Author Topic: ELI5 Reddit - Why will bitUSD work when they aren't backed by USD?  (Read 17662 times)

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Offline luckybit

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The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.

Can you teach us to play that role? More players would take the role if we understood the markets but right now it's too complex for most people.

I think the best idea is to just buy BitUSD and wait out the storm.

When the BitUSD price of BTSX is high... sell BTSX to buy BitUSD... for a while the price was .05 BitUSD per BTSX... when the price falls to .04 BitUSD per BTSX, sell your BitUSD back to the market at the peg price.     You will make the gain from selling BTSX at .05 and buying it back at .04....   

The challenge here is that you have to separate out your investment in BTSX from your arb profits.  If BTSX doubles to $0.10, you can still make money from your arb assuming you can sell your BitUSD for BTSX at 0.10.   You missed the capital gains must you made arb. gains.   Arb gains should be less risky than BTSX and can be made in any market condition (up/down/sideways).   If you want to bet on BTSX to the max, then you may not make as much from arm.

My personal recommendation is that your BTSX holdings are more likely to go up if you help maintain the peg and add liquidity... so everyone should use at least 10% of their holdings to add liquidity.  The combined strategy will likely cause your BTSX holdings to grow faster than if no one provided liquidity.

Perhaps we should incorporate a robotic trading assistant into the wallet.

Most of the market operations are algorithmic and do not require much thinking beyond what the end goal is. People know what they want to do, they just don't know which buttons to push to get there.

ie. The user could select an investment goal (BTSX bull/bear, arb, hedge, etc. or perhaps simpler choices like 'I think BTSX is going up', 'I think BTSX is going down', 'High risk', 'Low risk', 'Provide liquidity'. etc.) and the assistant (wizard!) could take them through step by step. Alternatively, user can designate assets have the assistant execute. The assistant should have access to live price feeds and be aware of user balances/portfolio holdings.

There are robotic asset management services out there that do this sort of thing, and they are gaining in popularity.

Implementing a robotic trading assistant would be a huge value-added service that would make it easier for non-investors to participate and not get frustrated/hosed, ie. make the initial investing/trading experience positive and most importantly quick and easy.

This is an opportunity for Bitshares to leapfrog the industry, like skipping landlines and going straight to mobile.
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jakub

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We will build more help into the GUI.
That'd be nice but a 5 minute video describing the full cycle of going short and covering would do the job.

Offline bytemaster

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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.

jakub

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My personal recommendation is that your BTSX holdings are more likely to go up if you help maintain the peg and add liquidity... so everyone should use at least 10% of their holdings to add liquidity.  The combined strategy will likely cause your BTSX holdings to grow faster than if no one provided liquidity.

I would be happy to help with the liquidity but I'm still confused how to use the market part of the GUI.
So please give us a good guide how to use the GUI and what the different tables and columns mean and we will give liquidity in return.

Offline bytemaster

The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.

Can you teach us to play that role? More players would take the role if we understood the markets but right now it's too complex for most people.

I think the best idea is to just buy BitUSD and wait out the storm.

When the BitUSD price of BTSX is high... sell BTSX to buy BitUSD... for a while the price was .05 BitUSD per BTSX... when the price falls to .04 BitUSD per BTSX, sell your BitUSD back to the market at the peg price.     You will make the gain from selling BTSX at .05 and buying it back at .04....   

The challenge here is that you have to separate out your investment in BTSX from your arb profits.  If BTSX doubles to $0.10, you can still make money from your arb assuming you can sell your BitUSD for BTSX at 0.10.   You missed the capital gains must you made arb. gains.   Arb gains should be less risky than BTSX and can be made in any market condition (up/down/sideways).   If you want to bet on BTSX to the max, then you may not make as much from arm.

My personal recommendation is that your BTSX holdings are more likely to go up if you help maintain the peg and add liquidity... so everyone should use at least 10% of their holdings to add liquidity.  The combined strategy will likely cause your BTSX holdings to grow faster than if no one provided liquidity.

I played for a bit today... with an average position of probably 750 bitUSD. And while I did made about $100 it is not user friendly at all at the moment... I have a hundred suggestions but the main point is 'Manual arbitrage with the current state of the system is nothing short of energy draining...'

my 0.02 BTSX

I hear you...
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.

Offline tonyk

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The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.

Can you teach us to play that role? More players would take the role if we understood the markets but right now it's too complex for most people.

I think the best idea is to just buy BitUSD and wait out the storm.

When the BitUSD price of BTSX is high... sell BTSX to buy BitUSD... for a while the price was .05 BitUSD per BTSX... when the price falls to .04 BitUSD per BTSX, sell your BitUSD back to the market at the peg price.     You will make the gain from selling BTSX at .05 and buying it back at .04....   

The challenge here is that you have to separate out your investment in BTSX from your arb profits.  If BTSX doubles to $0.10, you can still make money from your arb assuming you can sell your BitUSD for BTSX at 0.10.   You missed the capital gains must you made arb. gains.   Arb gains should be less risky than BTSX and can be made in any market condition (up/down/sideways).   If you want to bet on BTSX to the max, then you may not make as much from arm.

My personal recommendation is that your BTSX holdings are more likely to go up if you help maintain the peg and add liquidity... so everyone should use at least 10% of their holdings to add liquidity.  The combined strategy will likely cause your BTSX holdings to grow faster than if no one provided liquidity.

I played for a bit today... with an average position of probably 750 bitUSD. And while I did made about $100 it is not user friendly at all at the moment... I have a hundred suggestions but the main point is 'Manual arbitrage with the current state of the system is nothing short of energy draining...'

my 0.02 BTSX
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline oldman

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The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.

Can you teach us to play that role? More players would take the role if we understood the markets but right now it's too complex for most people.

I think the best idea is to just buy BitUSD and wait out the storm.

When the BitUSD price of BTSX is high... sell BTSX to buy BitUSD... for a while the price was .05 BitUSD per BTSX... when the price falls to .04 BitUSD per BTSX, sell your BitUSD back to the market at the peg price.     You will make the gain from selling BTSX at .05 and buying it back at .04....   

The challenge here is that you have to separate out your investment in BTSX from your arb profits.  If BTSX doubles to $0.10, you can still make money from your arb assuming you can sell your BitUSD for BTSX at 0.10.   You missed the capital gains must you made arb. gains.   Arb gains should be less risky than BTSX and can be made in any market condition (up/down/sideways).   If you want to bet on BTSX to the max, then you may not make as much from arm.

My personal recommendation is that your BTSX holdings are more likely to go up if you help maintain the peg and add liquidity... so everyone should use at least 10% of their holdings to add liquidity.  The combined strategy will likely cause your BTSX holdings to grow faster than if no one provided liquidity.

Perhaps we should incorporate a robotic trading assistant into the wallet.

Most of the market operations are algorithmic and do not require much thinking beyond what the end goal is. People know what they want to do, they just don't know which buttons to push to get there.

ie. The user could select an investment goal (BTSX bull/bear, arb, hedge, etc. or perhaps simpler choices like 'I think BTSX is going up', 'I think BTSX is going down', 'High risk', 'Low risk', 'Provide liquidity'. etc.) and the assistant (wizard!) could take them through step by step. Alternatively, user can designate assets have the assistant execute. The assistant should have access to live price feeds and be aware of user balances/portfolio holdings.

There are robotic asset management services out there that do this sort of thing, and they are gaining in popularity.

Implementing a robotic trading assistant would be a huge value-added service that would make it easier for non-investors to participate and not get frustrated/hosed, ie. make the initial investing/trading experience positive and most importantly quick and easy.

This is an opportunity for Bitshares to leapfrog the industry, like skipping landlines and going straight to mobile.



Offline Shentist

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1. would be nice to see the calculated marketprice from coinmarketcap.com in the market - i just flip all the time.

2. a calculated average of my positions would also be good to see if i am in the profits
- like 1.000 bitUSD average cost 22.25 profit/loss: 1.10

Offline bytemaster

The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.

Can you teach us to play that role? More players would take the role if we understood the markets but right now it's too complex for most people.

I think the best idea is to just buy BitUSD and wait out the storm.

When the BitUSD price of BTSX is high... sell BTSX to buy BitUSD... for a while the price was .05 BitUSD per BTSX... when the price falls to .04 BitUSD per BTSX, sell your BitUSD back to the market at the peg price.     You will make the gain from selling BTSX at .05 and buying it back at .04....   

The challenge here is that you have to separate out your investment in BTSX from your arb profits.  If BTSX doubles to $0.10, you can still make money from your arb assuming you can sell your BitUSD for BTSX at 0.10.   You missed the capital gains must you made arb. gains.   Arb gains should be less risky than BTSX and can be made in any market condition (up/down/sideways).   If you want to bet on BTSX to the max, then you may not make as much from arm.

My personal recommendation is that your BTSX holdings are more likely to go up if you help maintain the peg and add liquidity... so everyone should use at least 10% of their holdings to add liquidity.  The combined strategy will likely cause your BTSX holdings to grow faster than if no one provided liquidity.
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.

Offline luckybit

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The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.

Can you teach us to play that role? More players would take the role if we understood the markets but right now it's too complex for most people.

I think the best idea is to just buy BitUSD and wait out the storm.
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline Riverhead

Sounds like there is some opportunity for me to diversify my btsx holdings.

Offline bytemaster

The demand for shorts has outstripped demand for BitUSD thus far.... so right now BitUSD is cheap relative to USD.    Few players are performing the arb. role at this point in time... I think it will take a while for things to get there.
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.

Ggozzo

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BitUSD requires a liquid market...... right now BitUSD is the best hedge against a falling BTSX because it is cheaper than $1 USD due to all the demand to short.   

What we need are tools that show the arbitrage opportunities... and people willing to accept profits from arbitrage as more reliable than gains in BTSX.
So if I understand this correctly to protect the market peg we need both BTSX/bitUSD and BTSX/USD markets set up on the third party exchange (like bter). Because this will open up the arbitrage opportunities.
In other words, what we need is to enable both bitUSD and USD to be competing ways to purchase BTSX. This will create arbitrage and arbitrage will guard the market peg. Is it correct?

BitBTC may be needed... then we can have BitUSD vs BitBTC on chain.   This will also help with arb. ops.

Yes, this would be nice.

Side note, market hasn't been true to outside prices for at least the last couple hours. Market is trading around 22btsx/bitUSD when on the excjphanges they are going for 28btsx/$1 .

Did we get forced shirt covers? It was a ~50% drop from the high?

jakub

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BitUSD requires a liquid market...... right now BitUSD is the best hedge against a falling BTSX because it is cheaper than $1 USD due to all the demand to short.   

What we need are tools that show the arbitrage opportunities... and people willing to accept profits from arbitrage as more reliable than gains in BTSX.
So if I understand this correctly to protect the market peg we need both BTSX/bitUSD and BTSX/USD markets set up on the third party exchange (like bter). Because this will open up the arbitrage opportunities.
In other words, what we need is to enable both bitUSD and USD to be competing ways to purchase BTSX. This will create arbitrage and arbitrage will guard the market peg. Is it correct?

BitBTC may be needed... then we can have BitUSD vs BitBTC on chain.   This will also help with arb. ops.

But would you agree that arbitrage is a better justification for market peg then market consensus approach?
For me both approaches can be right but the one involving arbitrage looks more solid in the eyes of the outside world.
And when we have both bitUSD and USD competing as ways to trade against BTSX then we have arbitrage holding the market peg in place.
« Last Edit: August 26, 2014, 03:04:08 pm by jakub »