#msg57561

[santaclause102]

sam wants to short usd. Current price is 10 bitusd per bts. Larry wants to go long usd.

1) sam places a short sell order for 10 usd for 0.1 bts each. To place this order, he has to have 2 bts, which is taken as collateral.
2) larry puts buy order 10 usd for a bts.
3) the orders are matched. Network prints 10 bitusd and gives them to larry, and takes larry's bts and gives them to sam.
3) sam has 1 bts live and 2 in collateral. Larry has 10 usd.
... time passes ...
4) sam buys back 10 bitusd, but his bet was right so it costs him 0.5 bts only. Sam has 0.5 bts live and 2 in collatetal, and 10 bitusd. Larry (assuming he was again on the other side of this trade) has 0.5 bts.
5) sam uses his 10 bitusd to cover and reclaim his collateral. The bitusd is destroyed and now same has 2.5 bts.

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3) sam has 1 bts live and 2 in collateral. Larry has 10 usd.

So the collateral is held by the system. Is it possible to expand on how the system hold the collateral? Is a short sell basically a deal that goes like: I give up 2 bts in liquidity and get 0.5x the amount of bitusd I would get if I give up the bts forever and that 10 bitusd I got is exchangeable into liquid 2 bts any time I want. 
-->
2 liquid bts = 2 illiquid bts + 10 bitusd (given an exhange rate of usd/bitusd to bts of 0.1 to 1) <-- plus you can always switch between that at any time. You can also sell the 10 bitusd for bts (and wait till less bts are necessary to buy the bitusd back). 

[bytemaster]

I don't think that's right... you put up 2x collateral at the time you place the order. The bts you trade the bitusd for and your margin are separate. You never have negative balance, just locked collateral

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Each party puts up 1x for a total of 2x entering the trade, and the output of the trade is -USD backed by 2x and +USD

[toast]

Toast those are all implementation DETAILS:
He wants to know how it works,  no every detail how you implemented the general idea.

[EDIT]
Plus if 5-7 the way I described is far better than the nonsense actual implementation.

How is that nonsense? What's a better way to handle having 1 wallet with shorts at different prices? Or what if I want to receive bitusd to spend without covering?

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[toast]

sam wants to short usd. Current price is 10 bitusd per bts. Larry wants to go long usd.

1) sam places a short sell order for 10 usd for 0.1 bts each. To place this order, he has to have 2 bts, which is taken as collateral.
2) larry puts buy order 10 usd for a bts.
3) the orders are matched. Network prints 10 bitusd and gives them to larry, and takes larry's bts and gives them to sam.
3) sam has 1 bts live and 2 in collateral. Larry has 10 usd.
... time passes ...
4) sam buys back 10 bitusd, but his bet was right so it costs him 0.5 bts only. Sam has 0.5 bts live and 2 in collatetal, and 10 bitusd. Larry (assuming he was again on the other side of this trade) has 0.5 bts.
5) sam uses his 10 bitusd to cover and reclaim his collateral. The bitusd is destroyed and now same has 2.5 bts.

Sent from my SCH-I535 using Tapatalk

[bytemaster]

You cannot short BTS because you cannot borrow BTS, you can only short BitUSD because they are borrowed into existence.

You can go long BitUSD which is the equivalent of selling BTS and thus you do not profit if BTS goes up.  But you cannot get a leveraged short position on BTS.

[tonyk]

Toast those are all implementation DETAILS:
He wants to know how it works,  no every detail how you implemented the general idea.

[EDIT]
Plus if 5-7 the way I described is far better than the nonsense actual implementation.

[santaclause102]

Even with that requirement the order is wrong, you put up collateral in step 2 not 4

Also steps 5 to 7, that wouldnt happen. You don't reset the "-1" to "0" just because you bought, you have to actively cover otherwise you just hold your bitusd.

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toast, can you make a list like tonyk did?

[toast]

Even with that requirement the order is wrong, you put up collateral in step 2 not 4

Also steps 5 to 7, that wouldnt happen. You don't reset the "-1" to "0" just because you bought, you have to actively cover otherwise you just hold your bitusd.

Sent from my SCH-I535 using Tapatalk

[tonyk]

I thought that you might do it like this so I put:
!!! This is principally how it works – implementation might make necessary to have say B>=2X in p.4

[toast]

I don't think that's right... you put up 2x collateral at the time you place the order. The bts you trade the bitusd for and your margin are separate. You never have negative balance, just locked collateral

Sent from my SCH-I535 using Tapatalk

[tonyk]

Just give me one example where you sell 1bitusd using collateral and buy it back.

1.You start with B BTS in your account.
2. You place an order : sell 1 bitUSD @ X bitUDS/BTS
3. If your order is match with buy bitUSD order (i.e. there is a buy order >=1 BitUSD @ Y>X)
4. You have now ‘-1’ bitUSD in your account. Also B+X BTS in your account (B originally there and X received from the trade). Those B+X BTS are collateral of your ‘-1’ bitUSD. (meaning you cannot do anything with them until you buy 1 bitUSD); Also  at 2x margin for the trade to occure: B>= X;
…..
5. At some point in time you place an order: buy 1 bitUSD @ Z bitUDS/BTS
6. If your price Z >= of the best sell’s offers price, a trade occurs =>
7. You end up with 0 bitUSD in your account and B+X-Z BTS.

!!! This is principally how it works – implementation might make necessary to have say B>=2X in p.4

[liondani]

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

You ask too many question mixed with too many statements. if you ask one question at a time I might be able to help you.
 But I must figure out what you do not get/what you get wrong, first.

Here is a reading before you start asking q (if you prefer):
Think of BTS as the currency and of  bitUSD as futures contracts; bitUSD are futures contracts with: – 1. no expiration/delivery date; 2. no actual delivery;
http://www.ftpress.com/articles/article.aspx?p=1436919&seqNum=6
http://www2.hmc.edu/~evans/e104l12.pdf

Just give me one example where you sell 1bitusd using collateral and buy it back.


They way I am seeing it is BTS and bitUSD are different denominations of the same thing. If BTS is worth $1, then they are both the same thing with different names. You sell bitUSD, you get BTS. You sell BTS, you get bitUSD.

So when one day  $1= €1   then   $ = €  ?     (same value don't mean same thing)

[NewMine]

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

You ask too many question mixed with too many statements. if you ask one question at a time I might be able to help you.
 But I must figure out what you do not get/what you get wrong, first.

Here is a reading before you start asking q (if you prefer):
Think of BTS as the currency and of  bitUSD as futures contracts; bitUSD are futures contracts with: – 1. no expiration/delivery date; 2. no actual delivery;
http://www.ftpress.com/articles/article.aspx?p=1436919&seqNum=6
http://www2.hmc.edu/~evans/e104l12.pdf

Just give me one example where you sell 1bitusd using collateral and buy it back.


They way I am seeing it is BTS and bitUSD are different denominations of the same thing. If BTS is worth $1, then they are both the same thing with different names. You sell bitUSD, you get BTS. You sell BTS, you get bitUSD.

[Agent86]

How does one short bitUSD?

Given the following:

Let's say BTS is trading at $10.

1BTS is then worth 10bitUSD

I am not seeing how you could even short bitUSD.  I see you can short BTS.

In order to short a bitUSD $1 would have to end up being worth less than $1, which isn't possible. $1 will always be $1, just what you can buy with that is what changes.

So let's take shorting BTS:

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

If anyone has a full trade examples of what happens with bitUSD, that would be great!

When "short bitUSD" you are not predicting it goes down relative to the dollar, you are predicting it goes down relative to BTS.

The transaction is:
A person agrees to give you $10 worth BTS (at today's exchange rate) in exchange for an IOU $10 worth of BTS (at whatever the exchange rate is at that time).  1 bitUSD = IOU 1 dollar's worth of BTS.

I think this may help:
http://invictus-innovations.com/bookie-bob

[tonyk]

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

You ask too many question mixed with too many statements. if you ask one question at a time I might be able to help you.
 But I must figure out what you do not get/what you get wrong, first.

Here is a reading before you start asking q (if you prefer):
Think of BTS as the currency and of  bitUSD as futures contracts; bitUSD are futures contracts with: – 1. no expiration/delivery date; 2. no actual delivery;
http://www.ftpress.com/articles/article.aspx?p=1436919&seqNum=6
http://www2.hmc.edu/~evans/e104l12.pdf

[NewMine]

How does one short bitUSD?

Given the following:

Let's say BTS is trading at $10.

1BTS is then worth 10bitUSD

I am not seeing how you could even short bitUSD.  I see you can short BTS.

In order to short a bitUSD $1 would have to end up being worth less than $1, which isn't possible. $1 will always be $1, just what you can buy with that is what changes.

So let's take shorting BTS:

I sell 1 BTS for $10 giving me 10 bitUSD. What collateral is used, if I had no BTS to short in the first place.  Since naked shorting isn't happening, wouldn't shorting just be a closing of a BTS position?

If anyone has a full trade examples of what happens with bitUSD, that would be great!