Author Topic: BitUSD question?  (Read 11430 times)

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Offline 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
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Offline tonyk

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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
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline 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.   
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Offline tonyk

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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...
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline NewMine

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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.

Offline tonyk

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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
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline NewMine

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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!

Offline tonyk

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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)
« Last Edit: May 13, 2014, 12:10:31 am by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline santaclause102

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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. 
« Last Edit: May 12, 2014, 11:50:13 pm by delulo »

Offline tonyk

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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

« Last Edit: May 12, 2014, 11:39:37 pm by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline santaclause102

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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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Quote
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). 

Offline 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
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Offline toast

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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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Offline toast

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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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Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline 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.






For the latest updates checkout my blog: http://bytemaster.bitshares.org
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.