How is BitUSD going to work?

[tonyk]

The person shorting bitUSD into the system creates it when they short, but that person doesn't get the bitUSD, the system matches it up with somebody else who wants to buy it, and the person shorting gets the btsx from selling it (which they can use to later buy bitUSD for less btsx to cover their short, and get their collateral back).

That makes a little bit more sense.  Well, I guess we'll see what happens.

And that is the moment when you become the buyer in the famous pizza for BTC deal... Good story to tell, thou the kids would have enjoyed the money more than the story...

[hughmanwho]

The person shorting bitUSD into the system creates it when they short, but that person doesn't get the bitUSD, the system matches it up with somebody else who wants to buy it, and the person shorting gets the btsx from selling it (which they can use to later buy bitUSD for less btsx to cover their short, and get their collateral back).

That makes a little bit more sense.  Well, I guess we'll see what happens.

[merockstar]

You can't short BTSX to buy BitUSD, only the other way around. Buyers of BitUSD are only people that think it will work and would prefer exposure to BitUSD over exposure to BTSX, whether it is because they are short BTSX (but not actually shorting on collateral since you can't do that) or because they want stability.

So maybe I'm misunderstanding, how do you get BitUSD in the first place.. you have to purchase it using BTSX or short BitUSD in terms of BTSX, right?

You just buy the for whatever - USD, BTC or at the BTSX exchange for BTSX.(they start at that exchange initially if that is the question)

Wait.. I thought the whole way that BitUSD is introduced into the system is by shorting BTSX for USD?

Back to the original reason I posted this, how does the initial distribution of BitUSD work?

The person shorting bitUSD into the system creates it when they short, but that person doesn't get the bitUSD, the system matches it up with somebody else who wants to buy it, and the person shorting gets the btsx from selling it (which they can use to later buy bitUSD for less btsx to cover their short, and get their collateral back).

[toast]

You can't short BTSX to buy BitUSD, only the other way around. Buyers of BitUSD are only people that think it will work and would prefer exposure to BitUSD over exposure to BTSX, whether it is because they are short BTSX (but not actually shorting on collateral since you can't do that) or because they want stability.

So maybe I'm misunderstanding, how do you get BitUSD in the first place.. you have to purchase it using BTSX or short BitUSD in terms of BTSX, right?

You just buy the for whatever - USD, BTC or at the BTSX exchange for BTSX.(they start at that exchange initially if that is the question)

Wait.. I thought the whole way that BitUSD is introduced into the system is by shorting BTSX for USD?

Back to the original reason I posted this, how does the initial distribution of BitUSD work?

I think we're just getting our terms backwards, when I say "short USD" I mean you think USD is going down. So "Short BitUSD for BTSX" means some owners of BTSX think BTSX will go up against BitUSD. My original point was this helps the peg significantly because you can think of the market peg as only BTSX holders competing against each other (if this guy doesn't buy back USD at this price then you can bet at least one other short out there will).

[tonyk]

Somebody holding BTSX shorts bitUSD; Somebody buys said bitUSD;


Probably you are getting confused what shorting means:
'You provide 2x collateral (BTSX) and your position is -1 bitUSD'

[hughmanwho]

You can't short BTSX to buy BitUSD, only the other way around. Buyers of BitUSD are only people that think it will work and would prefer exposure to BitUSD over exposure to BTSX, whether it is because they are short BTSX (but not actually shorting on collateral since you can't do that) or because they want stability.

So maybe I'm misunderstanding, how do you get BitUSD in the first place.. you have to purchase it using BTSX or short BitUSD in terms of BTSX, right?

You just buy the for whatever - USD, BTC or at the BTSX exchange for BTSX.(they start at that exchange initially if that is the question)

Wait.. I thought the whole way that BitUSD is introduced into the system is by shorting BTSX for USD?

Back to the original reason I posted this, how does the initial distribution of BitUSD work?

[tonyk]

As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.

That's the point though. The only people who matter for deciding its price are the shorts who are already in the system, wants BTSX to go up, and agree with each to value it at 1 USD. Everyone else is just along for the ride.

Well... it you are shorting BTSX to buy BitUSD.. then you would only do that if you believe that BTSX will go down relative to USD...  which I didn't even think of before but that might cause a volume problem.  Because if you don't believe in BTSX.. you aren't going to buy BTSX in the first place, meaning you won't then proceed to buy BitUSD.

Read your own words above man. Do not come with one after the other  - wrong arguments from the NXT forum*. I read them all day anyway. Read your own words - I believe you are just one small step from getting it.

Post worth reading there btw:

nxtforum.org/index.php?topic=4716.msg90190#msg90190

You can't short BTSX to buy BitUSD, only the other way around. Buyers of BitUSD are only people that think it will work and would prefer exposure to BitUSD over exposure to BTSX, whether it is because they are short BTSX (but not actually shorting on collateral since you can't do that) or because they want stability.

So maybe I'm misunderstanding, how do you get BitUSD in the first place.. you have to purchase it using BTSX or short BitUSD in terms of BTSX, right?

You just buy the for whatever - USD, BTC or at the BTSX exchange for BTSX.(they start at that exchange initially if that is the question)

[hughmanwho]

You can't short BTSX to buy BitUSD, only the other way around. Buyers of BitUSD are only people that think it will work and would prefer exposure to BitUSD over exposure to BTSX, whether it is because they are short BTSX (but not actually shorting on collateral since you can't do that) or because they want stability.

So maybe I'm misunderstanding, how do you get BitUSD in the first place.. you have to purchase it using BTSX or short BitUSD in terms of BTSX, right?

[toast]

As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.

That's the point though. The only people who matter for deciding its price are the shorts who are already in the system, wants BTSX to go up, and agree with each to value it at 1 USD. Everyone else is just along for the ride.

Well... it you are shorting BTSX to buy BitUSD.. then you would only do that if you believe that BTSX will go down relative to USD...  which I didn't even think of before but that might cause a volume problem.  Because if you don't believe in BTSX.. you aren't going to buy BTSX in the first place, meaning you won't then proceed to buy BitUSD.

You can't short BTSX to buy BitUSD, only the other way around. Buyers of BitUSD are only people that think it will work and would prefer exposure to BitUSD over exposure to BTSX, whether it is because they are short BTSX (but not actually shorting on collateral since you can't do that) or because they want stability.

[hughmanwho]

As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.

That's the point though. The only people who matter for deciding its price are the shorts who are already in the system, wants BTSX to go up, and agree with each to value it at 1 USD. Everyone else is just along for the ride.

Well... it you are shorting BTSX to buy BitUSD.. then you would only do that if you believe that BTSX will go down relative to USD...  which I didn't even think of before but that might cause a volume problem.  Because if you don't believe in BTSX.. you aren't going to buy BTSX in the first place, meaning you won't then proceed to buy BitUSD.

[toast]

As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.

That's the point though. The only people who matter for deciding its price are the shorts who are already in the system, wants BTSX to go up, and agree with each to value it at 1 USD. Everyone else is just along for the ride.

[tonyk]

@hughmanwho I don't see how you say a cryptocurrency can have value in and of itself but then also say that it can't be used as backing collateral for a prediction market because it is like making value out of nothing

It's different, BTC, Nxt, BTS to some extend, are currencies themselves.  Let me put it this way, theoretically BitUSD will have some value if enough people decide to pay the same amount for it as they will for USD.. odds are that most people won't be willing to do that.  Afterall, you can't buy anything with BitUSD, you can with USD.  Therefore USD clearly has more value for years to come.  As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.

And just to be clear, to some extent, I'm playing devil's advocate here.  Once the current bubble pops, I may buy some BTS myself, but in my mind, clearly there are issues with BitUSD.

Read you own words couple of times... you might , just might, change your mind!
2c

[hughmanwho]

Hi hughmanwho

You of all people should know what are the risk when a central entity is holding the money, right?

Do not worry too much - this is just a theory. You do not have to 'believe' in it. After all people still refuse to believe in certain theories and instead believe that god created man out of mud.


BTW, there are better solutions before defaulting to 'trusting somebody with the money'. Just so you know.

I do realize that.  I don't see a way around that though, short of the government deciding to create their own competing crypto and any bank branch can take fiat and redeem it for crypto and vice versa.  Of course there is still an issue of whether that can be done trustlessly.. I guess not.

Like I said, we'll see if it works.. I hope it does, I just don't see it happening though.

In my robbery of fiat example, are you suggesting that everyone could be convinced that even though this asset is no longer backed by USD, everyone would just agree to pretend it is anyway?  I see that as the same thing.

@hughmanwho I don't see how you say a cryptocurrency can have value in and of itself but then also say that it can't be used as backing collateral for a prediction market because it is like making value out of nothing

It's different, BTC, Nxt, BTS to some extend, are currencies themselves.  Let me put it this way, theoretically BitUSD will have some value if enough people decide to pay the same amount for it as they will for USD.. odds are that most people won't be willing to do that.  Afterall, you can't buy anything with BitUSD, you can with USD.  Therefore USD clearly has more value for years to come.  As a prediction market.. maybe it's worth something if enough people all decide to agree it's worth 1 USD.. I'm skeptical though.

And just to be clear, to some extent, I'm playing devil's advocate here.  Once the current bubble pops, I may buy some BTS myself, but in my mind, clearly there are issues with BitUSD.

[toast]

@hughmanwho I don't see how you say a cryptocurrency can have value in and of itself but then also say that it can't be used as backing collateral for a prediction market because it is like making value out of nothing

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[tonyk]

Hi hughmanwho

You of all people should know what are the risk when a central entity is holding the money, right?

Do not worry too much - this is just a theory. You do not have to 'believe' in it. After all people still refuse to believe in certain theories and instead believe that god created man out of mud.


BTW, there are better solutions before defaulting to 'trusting somebody with the money'. Just so you know.