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RE: BitShares is Going to Dominate Crypto in 2018 - Here's Why!
Just a little missunderstanding ...
BitGOLD is not backed by actual gold. Nor BitUSD by USD.
All BitAssets are baked by 200% of their value in BTS.
BTS is the collateral used to back the asset.
In the case of gold, every BitGOLD is back with 200% of its gold value in BTS. No fractional reserve, always fully backed.
That's MUCH more interesting this way because, the most BitAsset are created and used, the more BTS are locked in collateral. That shrink a lot the BTS supply creating higher buying pressure.
What happens if one of these assets does a moonshot? Suppose the Gold price is $50,000 tomorrow, 200% backing is nowhere near enough...is everyone forcibly cashed out at the collateral level (200%)?
That actually happened with the Gridcoin equivalent smartcoin - it spiked after the smartcoin was created, resulting in a Black Swan Event, which means there wasnt enough collateral to buy back the smartcoin. Bitshares is built so that such events affect only the MPA (Market Pegged Asset) in question, and the Bitshares network is otherwise completely unaffected. The Gridcoin MPA is now in a locked state, where the holders can claim back an equivalent amount of BTS of that point in time, but trading that asset is discontinued.
There is a proposal to enable reviving Black Swanned assets and markets, but for now they are semi-permanently locked.
Interesting, thank you for the background! That does make sense as an approach. It's like a permanent market circuit breaker when collateral dips too low.
I find I am not confident in my ability to assess these kind of risks with Hero, so I worry about how those that aren't even in crypto could possibly feel confident investing large amounts here.
HERO won't spike by definition. Gold and other traditional assets also move so slowly in comparison to crypto's, that they will be no problem at all. The other side of the problem is the volatility of BTS. However, all these MPA's survived the death trap of past years, where BTS dropped down to 10% of it's peak value. So I think it's safe to say that they have been proven to work as intended. Probably the asset most likely to suffer a black swan today is BTWTY. It is an index fund-like MPA which follows the value of the top 20 crypto's. The value of that could suddenly soar...
MPA's pegged to crypto's are unpopular, as they serve no purpose. MPA's make sense when they are pegged to non-digital assets, which are usually also relatively unvolatile. Thus the risk of Black Swans are usually related to crypto-MPA's, which are of little interest anyway.
Is your argument here that we can't have a black swan in something like Gold (Comex levered, what, 100:1?) or the USD?
No, not at all. Just that margin calls - and hence Black Swans - are less likely to happen with traditional assets than with crypto's. I mean the respective MPA's. Gold, Silver, Oil, USD, CNY are very unlikely to spike 100% in one day, while it is very normal with crypto's. Black Swans can still happen with any MPA.
The shorters have an incentive to support the BTS price if they are short some MPA. Thus, the more MPA's that are issued, the more stable they are likely to be. Bitshares is still relatively young, but it is starting to grow. Black Swans are a part of the growth pains.
Thanks for the added color.
What color?
Yes. When they get locked in, It decreases market volatility, and allows mom and pop to dip their feet in! The interesting question with bitGold and the other smart coins is this: What is the market price, and how do we discover it? If you talk to anyone with knowledge of the precious metals, they will tell you that the metals are manipulated by the biggest banks in the world. Price discovery from the standard markets cannot be trusted. We've been talking for some years now about the two prices for gold (physical vs hypothetical) diverging once the manipulation grows past sustainability. Back in 2008/9 and 2011 we saw ebay take up the role of price discoverer. People were willing to pay MULTIPLES over the spot price in order to get coins in hand. I can see Bitshares becoming the place to go for real pricing for gold, even over the COMEX, etc. In that case? What does Bitgold peg itself to? ITSELF! It becomes a floating free market... and once these smart contracts are plentiful, bitshares gets ROCK SOLID. It will dominate, and there will be many tears of regret... imagine chasing Etherium at $300 when Bitshares is at 18 cents.
Chasing ETH seems to be relatively pointless at this stage (especially relative to BTS), as the price appears to be suffering under the endless wave of ICOs of questionable value.
ICOs with interesting coins are moving from ETH to the BTS blockchain, such as Crypviser did.
Crypviser, is the ICO that led me to discover bit shares.
Etherium without the hassle/risk/spam?
Im in. 😂
I guess johnsmith is right. Its all about security and transaction speed and Bitshares dominates these areas.
About ICOs: Expectations are much higher than the product/solution and their real market value. At some point people will realize it.
Haha! I cant wait. Ready for the trip to the moon!
Ready for liftoff? It's happening now. :)
Oh wow, even better than I thought. I have made an edit to reflect this. Thank you for clarifying the system, learning every day! =)
In that case, what happens to the USD converted into bitUSD when poored into the system via, for example, CCDEK? If not held as collateral, where is it kept?
Being able to buy straight into the BitShare market with USD without having to go through a medium like BTC is something I am hugely thankful for as someone with limited exchange experience. It does a lot to simplify the crypto buy-in process for a new investor.
Could you expand a little on the process of moving USD directly to the Bitshare market? I wasn't aware this was an option to bypass first buying BTC. Thanks!
Using CCDEX on DEX you are able to exchange USD for bitUSD, which is an asset on the BitShares platform pegged to the dollar. This can then be readily exchanged into any other asset on the platform. Other than USD, you can also do this with Euro and, from memory, Chinese Yuan
To use CCDEK, you will need to prove your identity before you can use it. Once you are verified, deposits are free and withdrawals are charged at a 3% fee.
Hello, I am wondering if you can share me your knowledge on how to use that CCDEX thing you're talking about? Thank you!
It is a method to move fiat directly into USDT on the Openledger DEX. Just set up an account, and elect to load USD, CNY or EUR. It will walk you through the rest of the process.
How am I going to do that? Do you have a screenshot of some sort?
I do not have Openledger account but I do have a Bitshares client and a wallet installed on my desktop. Will this be enough to do the feat?
Thank you, this is super helpful stuff. Definitely adding you to my follow list.
@dutch is CCDEK a fiat gateway? Can I convert USD from US bank account to bitUSD directly?
THank you for the explanation. It's the same concept with locking up your steem in steem power. This concept would work great if you had long term investors, that is tied has the coin tied up with them for two plus years, giving the project time to mature and gather interest as the value spark but with everyone looking for a project, people gonna pull the trigger once they are in profit. If they can half the available supply, not just Bitshares but Steem we can see a considerably spike in price. With EOS, the initial circulating supply should have gone along with the 7's concept of the symbol and limit the initial supply to 7 million and gradual release into circulation with time.
Sorry for dropping out of the blue here, but this is the last thing you wrote. I advertised you a bit in my last post and even added a picture of your profile info. If you mind tell me and I'll edit.
Cheers! I hope you write something new I can upvote ;)
Much clearer. Thanks.
Thanks man!