Topic: Creating metacoin for a decentralized exchange? - page 2. (Read 3191 times)

I don't accept BTS as having value.  I don't accept doge coin either.  I regard these assets as having no collateral, because I have no guarantee that I can exchange BTS for anything of value.

It's all very good indeed, but why use an intermediary? You said that bitcoin is not fast enough. I say in reply that without an intermediary the system should work even better. If I want to buy doges and am going to pay in bitcoins, why should I at first buy BTS to sell bitcoins and then sell BTS to buy doges? I don't get it.

BitShares is a DAC- a distributed automated company.

It offers a service: value transfer
has expenses: delegate pay
has revenue: transaction fees
and its equity (BTS) rises in price as the adoption and utility of the network grows.

You can apply the same line of reasoning to Bitcoin and realize that mining is a really expensive way to secure the ledger. I'm not trying to get into a debate regarding whether or not mining is the way to go, just saying that it costs more to secure due to the energy expenditures. The idea is that there is a happy medium where you can achieve a sufficiently decentralized network where malicious actors cannot game or easily get control of the system, yet also minimize the cost of securing the blockchain ledger of said network.

BitShares attempts to redirect those miner fees in a more efficient way by allowing delegates to campaign for funding via delegate pay. Many delegates are being paid for their efforts in core development, building the BTS supporting infrastructure, and marketing initiatives, including many other things including education, exchanges, and blockchain statistic sites (such as bitsharesblocks.com). Their actual delegate node is validating and signing blocks to form the network consensus. In such a system, each delegate actor has their reputation at stake and their interactions with the blockchain are public and can be audited.

Also, Atomic cross chain trading is what you are talking about. Ideally, a decentralized exchange can accomplish such a thing... but in practice it is more difficult than it looks. Looking forward to seeing some creative solutions to that problem spring up in the coming year.

But if the primary purpose of the BTS blockchain is organizing decentralized trading, why make use of an intermediary when you can trade directly, say, buy doges and pay for them in bitcoins?

That would make trading even faster, right?

Proof of work in the current incarnation doesn't confirm transactions quickly enough to facilitate a decentralized exchange smoothly. The design of DPOS also has block confirmations set at every 10 seconds, to keep the flow of the market running smoothly. Each delegate can also be viewed as an oracle... they publish price feeds from scripts interacting with an RPC API on the server their delegate node is running, to provide the internal market with spot prices, the median of which is the price new short orders execute at for that given bitasset.

Why not use bitcoin as a back-up asset? Why create new coin when everything what is new in BTS can be done around an already existing infrastructure, that of bitcoin?

Not quite, but I suppose that depends on how you define shitcoin. Bitshares is built from the ground up on a new codebase instead of being a simple fork of another like actual "shitcoins". The proof of work distribution (which accounts for ~50% of the BTS supply) was based off of a snapshot taken from protoshares (PTS), which is a bitcoin fork. The other 50% of the initial distribution was sharedropped to AGS holders, who contributed to a development fund by donating BTC or PTS to the AGS initial crowd offering.

 It is also the first cryptocurrency to use delegated proof of stake. To me, a shitcoin is something that has NO value proposition or unique use cases; instead it is just a simple fork of an old coin with a new brand.

Some examples of non-shitcoin projects (IMO) with their own native token: maidsafe, ethereum, ripple, nxt, bitshares

Sorry to make an assumption about you, there are a lot of misconceptions around the concept of bitassets so I was just trying to help the readers of this thread understand the difference. I am passionate about the project but I want nothing more than full disclosure of the associated truth, risks, rewards, and use cases. Not to sell someone on something they don't understand.

So as for you thinking I am selling snake oil, well like, that's just your opinion, man.  

Personally, I think the ability to peg the price of BTC is rationale enough to include BTC in the name. I think BTSBTC would also be a good way to identify it.

So BTS, which is used to back up bitassets as I got it, is just another shit coin out there, which we've seen more than enough already.

I'll try and clear up a few misconceptions.

BitAssets are shorted into existence.  The shorters are forced to buy back the BitAsset they shorted every 30 days.  So anytime someone buys $1 BitUSD, there is guaranteed to be a buyer within 30 days.  This keeps the peg in place, because people know that if you can snap up BitUSD down below the price feed, then later you will be able to sell it closer to the price feed (or slightly above).  You can view the accuracy of the peg here: https://bitsharesblocks.com/charts/feeds?asset=USD.  You can see it usually stays +/- 2% of the price feed, occasionally slipping to 3%.  So it's been working well for months and the more liquidity gained in the future will improve its function, making it get tighter and tighter.

So that's the peg, then there's the collateral.  The collateral percentage for each BitAsset is viewable here:
https://bitsharesblocks.com/assets/market.  You can see there is over 250% collateral for every BitAsset locked up by the BitShares blockchain.  This high collateral requirement is due to the unstable price of BTS, for more stable collateral types typically lower percentages are needed.

All collateral is in BTS, but does BTS have any value?

- Distribution.   BTS was initially distributed via proof of work, the same as bitcoin.
- Utility.  BTS is the fuel for a derivative instrument that create stable cryptocurrency - a decentralsed crypto-bank for all.
- Current distribution.  BTS is now created via real proof of work, DPOS (delegated proof of stake).  Developers do work for BitShares in exchange for BTS.

It's normal for derivatives to be backed by collateral different to that of the derivative.  A gold derivative doesn't have to be backed by gold, just an asset of equivalent value.  In this case, BitGOLD is backed by as much BTS as it takes to buy a physical ounce of gold. 

Very soon though you will be able to exchange BitGOLD and BitSiLVER 1:1 with the physical metal at http://cryptosmith.info/. Also, BTC38.com accepts BitCNY as if it were real CNY and actually pays a small bonus for depositing it.  This is just the beginning for BitShares.  Stocks are coming soon, backed by real stock bought on a stock exchange.

You are probably unaware that Dan Larimer used to chat with me on Skype before Bitshares even existed and that I knew about this whole concept before nearly anyone on this forum.

I am not making assumptions at all - calling something xBTC that has no BTC to back it up is not what I think of as being a valid product (but again that is just IMO).

And for the record I am not claiming that it *is* snake oil but the way it is being sold (by you in particular) looks just like that (so please stop telling me to "educate myself").

Please cite these references.  What is "The Bitshares Foundation"? I don't think that entity even exists.

I haven't seen anyone claiming that bitassets are backed by their physical counterparts... in fact that is the beauty of it. You can hold and trade a cryptographic token that closely approximates the value of its real world counterpart. You can send the purchasing power of gold, usd, etc. across the globe for fractions of a penny. This opens a new venue for use cases that hasn't been possible before & lowers counterparty risk. So you would prefer to hold an IOU... don't use bitassets. I however would like to minimize trust as much as possible with my money... hell I barely trust myself with it even.


All bitassets are backed by BTS as collateral. Period. Nobody is trying to say that the physical counterpart is backing it as DecentralizeEconomics claims. This is why it is not an IOU and is in fact a type of derivative... but instead of trusting Wall Street bankers who are collateralizing the asset with junk mortgages (the bad derivatives), you are trusting a blockchain protocol to secure the underlying BTS and keep the asset collateralized. This is why the assets will automatically unwind if BTS is falling in price when the median feed price matches the call price for a short position an automatic cover is triggered.


Sorry, I will take bitUSD over MtGoxUSD anyday. Different strokes for different folks.

BitAssets are a new use case- want to have an asset with minimal trust that approximates the value of its counterpart and exposes you to yield? Hold a bitasset. Want to trust the assurance that a company will redeem your IOU, while being exposed to the risk of default, hacking or bankruptcy? Then go for the IOU.


BitAssets aren't collateralized by fractional reserves. In fact, they start at a 300% reserve, and margin call well before it gets anywhere near 100%. For uncollateralization of a bitasset to occur (a systemic risk), a black swan event would need to happen. Read about what those are here and ways they can be handled: http://bytemaster.bitshares.org/article/2015/01/27/BitAssets-and-Black-Swan-Events/

I've explained a lot of these things here before. There is a lot of content to digest- why wouldn't you want to read it from the horses mouth? I see no problem with linking people to useful resources. It isn't snake oil that instead of writing a blog posts worth of information I point you to a sufficient article. You can judge yourself whether or not it has merit; that is not for me to decide.


bitBTC approximates the value of BTC, but can be traded on the bitshares decentralized exchange. Simple as that. It pegs the value of BTC.

You can trade bitBTC/BTC on this market: https://metaexchange.info/markets/bitBTC/BTC

There are use cases that bitassets can fulfill that nothing else in the space is capable of atm. I wouldn't be so quick to dismiss it all as "snake oil" because you haven't taken the proper time to research it for yourself and are making assumptions instead.

Oh and for the record, DecentralizeEconomics has an excellent & entertaining thread filled with propaganda FUDing bitshares over here that had me laughing and has some great back and forth dialogue about contested bitshares topics... check it out!

https://bitcointalksearch.org/topic/communist-bitshares-wealth-redistribution-is-theft-916696

Yes - very good point.

This is why a Ripple BTC is not worth a real BTC (as you can't be sure that all the issued "tokens" can be redeemed).

Constantly posting links to large blog entries or papers (rather than giving a simple explanation) is another problem I have with these "products". Typically this is the "snake oil" sales approach in the financial world.

We all saw (and many have felt) the result of Credit Default Swaps (which were also very complicated "derivatives").

"So if you are able to actually exchange 1 bitCNY for 1 CNY somewhere and there is enough CNY held in reserve to cover all outstanding CNY debts then that is fine but if there is nowhere you can do that then the name is about as meaningful as bitXYZ."

I added the bold part because without 100% reserves you simply have a fractional debt scheme.

This is exactly my issue with these "products" - if it is called xBTC then I expect to be able to exchange it for actual BTC.

So if you are able to actually exchange 1 bitCNY for 1 CNY somewhere then that is fine (and the name makes perfect sense) but if there is nowhere you can do that then the name is about as meaningful as bitXYZ.

Whilst I don't think that there is any intention to deceive it "seems" deceptive to name something xBTC if you can't exchange it with actual BTC (i.e. why are you using that name?).

I am quite familiar with options trading (used to do some of that years ago) and although options are often never exercised they always *can* be if the conditions are met (i.e. the underlying share ownership will be transferred).

Trading something that with a name that doesn't have an actual matching asset is just something I'd never do (but perhaps that's just me).

They don't exist.

If the IOU's respective gateway isn't fractionally reserved, then the IOU is actually redeemable for the physical asset.  The issue with "bitAssets" is that they are a derivative which can ONLY be settled in BTS.  There aren't any dollars, euros, bitcoins, bars of gold, barrels of oil, etc in the Bitshares ecosystem.  "bitAssets" are not redeemable for what they are supposed to represent.  Even if there are "bitAsset Offramps", companies that purchase bitassets and send out their physical counterparts, there will never be a 1-to-1 correlation between physical assets available and derivative contracts open on the market.  Bitshares' claims their "bitAssets" remove "counterparty risk" but what they really do is expose individuals to extreme systematic risk.

Imo, no convertibility, no parity.  IOUs are much safer and reliable than derivatives.  I'd much rather have a digital representation of a physical asset that is directly convertible requiring trust than a digital representation of a physical asset which requires no trust because it has no convertibility, therefore no value.

This doesn't make them more reliable, right?

Derivative is a promise to give you some quantity of the underlying asset. IOU is a document that acknowledges debt, that is a promise to pay you some amount of money (and money is an asset too). Don't see much difference between them in respect to their reliability. Six of one, and half a dozen of the other.

They aren't IOUs.  "Bitassets" are derivatives.  An example of an IOU is a Ripple token which is directly redeemable for the physical asset via its respective gateway.

No, I would most certainly not think so. As said before, these bit-assets are just IOUs for which you pay real money. And it doesn't actually matter whether their "bitassets" are backed by their physical counterparts. What matters here is who controls the real assets (if they exist at all, of course).