Topic: [Announce] Project Quixote - BitShares, BitNames and 'BitMessage' - page 18. (Read 48297 times)

I would gladly attempt to explain it again, but I will do so by way of an analogy that takes the blockchain out of the picture and replaces it with trusted 3rd party.

Assume  1 BTS == 1 USD on the market as the initial condition.

Sam wants to buy 1 BitUSD
Pam wants to short 1 BitUSD

Neither Sam nor Pam currently own any BitUSD because BitUSD is issued by Bank of Dan.

Before Pam can sell BitUSD she must borrow it from Dan.  Dan doesn't trust Pam one bit so requires 2x the collateral to be held in escrow.  Pam agrees and gives Dan  2 BTS and Dan lends Pam 1 BitUSD.  

Pam then Sells the 1 BitUSD to Sam for 1 BTS.  

At some point in the future Pam has to pay off her loan from Dan and to do so she must buy 1 BitUSD on the market.  

There are two outcomes:

1) 1 BTS == 2 USD,  Pam is able to buy 1 BitUSD for 0.5 BTS on the open market, then go to the bank pay off her loan and free her 2 BTS collateral.  In this case Pam ends up with a profit of .5 BTS for a 50% gain.

2) 1 BTS == 0.67 USD,  in this event Dan starts to get concerned that Pam will run out of margin so exercises his right to cover the loan with the collateral.   Dan enters the market and buys 1 BitUSD for 1.5 BTS and then gives Pam the change of 0.5 BTS minus a margin call fee.

At the start and end of the day all BitUSD is owned by the Bank.

BTS can be thought of as shares in the bank.  Dividends as profits from operating the bank.  

The only thing required for this to function is a way to enable the block chain to enforce margin calls that cannot be manipulated.


  

I did not raise the issue of legal threats. Other parties here are discussing it, so they must feel it is important.

I acknowledge that creating the s/w for a coin is far from being officially illegal. But the people who are profiting on the system will take out threats if they deem those threats to be credible, e.g. Edward Snowden has a difficult challenge to stay alive even in Russia (planted double-agents etc).

becoin, you entirely missed the points, and are suffering from Dunning-Kruger effect. Sorry to say. If you want to debate it with me, please start another thread. I am willing to waste another day, to prove to you that my understanding of economics is correct, but in another thread please.

He answered your question. I'm sorry that you feel it wasn't sufficient.

I had to Wikipedia that term.  

I guess I had to fight with my sister too much over whether our TV was tuned to Captain Kirk or Barbie.

Could you please explain BitAssets? I still don't understand them apparently. And it appears to be your most innovative concept, so I wish to understand it.

AnonyMint, I'm glad you are an expert on programming languages, economics, regulation, the behavior of the American government, human behavior, history and perhaps a thousand other topics; however, this dialogue has not been productive. I asked for a meeting over skype with my CTO, you and me and you declined.

Your feedback is appreciated, but even you must concede that this discussion isn't the intended purpose of this thread. I'd be happy at any time to discuss why we feel our business model is compatible with the existing regulatory environment and our business strategy, yet let's do it in a thread or in a format specifically for that purpose. Our goal here is to help people understand BitShares, the whitepaper and also collect volunteers who would like to help us evolve the idea in a productive way.

You obviously would never pass the Kobayashi Maru.  

Okay... I don't think there is any point in further discussion. I'll leave you to your 'axioms.'

There are only two ways you will not be destroyed by the government.

1. Cooperate on regulating the coin such that all anonymity is destroyed. (make sure you read this link, it quotes an astute Yahoo Finance op ed)

2. Be entirely anonymous.

There is no way that government will give up its power to give people debt (and welfare handouts which are the same thing in a different skin), keep the profits and socialize (charge to the public) the losses.

You are arguing that you can convince the ignorant masses they want to give up getting something for nothing. Impossible. There is several thousand years of recorded history that shows this is impossible.

This is an epic racket, and anyone who claims they will eliminate (with grand delusion of a public relations campaign and heroic poems) what has been around since before Jesus and even Mesopotamia, is delusional.

First of all, I do not know where you get the idea that I am using a price feed because that violates core economic axioms such as:
1) historical trades are meaningless for algorithmic purposes are can be arbitrarilly manipulated by trades to self.
2) only trades at prices agreed to by both parties are valid... no feed prices
3) prices cannot be calculated and math operations are invalid on prices
4) this system must be decentralized and trust-less, thus there is no point where any trusted oracle is used.

1) trades that have been signed but not entered in the block chain are about as valid as a bitcoin transaction that has been signed but not entered of course you must wait to have it confirmed by 6 blocks.
1a) it is not possible to reverse trades that are confirmed in the block-chain
1b) violates economic axioms on price calculation being invalid

The block chain will not work for instant trades, and of course if you place your 'order' in the chain, then it will be matched by a miner and instantly confirmed.  

Agree to a price, both parties sign, broadcast, wait, spend your funds after 6 confirmation.  If the other party cancels the trade by double-spending then trade with some one else or use the on-chain orderbook.  

Regardless of the legalities involved, the Bitshares idea has severe technical problems. As announced, bitshares is infeasible.

1) Via double-spending, miners will be able to selectively reverse trades that have been signed, but not yet entered the blockchain.
1a) If reversing trades is potentially profitable, the whole decentralized trading system will be borked by manipulation. Why trade if some privileged fucks can selectively reverse deals.
1b) To prevent this, the blockchain must not execute trades instantaneously. Instead, trade execution must be delayed until long after trades enter the blockchain. The execution price should be a unknown future price determined by the 'feed' price. Buyers and sellers should simply agree to exchange a certain quantity of assets, put collateral in the blockchain, and wait to see what the price will turn out to be.

2) A bunch of 'feeds' is a horrible idea. Again, 'feeds' can be profitably manipulated. The more competing feeds you have the cheaper they will be to game. You need a single secure 'feed' that is as strong as the blockchain itself. The price data should be submitted by proof of stake miners. Use a median of prices submitted over a large number of blocks to determine the current asset price. If you do this, meaningful feed manipulation will require control of the blockchain.

If you think about this it is kind of like trading in slow motion. The 'feed price' lags the true market price, but is forward with respect to the market price when buyers and sellers agree to trade.

There are other issues, but I will wait to see whether you address the manipulation problem before saying anything else.

When events like this happen: http://articles.chicagotribune.com/2013-08-02/news/ct-met-kass-0802-20130803_1_butcher-type-kitchen-knife-park-forest-police-taser

Who knows with the government. Honestly we can just start with our principles and our vision and have the courage to follow it. Our lawyers believe the business plan is solid and we can't see a regulation or law we are breaking by building this software. It doesn't mean we are immune to legal concerns, but it does mean we've done our best to see if the road ahead has issues.

I have no doubt that part of our time and money will have to be invested in educating regulators, law enforcement and lawmakers about BitShares and cryptocurrencies, but frankly any business in the Bitcoin ecosystem has this duty as well. We are at the bleeding edge of technology and social innovation. Nothing is known about the best practices or relationships we will have moving forward. That's what makes being an entrepreneur fun and also it lets us wear our hopes and dreams on our sleeves.

I've had a wonderful time working with Daniel and I've learned so much over the past few months. I can't wait for the next six.

Legal issues will always be a problem when we live under a corrupt system.  We could follow the law and it could be changed or reinterpreted.   The truth is we live in a lawless society where no one knows or can even agree on what the law is, it is selectively enforced, and entirely detached from morality.   This makes the 'law' irrelevant if someone in power considers you a threat. 

The only defense against corrupt enforcement of the law is publicity and providing a good to society that is so in demand that the government is unable to outlaw it. 

The true purpose of our company is as a free market solution to fighting the most common crimes in our society:  identity theft and fraud in the financial industry.  You cannot overcome government by 'fighting the government' because they can always claim the 'moral high ground' of fighting crime and 'protecting people' from 'money laundering' and ponzie schemes.     Well, we are claiming that high-ground first.   If they want to fight us, they are going to have to claim that our efforts to fight identity theft and financial fraud are a bad thing.  That grandma doesn't deserve a safe ROI on her savings, and that people should not have free and easy to use secure communication software. 

So our goal is to provide people the services they expect from their government, but do it without shoving a gun in their face.   So people expect the government to regulate the financial markets to prevent fraud and abuse.  To insure deposits at banks.  To provide counterfeit resistant identities.  To provide postal service.   We will provide those same services and do a better job in an entirely transparent manner.

If governments want to claim the high ground, they will have to start actually doing the job they sell themselves as doing because they will look very foolish attacking us we will achieve what they have failed to do... regulate financial markets and secure identities.     Besides, wall street will be able to make a killing with this system so they will probably not push for it to be outlawed entirely nor for us to be put in jail. 

It is all a public relations game.   

So by that logic you are shifting the burden to the miners.

Regardless HELP you are missing the point of the argument, as is clarified by bytemaster's most recent post.

Read his first post more carefully:

It boils down to (from the whitepaper):

this whole convo might be too OT, up to you bytemaster

If I write software and never run it, did I issue any coins?

Invictus

Out of the night that covers me,
Black as the Pit from pole to pole,
I thank whatever gods may be
For my unconquerable soul.

In the fell clutch of circumstance
I have not winced nor cried aloud.
Under the bludgeonings of chance
My head is bloody, but unbowed.

Beyond this place of wrath and tears
Looms but the Horror of the shade,
And yet the menace of the years
Finds, and shall find, me unafraid.

It matters not how strait the gate,
How charged with punishments the scroll.
I am the master of my fate:
I am the captain of my soul.

William Ernest Henley

The million dollar question. I see this becoming a decisive issue moving forward. As Satoshi is a mystery and no legislation has been written to capture the essence of decentralized OS projects, the opportunity for the creators of a widely-adopted OS distributed digital asset class to be persecuted is non-zero. This seems to be a risk you are willing to take and I commend that, as doing so fits into your vision for this platform. If I had the skills I would help; unfortunately I do not, so I will be watching closely for the time being

Last one.


You are not grasping that whole != SumOf(parts), because dynamic changes in composition do not yield same whole because are quite different in outcome.

I suggest you lock arms with everyone on the face of earth, since we all "own" it, and then try to optimize your movements collectively.

My math points were either ignored or complete flew over the head.

---

P.S. I wouldn't expect the "rule of law" to be sane in what we are heading into. Study Hitler, and even he couldn't track every email and communication, but the developed nations do now. Much better to be entirely anonymous.

They don't get you for free speech, rather in the Wallstreet protests they arrest you on a technicality, such as stepping on the grass.

In your case, you can end up always being audited (harassed) by the IRS, then they can cancel your passport (due to IRS assessment not paid), etc.

We are merely publishing open source software that happens to create a crypto-currency that is mined into existence with 0 pre-mining.  This, in theory, is protected as free speech and does not constitute issuing a currency.  The last page or so of the white paper addresses our personal assessment of the legal standing of BitAssets. 

1) They are not financial instruments in the legal sense because there is no contract or liability.
2) There are no contracts in the legal sense between any two parties.
3) Our company could disappear and this system would continue to function.
4) We will not be engaging in money transmission, but will be partnering with those who are.
5) Our company is not an exchange and does not act as an intermediary between customers.

Have you guys addressed some of the legal issues that will rest on your shoulders as the public 'issuers' of this metacurrency system?