Can someone explain to me how and why BitUSD will work, with no "government" controlling things, while it seems to me nothing like this has ever worked before, without huge expenses, and a very powerful government making centrally controlled decisions, in the past?
quick explanation of the peg is that if there was a lot of liquidity, and the overwhelming consensus was that one bitUSD was worth one USD, then anyone that trades at a value off of the peg will lose money to the party that is returning to the peg. This is because deviation creates instant arbitrage opportunities. Consensus is formed when there are reasons (e.g. merchants, traders, exchange markets) why one bitUSD should be worth one USD.
Right now the BitUSD:USD link is missing/not strong, so developers are injecting that link with the new shorting rules. However, these rules remove the "exchange" (price discovery) component from bitsharesx and leaves it more like a "bank" (stable supply of value). At this early stage, stable USD:BitUSD value is probably more important to the technology than a fully decentralized exchange. BTSX:USD, BTSX:BTC, and BTSX:CNY price discovery is left to external exchanges which are then reflected by the internal market.
I think the next innovations in bitsharesx will be in the areas of market making - either by building it into the blockchain some how or by some 3rd party finding a way to externally peg USD:BitUSD (and make money while doing it). At some point, we want price discovery to occur ON bitsharesx markets, and not on an external exchange that gets injected INTO bitsharesx.