Topic: Creating metacoin for a decentralized exchange? (Read 3191 times)

This should be nailed on the top of the whole bitcointalk altcoin section!!!

The high collateral requirement makes it less likely to see under collateralization under high volatility. Even in highly volatile scenarios, the bitasset markets can adapt so long as the price doesn't flash crash. The bitUSD buyer doesn't need to pay more than the face value of the bitAsset, while the short is willing to lock up more BTS as collateral in order to get leverage. So we have a stability vs. leverage trade off here.

There is still the chance that a black swan event could happen.

I got it, conceptually, but this still seems to me a bit unnatural in outlook and fragile in setup. On the one hand, you have to provide a collateral which is times as much as the initial amount, which is rather strange. On the other hand, it is not uncommon in the cryptocurrency world for a coin to drop (or increase) in price orders of magnitude (and fast at that), not just a few times, so it might not help (I mean what you call a short squeeze)...

The amount of BTS held by the market for each bitUSD starts at 300%, 2x from the short, 1x from the bitUSD buyer. Imagine the collateral as a slider split into 2 sections, 2/3 (short) and 1/3 (long).

As the price changes, that slider either goes to the left or right, i.e. the bitUSD will either cost more or less BTS to buy. One of these two voluntary positions will make a profit in this way... either BTS will go up and the short will be able to buy each unit of bitUSD for less BTS than it cost initially to short it, or BTS will fall relative to bitUSD, and the bitUSD buyer will be able to sell the bitUSD back for more BTS than it originally cost. If the price of BTS falls too quickly (past the call price for the margin position), a margin call will force the shorter to automatically cover. This is also known as a short squeeze.

Hope that helps you conceptualize it.

Honestly, I don't quite get that part. If the price of BTS goes down (or the price of my bitUSD asset goes up, which is effectively the same) and, as you claim, it will still be worth 1 buck, whence will the necessary amount of BTS required to cover the lapse come from? Who pays for it?

The developers of Bitshares have been extremely honest and open, to a fault, to the extent that it has greatly hurt them because they discuss future developments openly on their forums and then people get upset. 


The way I look at it, in the future one of two things will have occurred:

USD:bitUSD gateways will exist, and all these people like you who are skeptical won't be skeptical anymore.  And the price of BTS will be 10x or more what it is now, because its clear at that point that the system works.

or

Bitshares will be dead and people will have lost money. 


You can wait until its a sure thing, but then you aren't an early adopter / an early investor, and you don't get to reap the enormous reward.  But you also didn't take the large risk if it failed, which is of course quite possible.

So the best course is to diversify into lots of these projects, not ignoring any particular one which has promise.  Some will succeed and some will fail, but the ones that succeed should reward you more than the ones that fail cost you, if you spread out your money.


Any time that someone dismisses some crypto project as a scam, they miss an opportunity to bet on one of the possible winners.  There are scams out there, of course, so we need to be smart, but generally those scams dont have a $10M+ market cap valuation over an extended period of time, like NXT, BTS, XRP, etc.   (Yes, PayCoin was an obvious scam and it was highly valued for a short time.  "Its worth $20 because I say it is" doesn't work in reality.  But scams die fast, and PayCoin crashed hard.  If something has been there near the top steadily for 6-12 months, you're no longer in scam territory.

You can deposit bitCNY to btc38 and they will give you CNY deposit credit for it.


The complaints about the lack of convertability merely show that the system is not yet fully developed.  Bitshares needs bridges into fiat which provide bitAsset to fiat convertability.


It is true that a bitAsset is not identical to actual fiat.  A bitAsset is a token with 'guaranteed' convertability into its value in BTS.  For example, a bitUSD is a token which is convertable into $1 worth of BTS.  A bitGold is a token which is convertable into $X worth of BTS, where X is the current price of 1 oz of .999 gold.  (By the way, someone is working on a precious metals dealer which accepts bitGold and bitSilver and ships you physical gold and silver for them).


A bitUSD stored on the Bitshares blockchain, and a fiat USD stored by some central 3rd party have different risks. 

If the Bitshares blockchain was to completely collapse for some reason, your bitUSD wouldnt be redeemable. 

If the 3rd party you were entrusting your fiat USD to gets hacked, goes under, or runs off with the money, your fiat USD will not be redeemable. 


Those are different risks.  The risk in Bitshares is systemic risk of a failure of the blockchain network.  The risk in having a centralized 3rd party such as a bank or exchange hold your fiat is that you have to trust that centralized entity. 


Saying that a bitAsset is a scam is untruthful.  A bitUSD is backed by $1 worth of BTS.  If the price of BTS goes down, then your bitUSD is worth more BTS than before.  Its still always worth $1.   The blockchain enforces margin calls and enforces a collateral requirment, which means that if at any time you are ever at risk of not being able to get your $1 value, the blockchain unwinds the trade and gives you your $1 of value.  Yes there are black swan risks, and bytemaster has blogged about them.




There is a strong tendancy in the crypto world to call everything else that one isnt invested in, and to call every other crypto project is a scam.  People calls Bitshares a scam, they call Ripple a scam, they call NXT a scam, they call Nubits a scam, they call Ethereum a scam, they call every altcoin a scam.  Come on people!  Stop being so tribalistic! 

These are not scams, they are experiments. 
Cryptodouble.com was a scam.  Some altcoins really have been scams, and the scammers ran off with the money and they died pretty fast.  But calling such major crypto projects as these 'scams' is simply not accurate. 


At first no one believed in Bitcoin.  Every single one of us had to make some mental leap to realize that a Bitcoin is REAL, that its not just some scam, that it has actual value.  It is no different with bitAssets in the Bitshares blockchain.  Yes, this is a complex thing to get your head around, just like Bitcoin was a complex thing to get your head around when you first encountered it. 

Success is not guaranteed, and these crypto projects are not fully finished products ready for mass consumption!  That is why we are investors, early adopters, who stand to lose or gain depending on whether they succeed!  If you wait until a project is fully developed and useable and has a large user base, what price do you expect to pay to invest in it?  Much more than you would when it is new and not fully built.  The fact that it isn't complete yet doesn't make it a scam, it makes it an opportunity.


Given the risks and the potential rewards, it makes a lot of sense to diversify into different crypto projects, and not bet all your eggs on one thing.  We dont know which will survive and win in the end, and which will fail.  So you should probably buy some Bitshares and some InstantDEX, because decentralized exchanges are a big deal.  You should own some Ether and some XRP and some NXT, because these are all promising but not fully developed projects in the crypto 2.0 space, and some will succeed and some will fail, and we don't yet know which, but the ones that succeed will reward you 100x, and all that matters is that you have some of the eventual winners.

When you have that I will be much less skeptical.

Again I don't believe you guys are scammers but when you are doing things to do with peoples money you really have to be very open, honest and careful.

It isn't a centralized entity, it is a metaphor you can apply to networks like Bitcoin and Bitshares to view them in a different perspective. Legal clarification on the laws delegates must abide by will be helpful though. There is a bitsharestalk forum member looking into a legal consultation to gain some clarification on the matter- if delegates are comparable to miners in bitcoin from a tax perspective or have extra hoops to jump through and other legal questions.


Thanks, I'm curious to see how it differs from OT which I believe is trying to accomplish something quite similar. I'll have to dig in and read more.


Not yet at least. I think it can become a reality, though. Looking forward to the first USD:bitUSD gateway.

This part I *get* (and always did after Dan explained it to me more than a year ago) but I still have a problem with it being named bitUSD when you can't exchange it for actual USD.

There is no law recognizing entities of this category in the United States.  Nor have I ever heard of any nation whose legal system encompasses such a thing.

As such, I have no guarantees of what the law requires of this entity, nor whom to serve papers on if they fumble and fail to deliver my asset as agreed.  The legal ambiguity of an unknown entity type will also make court proceedings drastically more expensive if it becomes necessary to sue them.

You can find some information here: http://ciyam.org/at (am sorry it is mostly very technical).

To explain succinctly though AT is a "smart contract" implementation that can be added to *any* blockchain (so it does not have its own blockchain).

It already works and we have created Lottery and Crowdfund ATs that have been running "live" for weeks.

Actually the beauty of it is the scenario you described won't happen because the shorter already put up enough collateral to perform the buy back, which is sent to an address controlled by the market on the blockchain. If the user shorting doesn't have the money to buy up bitUSD for example, and use it to cover the short manually, it will be bought out of the collateral they put up initially in the short (which is 2x the amount of the short).

How does Automated Transaction differ from Open Transactions? I'll have to read more about it.

I believe bitsapphire is working on something similar with Pactum- uses Hyperledger, Open Transactions, DPOS, and Codius apparently from this source:

http://www.slideshare.net/MrCollectrix/is-the-adoption-of-blockchains-and-consensus-ledgers-a-foregone-conclusion

There isn't much information on Pactum yet so it is mostly speculation.

The problem with this is counterparty risk.  The guy who "guarantees" to buy back the bitasset in 30 days may go broke first.  And somebody eats the loss. 

Counterparty risk is exactly what you get with IOU's and some types of derivatives, too.  So your "trustless" system involves "trusting" that someone will not have filed bankruptcy, will be able to buy back the asset, and will follow through on the promise rather than disappearing and retiring under a fake name in the tropics or something.   

For the type of options that are normally sold for stocks what I stated is 100% correct (perhaps you are referring to some type of option that only applies to the US?).

You sell options as an "insurance" against loss on the underlying stock. So the seller of the option is hedging and the buyer is speculating.

This is generally most useful for stocks that don't pay much in the way of dividends (as you are less likely to want to sell options on blue chip shares that pay good dividends).

The Automated Transactions project (aka AT) has already created an atomic cross-chain transfer smart contract that could operate on any platform that implements AT (it is on Burst and soon to be on Qora).

If you guys are seriously interested in a completely decentralised solution then perhaps you should think about integrating AT with BitShares (I know at least two BitShares devs are interested in it).

In my own experience, farmers sometimes trade options in their crops in order to reduce risk from, eg, a year with tough weather patterns.  When they do so, it's usually with the full intent of fulfilling that option, or demanding the actual physical asset it represents, should the market do what they hope it doesn't.

Thus a wheat farmer will place a  'buy' option on some quantity of wheat, and then if his own crops get hailed out (and likely everyone else's as well, driving prices sky-high) he will exercise that option and expect trucks to show up with product he can take to the grain elevator and sell.  

The market disagrees with you but of course you are free to believe what you wish. BTS are trading for around $0.01... seems like a steal to me. 

I think we will see better usability as businesses see startup opportunity in the space and build those types of services.

http://mercuryex.com/ looks interesting too, I haven't tried it out. They are using the atomic cross chain swap to allow trading between the two. I think there is a centralized orderbook, tho so it isn't completely decentralized.