Author Topic: BitShares - Decentralized Autonomous Bank & Exchange  (Read 8784 times)

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Offline etherbroker

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #15 on: March 22, 2014, 05:32:59 pm »
I was wondering that now that we know that shorts will be required to have 10x leverage,

is there any problem with creating bitassets as shorting a small portion of your capital may not be totally attractive,

compared to a traditional stockbroker, who will actually give you money to short stocks..

Offline bytemaster

Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #16 on: March 22, 2014, 05:53:44 pm »
I was wondering that now that we know that shorts will be required to have 10x leverage,

is there any problem with creating bitassets as shorting a small portion of your capital may not be totally attractive,

compared to a traditional stockbroker, who will actually give you money to short stocks..

They don't give you money... they lend you money.   Lending money is backed by their ability to seize your your house, car, and garnish your paycheck.   A DAC cannot do those things.
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Offline etherbroker

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #17 on: March 22, 2014, 06:06:43 pm »
Ahh I see so shorts should still be attracted BitX because they will be earning 5% on their reserves,

So instead of borrowing money.. shorts BECOME lenders,

and that entails the benefits of doing so..

Is that correct?

EDIT:  Is there a way a short's collateral could still be attached (long) to other bitassets (the collateral would still be in BTS afterall)

Obviously this would get complicated, I am just wondering if its a future possibility.
« Last Edit: March 22, 2014, 06:09:59 pm by etherbroker »

Offline bytemaster

Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #18 on: March 22, 2014, 06:17:17 pm »
Ahh I see so shorts should still be attracted BitX because they will be earning 5% on their reserves,

So instead of borrowing money.. shorts BECOME lenders,

and that entails the benefits of doing so..

Is that correct?

EDIT:  Is there a way a short's collateral could still be attached (long) to other bitassets (the collateral would still be in BTS afterall)

Obviously this would get complicated, I am just wondering if its a future possibility.

Eventually you will be able to go short / long anything.   Shorts are lenders, they earn a percentage equal to the amount something falls in price.  Could be much more than 5%. 
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Offline etherbroker

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #19 on: March 22, 2014, 07:48:55 pm »
You could make much more than 5%, but only only on 1/10th of your capital.

But if its true that your collateral will earn 5% because you are lending into the system, then I see that there is a strong incentive for financial speculators to use BitX.

Is that correct?  Or when collateral is pledged to a short position, it no longer earns the 5%?

Further, is there any problem with using this collateral to go long other bitassets because credit has not really left the system, it will just make a lot more work for the developers

:)

Offline bytemaster

Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #20 on: March 22, 2014, 08:05:59 pm »
You could make much more than 5%, but only only on 1/10th of your capital.

But if its true that your collateral will earn 5% because you are lending into the system, then I see that there is a strong incentive for financial speculators to use BitX.

Is that correct?  Or when collateral is pledged to a short position, it no longer earns the 5%?

Further, is there any problem with using this collateral to go long other bitassets because credit has not really left the system, it will just make a lot more work for the developers

:)

Recent attacks have shown that 10x collateral requirement may be too much... so assume it is down to 3x which means that you can go short using 50% of your collateral.   You still earn dividends from transaction fees with your collateral.  So this means you get a solid yield and can leverage it up to some extent but not to the point of causing too much risk.
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Offline etherbroker

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #21 on: March 22, 2014, 09:08:57 pm »
Recent attacks have shown that 10x collateral requirement may be too much... so assume it is down to 3x which means that you can go short using 50% of your collateral.   You still earn dividends from transaction fees with your collateral.  So this means you get a solid yield and can leverage it up to some extent but not to the point of causing too much risk.

 +5%
wow this will be so attractive to the market

honestly this thing could go institutional

Offline Empirical1

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #22 on: April 07, 2014, 02:16:00 am »
I don't know what exactly it is


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BitShares is a revolutionary new bank and exchange that could rival the value of the largest banks in the world such as JP Morgan and Bank of America in just a few years. How could this new upstart grow so quickly?  BitShares offers a bank account that earns 5% interest where funds can be transferred in minutes anywhere in the world with more privacy and security than a Swiss bank account.  Your account can never be frozen, your funds cannot be seized, and the bank can never face collapse due to loan defaults or fraud.  All of this is made possible without requiring any employees, lawyers, regulatory compliance, vaults, buildings, and other infrastructure required by traditional banks.  Unlike existing banks, you can hold your balance denominated in gold, silver, oil, or other commodities in additional to national currencies while earning 5% interest. 

In addition to acting as a bank, BitShares also serves as an exchange where currencies, commodities, and stock derivatives can be traded with most of the features used by professional traders including shorts and options.   The Bank takes a cut on every transaction and pays 100% of these transaction fees as dividends to the shareholders.  BitShares can achieve this feat using the same technology that makes Bitcoin possible, irrevocable decentralized automated consensus forming.     

For a quick comparison of BitShares to Bitcoin you can view Bitcoin as stock in a company that earns no profits, pays 100% of its revenue to security guards, and then debases shareholders by 12% per year to fund security.  Despite the inefficiencies and costs, Bitcoin has grown to be worth over $12 billion dollars in less than 5 years.   How much more valuable would Bitcoin be if it could turn a profit while offering far more powerful services?    The value of owning shares in this new Bank will exceed two times the value of all balances of in gold, silver, oil, and currency accounts.  If the largest banks can achieve deposits of over $1 trillion dollars with no meaningful interest, how many deposits could BitShares attract and what would that mean for the value of the bank?

 +5%

That is some great stuff! I imagine you guys are doing a Bitshares X video to explain how it works.
I would also consider doing a Bitshares X advert, where the advert includes pretty much exactly what you've written there! Even just the first paragraph, if that first paragraph was a short advert we could send to friends, colleagues with a click-through at the end 'want to learn more' I think that would spread quickly!

Offline tonyk

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #23 on: April 09, 2014, 03:49:48 pm »
While I have no official proof that my actions/posts have led to/contributed to the outcome, I am more than happy to see  2 features/changes that I argued for, now being on their way to be seriously considered/or being implemented.  Those 2 being - dropping the idea of 10x margin and - setting a cap on price movement (in the 1% range)…
See here: http://107.170.30.182/banking/ under ‘Market Security’ and ‘Trading Halt Conditions’ respectively.

What I argue for in this post is – before the ‘bitshares toolkit’ is finalized, an addition to the basic functionality to be made -namely to be added a possibility (reserved function with no implementation if you want) for claim by market bid – as well as adding such transactions as one of the deterministic transactions.
What will the ‘market bid’/ ‘market buy order’ do:
-It will allow the party placing such bid to buy a bitAsset at the last established market price, from ‘the market’ i.e. with no physical counter-party for the transaction. It will result in a long position in the bitAsset and destruction of the appropriate amount of BTS X/bips. (I foresee certain conditions to have to be met – like the market price to be established with certain minimum market depth, imposing additional transaction fee, in probably the 1% range, for such transactions)

The benefits of the existence of such transaction can be possibly huge! – I would venture to say it makes possible the bitUSD to become the de facto crypto dollar of the world. AS it stands now bitshare x(t) will be ,if successful, great prediction market. But if bitUSD is to be crypto USD replacement in all possible transaction, the demand for bitUSD will simply could not be met by only the parties speculating that the price of bitUSD will go down (i.e. people taking short positions). And while I am not saying this will make the price move/ be distorted, the demand for bitUSDs for ‘everyday use’ will very likely not be met. In other words there will not be enough bitUSD to facilitate its use as crypto USD (USD crypto replacement)

P.S. If the above stated goal is not in the plans for bitUSD, and you are happy as limiting bitUSD to its prediction role only, while truly unhappy to hear that, please disregard this post of mine.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

sumantso

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #24 on: April 09, 2014, 09:41:58 pm »
The benefits of the existence of such transaction can be possibly huge! – I would venture to say it makes possible the bitUSD to become the de facto crypto dollar of the world. AS it stands now bitshare x(t) will be ,if successful, great prediction market. But if bitUSD is to be crypto USD replacement in all possible transaction, the demand for bitUSD will simply could not be met by only the parties speculating that the price of bitUSD will go down (i.e. people taking short positions). And while I am not saying this will make the price move/ be distorted, the demand for bitUSDs for ‘everyday use’ will very likely not be met. In other words there will not be enough bitUSD to facilitate its use as crypto USD (USD crypto replacement)

I was actually wondering how we can make BitUSD act as the Crypto USD since there wouldn't be enough. If the price tracks closely with the real USD and is used by a lot of payment processors etc, benefits of using BitUSD is obvious.

Your suggestion sounds like a good one. Waiting to see Bytemaster's response on this.

Offline bytemaster

Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #25 on: April 09, 2014, 09:47:06 pm »
There is no limit on bitusd supply.   Demand for bitusd will drive it to rise in value above paper usd. People will the make money shorting it. 

Demand for bitusd will drive up the values of bts.


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Offline tonyk

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #26 on: April 09, 2014, 11:48:34 pm »
bytemaster, It is all well and good, as long as the people willing to take the extra risk of going short for the extra profit (*1), as opposed to simply staying long BTS X, will equal the demand for bitUSD by people preferring bitUSD to USD. It might be the case, but if one envision huge interest in bitUSD this might not be true at all.
In other words relying on enough risk tolerant players to essentially ‘print’ all the bitUSD needed/required by everyone seeing the benefit of using bitUSD (instead of USD) is something I am not totally comfortable with…

*1 It is pretty straightforward but someone buying a BTSX at @ $100/BTSX will profit $100 if the price goes up to $200/BTSX and $200 if buys at the same price and shorts bitUSD (assuming 2x margin and USD~~bitUSD). Going short unfortunately proportionally increase the loses in case of unfavorable price movement.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline hasher

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Re: BitShares - Decentralized Autonomous Bank & Exchange
« Reply #27 on: June 03, 2014, 03:22:07 pm »
Could the BTS being considered as "analog" to TARGET2-Securities
Or they simply in different weight categories /have different purpose?

http://en.wikipedia.org/wiki/TARGET2
http://en.wikipedia.org/wiki/TARGET2_Securities
PS Target is clearing system, centralised Ripple
Q is closed )
« Last Edit: June 03, 2014, 04:16:48 pm by hasher »