Am I right in understanding that with BTS is there is no guarantee that you can redeem 1 BTSX for 1 USD because you do not need to deposit a USD somewhere to create a BTS in the first place?
But is that not the very definition of pegging?
I don't think so, there is a difference between pegging the value of something to something else, and saying that it is back by that other thing.
Exactly. That is bitassets versus the Nxt asset exchange (as it exists today).
Generally, to peg the value to the dollar they would have to buy and sell bitUSD to keep it at a value of $1. That means there is a central bank and the value of bitUSD is being manipulated, right?
BitUSD can be manipulated in the same way anything traded on the free market can be manipulated (Bitcoin, stocks, Etcetra.) In Bitcoin's case, there is financial incentive for people to trade against manipulation due to things like arbitrage or perceived value by the public for instance. With bitUSD, the incentive for people to trade against manipulation is that they will likely make a profit on it by going long or short against the manipulative trader(s).
If a bad actor tries to manipulate BitUSD by dumping on the bitUSD market below the value of the actual value of the dollar, then there is an economic incentive for someone to scoop up those cheap bitUSDs. They will likely profit from the inevitable price swing that will incur when the honest actors come in and bring the bitUSD market back it equilibrium with the actual value of the US dollar. The opposite incentive is there if someone tries to pump the value of bitUSD greater than the actual value of a dollar.
As soon as market depth is established, a certain amount of volume is achieved, and skepticism bitassets will work dies down, bitUSD should very closely resemble the value of the US dollar.
