Topic: [Announce] Project Quixote - BitShares, BitNames and 'BitMessage' - page 8. (Read 48297 times)

On a Bitcoin exchange you reward the winning party with FedUSD by taking those FedUSD from the losing party. On BitShares you take from the losing party and and give to the winning party only BitUSD. There is no real life "interface" between BitUSD and FedUSD. In the real economy you have to take to give! If you can't take (not purchase, but take from the losing side) FedUSD, you'll have no FedUSD to give (not sell, but give the winning side)!

First you never lose BitUSD, their value decreases relative to another asset such as BitShares or Bitcoin. Second, this statement would also assume Bitcoin have no value whatsoever because they are not directly pegged to the USD. If the value of Bitcoin relative to USD goes up or down, you still have the same amount of Bitcoins. This is preserved in our system as well for BitAssets. You should think a little more deeply about what you are saying.  

They can lose BitShares which is like losing Bitcoin and the value of the BitShares they lose could have purchased FedUSD and thus they did lose FedUSD.

What money they'll lose?

They can lose only BitUSD. They can't lose FedUSD because you have no access to their FedUSD. The value of BitUSD is absolute zero if losing BitUSD doesn't automatically inflict losing the "real" stuff (FedUSD)!

BitUSD is a prediction market on the consensus value of BitShares vs FedUSD and that is all it is.   Consensus value will track the value of FedUSD without ever having to store FedUSD with any trusted party.  Anyone who doesn't invest according to where the consensus is going to move will lose money.

As far as no 'nominal value',  when we started Invictus Innovations the  'nominal value' of the stock was meaningless until someone decided to give us real FedUSD in exchange for said stock.   We could easily issue an IOU USD to one of our shareholders in exchange for holding some of their shares as collateral.   In this case what we would be doing is converting a personal IOU USD from the shareholder into an IOU from the corporation that is backed by equity.  The IOU from the corporation is much more valuable than an individuals IOU, especially if the IOU is backed by equity.    

This:

BTW, bitcoins were valued in bitcoins. In BitShares you value BitUSD in FedUSD!

And this:

So, there is a big difference and this simple analogy is not quite useful.

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Aside from price oscillations around parity there is only one way to keep the value of BitUSD equal to FedUSD. To issue 1 BitUSD if you get 1 FedUSD and to pay out 1 FedUSD when 1 BitUSD is redeemed. FedUSD units are not part of any block chain for they are property of Federal Reserve. Where FedUSD units in the BitShares system reside?

There is no nominal value, they start out valued just like bitcoins did.   Someone decides to place a value on the company.  A share is just a percentage of the market assessment of the value.

With regard to why would someone Borrow a USD Note from the bank... because they could sell the USD Note for real USD to someone who wanted to make a deposit into the bank.   So while it may appear that it was a game of musical chairs, in reality it enabled decentralized deposit and withdraw of real USD by exchanging USD Notes of the corporation for real goods and services.

I'm more interested in rather practical questions. What is the nominal value of each share? In what currency and how is initial capital paid in?

That question seems to me to hide quite a can of worms.

Suppose five banks launched, each bank issues one million shares, and offers their shares for sale for one bitdollar per share.

Each bank sells shares to each other, in equal amounts, so basically they barter, "I will give you X dollars worth of my shares for that same value worth of yours".

Now if the purported valuations of "all the other corps/banks thus far created" are to be believed, each of them can have a value of a million bitdollars, as witnessed by the fact they each own a million bitdollars worth of shares.

Another can of worms is when a share is put up for sale, is its market value to be considered to be different depending on who puts it up for sale?

That is, if corp one offers corp one shares for sale, are they worth a different value than if corp two put corp one shares for sale?

If not, why do some jurisdictions value the shares of itself that a corp owns differently than when others own them?

( That is: some jurisdictions apparently would not count corp-one shares that are owned by corp-one itself as being valuable assets/inventory contributing to the value of corp-one. But, if we substitute nation for corp, all of a sudden we see that USD in the possession of the US does count as inventory/assets/value even though ultimately it is backed by the nation in much the same way that shares of a corp are backed by a corp... I actually made a devtome page about this weird glitch, see http://www.devtome.com/doku.php?id=martian_accounting_galactic_milieu ... If owning my own shares makes them not count as valuable for inventory/'assets, won't I merely create holding companies to hold my shares for me, so I can own their shares instead of mine, in order that the actual current market value of my shares can be felt and used by me just like it can by others? I wonder how much of the world's on paper "wealth" is basically just such a shell-game or dutch-nesting-dolls game type of weirdness? )

-MarkM-

What is the face value of every share?

The only challenge is bandwidth.   If you have WiFi it shouldn't be hard at all, and yes we do have plans.

The point of borrowing BitUSD is to sell it, and buy it back later for less.   BitUSD is more marketable than bank stock because it is less volatile.

Ah yes I just found the BitMessage forum, but I did not see discussion of the attack. But I agree that it is a problem that it is up to the sender to play nice and include a small enough prefix that doesn't give away too much information about the true recipient.

With BM, it seems there is currently quite a large attack surface, stemming from the use of Acks, Broadcasts, lack of link layer encryption, lack of message padding, timing attacks and so on.

If we are required to use BM over Tor/I2P to stay anonymous, perhaps a simpler messaging system could be envisaged.

Ive probably missed something but I currently can't see what would be so wrong about doing something simple. We could use a DHT that has some degree of built-in anonymity guarantees (freenet / I2P/ whatever) for storage of messages. This would scale nicely and GET/PUT operations would be kept anonymous under the DHT's security model

• This itself could be enough to have an email replacement. A user's inbox is simply stored in the DHT.
• For the mailing-list/subscriber model, one could have a shared 'inbox', subscribers are made aware of both the location of the inbox in the DHT and the key to decrypt messages.

how hard/easy would it be to develop a mobile app for bitmessage? do you have plans?

Clearly it would be pointless with $100 itself - but an asset is something that presumably you don't want to lose ownership of (i.e. the selling of and buying back would either represent a timing issue or might be expected to be of greater cost due to fees or rising asset values than the paying of interest for the loan).

So I can see the point of using a BitGold asset as collateral for a loan of USD fiat but I could not see the point using a BitUSD asset for that.

If I have $100 (or an asset unconditionally and irreversibly pegged to 100$), what's the point of putting $100 as collateral in the bank to get $50 as a loan and pay interest on it?

Imagine you wanted to start a bank, so you create a cooperation and issue  1 million shares of stock to the shareholders.  On the date the bank is formed, it has no capital.

Now imagine that there are 1000 shareholders, among them are cunicula and bytemaster.

Now imagine that cunicula would like to sell some of his equity in the bank in exchange for USD, so he advertises that he would like to sell 100 shares for 1 USD.

Now imagine that someplace else in the world, bytemaster would like to borrow some USD from the bank.   This bank is no fool, and demands collateral for the loan.  Fortunately, bytemaster has some equity in the bank and offers to put a lean on it to back his loan.  The bank agrees, and issues bytemaster brand new USD Notes which are an IOU from the bank.  Now the bank is not dumb, it makes sure the collateral is worth at least 2x the value of the USD note it gave bytemaster because the bank now has a USD debt on its ledger. 

Bytemaster sees cunicula's advertisement and decides to sell the USD Note to cunicula in exchange for his shares in the bank.   Now cunciula knows the bank is solid and is holding plenty of collateral backing its Notes and so he accepts the USD Note from cunciula and deposits it into his savings account at the bank where he earns interest on his deposit.

Time passes and eventually bytemaster pays off his loan or the bank seizes his collateral to cover the loan. 

A little later, Charles comes along with the USD Note he received from cunicula when he sold his car.  Charles decides he would like to invest in the bank so he puts in a bid to buy the bank's stock with his USD Note.   If no one in the market is willing to take the bid and the bid is above the margin threshold, then the bank will step in and redeem the USD note to purchase $1 USD worth of stock.    The bank could do this because it has plenty of collateral.

Now I believe everyone can agree that if this were a real bank and the bank stock has a non-0 value that each and every transaction would be valid and 'safe'.   The USD note's from the bank would have a market value of about 1 USD and the purchasing power would be defended by the bank which would honor its IOUs.   There should be no doubt that the USD would track real USD even though the bank never had any USD on deposit, only offsetting ledger entries and collateralized loans.

So take this system that works in a traditional corporation manned by real people operating for a profit, and replace it with a blockchain.   The only thing the blockchain needs to know is the market value of USD relative to the bank's stock.  Fortunately, there is a reliable way to get that information:  always pair every individual who wants to borrow USD with someone who wants to buy USD.    Then have the borrower pay interest to the buyer.  The bank acts as the middle man and takes a cut on transaction fees and match making.   Of course, the borrower and buyer must always agree on the price and neither will bid more or ask less than what USD is worth. 

So, buy this simple analogy, I hope I have shown that the BitShares system is really no different than existing banks except that instead of issuing new USD with your house as collateral, it issues new USD with the bank stock as collateral.

Interesting project.  I'm very excited to watch it develop.

I recently came up with a way to eliminate all price fixing from BitShares and would like to introduce the concept here.  This is still theory, and does not represent a commitment to a particular implementation at this point.

Price Fixing in the abstract sense is anytime a parameter of our system is not based upon market forces. 

Examples Include:
1) 5% fee for margin calls
2) 5% fee for moving old outputs forward (inactivity fee)
3) 50/50 split of mining rewards vs dividends
4) Margin call when collateral falls to 150%
5) 200% initial margin

Each of these numbers represents an 'arbitrary' choice based upon one opinion / estimate of what is optimum.   They are also static and the reality is that the optimum setting for these numbers must change over time.  So what works today may be 'too high' tomorrow.   In a low volatility market, calling margin at 150% may be entirely too conservative and many people would consider 200% initial margin to be too conservative.   The point is that all of these numbers represent a form of price fixing that could leave the market vulnerable to both competitors and in the worst case complete failure.

The network needs to gather meaningful, honest, information upon which to make decisions on where to set these numbers.   This is where creating a prediction market on the block chain would come in to play.   If you think the margin call threshold is too high, short it.  If you think it is too low, buy it.    Note that you will lose money if you do not buy or sell based upon where the 'group consensus' will move.   

Given such a market for speculating on the group consensus of each of these parameters, the block chain can take a 30 day median price and use these prices to tweak each of the 5 parameters I listed above.  The result would be a slow, predictable adjustment in the network parameters based upon real-time speculation on the group consensus.

I would probably build in 'safe guards' that limit the range that the prediction market may tweak the parameters and if things end up pegged to one side of the range or another that may be an indication that something needs to be changed in the software.  The market would still function freely and thus the developers could release a patch that expands the range if the prediction market indicates a demand for values outside of our 'safe range' and we conclude that it is not due to manipulation.   It would then be a 'democratic vote' via hash power to expand the authority of the prediction market to set parameters.

I expect this to be highly controversial... so bring your best arguments for or against!