CALIBRATION POINT

By the way, below is a sample of the kind of "Altcoin Discussions" I always hoped we would be able to have with folks in this forum.

Compare this to what usually goes on among the schoolboy spitball crowd and then ask which is the best use of your time...

(Read the original at bitsharestalk.org)

Quote from: Stan on July 11, 2015, 01:29:46 PM

Quote from: starspirit on July 11, 2015, 02:39:04 AM

Quote from: Stan on July 09, 2015, 03:42:40 AM

Quote from: ccedk on July 08, 2015, 10:53:10 PM

Quote from: starspirit on July 08, 2015, 01:30:07 AM

I would like to better understand how the actual functionality will look for users, because it appears a bit vague to me at the moment. (Apologies if the answers are obvious to others). So as a starting point:

Say I have fiat USD, and I want to start trading cryptos. I send the fiat USD to CCEDK - do I then receive bitUSD in return or a gateway USD (say CCEDK.USD)?

Likewise if I were to send BTC or alt-coin to CCEDK, do I receive the Smartcoin version (e.g. bitBTC) or a gateway equivalent (say CCEDK.BTC)? If there were more than one privatised Smartcoin equivalent of any fiat or crypto, which version would I receive?

Assuming I receive the appropriate Smartcoin equivalents, then is my crypto-trading limited to whatever cryptos are currently represented in BitShares in Smartcoin form? ie. I speculate in bitDASH rather than real DASH or a gateway IOU called CCEDK.DASH?

What is the profit model for CCEDK dependent on? For example, would CCEDK be creating their own privatised Smartcoins to represent DOGE, DASH, BLK etc in order to earn trading fees as a privatised issuer? Or would they be rewarded in some way for setting up markets for various trading pairs? If there are multiple exchanges like CCEDK in the network competing in these activities, would we end up with multiple representations of each coin (which would not seem very efficient from a user perspective)?

Or is the profit model transformed primarily into a referral model, where CCEDK receives a cut of all trading activity in the BitShares exchange resulting from members brought into the system?

How are different exchanges in the BitShares Exchange Network likely to differentiate themselves?

It seems a lot like this is all questions based on CCEDK being the new Bitshares wallet, and as such I would appreciate [member=6]Stan[/member] to come up with some clever explanation on the various options!

Since you are asking a generic question, I'll provide a generic answer and let CCEDK and other partners comment on their specific customizations when they are ready to announce them.

At the core of everything sits the Cryptonomex web wallet with built-in decentralized exchange and financial products factory which will be hosted on partner sites. This provides the standard back end (market order books and trading engine, etc.) and front end (hosted web wallet that looks like a familiar exchange.)

It also provides built-in interfaces to other leading coins and partner-supplied financial products and services.

Fiat can enter/exit the system via any member with the proper licenses who can buy/sell any asset on the BitShares exchange that they like from their own inventory of SmartCoins and Exchange Issued Assets. They can even sell assets issued by other partners if they want to. Just like selling books on Amazon - from inventory in their own wallet accounts.

So customers can choose between bitDash or CCEDKdash on the network or actual Dash in CCEDK inventory on their dash wallet. (Of course the CCEDKdash UIA on the bitshares network is essentially nothing but a claim on the actual Dash in the CCEDK wallet and is only as good as their counterparty promise to redeem it.) Users get the choice whether to take that risk or pay to move into the BitShares bitDash market pegged asset to be counterparty free. Or they could choose the CCEDK private pegged asset which only trusts CCEDK to publish a price feed not to hold the currency itself. In practice, other exchanges will offer similar choices and all will trade with slight premiums or discounts based on perceived risk and reputation of each issuer.

Repeat: Users get the choice. Shocking.

Once a user has those assets, they can trade them with no further counterparty risk on the decentralized exchange - interacting with users from every partner on the network.

So, as you have just seen and will soon see again (cue the dark mystery music), businesses who are not exchanges can join our network and instantly have a basic exchange and wallet built in (just like a typical shopping cart is built in) and integrated with their industry-specific business processes.

Stay tuned for more Summer Announcements.

Then each partner/industry gets to customize it as much as they want, including:

Making simple branding or "white label" changes with logos and color schemes.
Adding in GUI elements to present extra site-unique tools and features.
Linking between these GUI elements to custom business logic between the BitShares wallet and other coin wallets or the APIs of other fiat payment services and partners.
Implementing their own assets and financial products using the tools provided by BitShares for which they get their share of the fees associated with those products
Implementing their own unique customer support services and loyalty programs.
Implementing their own unique customer acquisition strategies competing to sign up BitShares users.
Implementing their own unique strategies to train and up-sell customers into using more services for which they are entitled to their share of the fees from the whole network for every customer they signed up.
Negotiating their own deals to bring other partners into the mix - like CCEDK did with Bit-X.

Example: A worker in Omaha feeds some of his paycheck dollars into a Peak Ventures ATM machine and one second later his wife in Tijuana buys groceries with it using her CCEDK Nanocard.

The use cases of all the newly available seamless partner integrations are mind-boggling.

Everybody wins:
The issuer of an asset gets the fees from the use of that asset by everybody else's users.
The recruiter of a user gets the fees from the use of the network for everybody else's products.

... and we all benefit from greater economic volume - which itself attracts more users and service providers.

So, bottom line:

Network members compete to win and retain customers - usually drawn from completely different demographics.
Our affiliate incentive program gives them credit for everything those customers do on the whole network - by introducing them to products and services offered by other network partners.
They gain by having their own products and services marketed to the customers of other network members.
They gain by sharing market depth and liquidity in a single global marketplace.
They gain by sharing in the "unhackable" and "transparent" set of order books that protect the consumers for the first time from exchange counterparty risk.

This changes everything.

Thanks for your comments Stan, and highlighting the flexibility in the range of assets an exchange could offer. Below are some more questions, I'm really just trying to understand how the pieces work. Feel free to correct any of my misunderstandings.

When we say the exchanges will be able to share market depth and liquidity, are we referring specifically to markets where both tokens in the pair are on-chain assets?

The way I am seeing this at the moment (correctly or not) is that, like a traditional exchange, I can deposit fiat USD, alt-coins, or other types of assets to the member exchange. Any deposits in the form of off-chain assets (e.g. fiat currency, BTC, LTC etc) then get credited to my account with that member exchange as an IOU from them, supported by their inventory of that asset, until I withdraw them from the member exchange, or trade them for another asset. I presume I will be able to hold on-chain assets obtained through the member exchange in some way that is counterparty-risk free, and transfer to or from the hosted wallet.

I am then supposing that where I am trading between two assets, at least one of which is an IOU from the exchange, that those markets have liquidity specific to the member exchange, and do not benefit from shared depth or liquidity with other exchanges. I'm thinking this because the buyer or seller on the other side needs to want to accept the issuer-specific IOU in return.

When I do exchange trades exclusively between on-chain assets (e.g. BTS, bitUSD, bitDASH etc), then market depth and liquidity is shared because the exchange GUI is drawing on the common market in the DEX.

Is this close to what users should expect?

Exchanges can continue to do anything they did before, including having funds on deposit from users that carry traditional exchange counterparty risk.

But they don't need to. They could have a simple interface like shapeshift, blocktrades, metaexchange where buying BTS or a Smartcoin (eg BitUSD, BitGold) is more like buying a book from inventory on Amazon. The exchange either has them in inventory or buys them off the BitShares Exchange for you just in time using any other currency they have on the BitShares exchange already.

Most likely, that asset is one they have issued themselves on the BitShares network. Exchange A might issue EXA.USD and Exchange B might issue EXB.USD. These they guarantee to always redeem for fiat USD and that promise is as good as their reputation. Thus, EXA.USD and EXB.USD might trade slightly differently against BitUSD on the BitShares Exchange depending on the perceived reputations of the two exchanges.

Now, anything can trade against anything on BitShares 2.0 so you could trade EXA.USD against EXB.USD or against BitUSD or anything else.

I might pay USD to Exchange A (via a convenient ATM they have) to have EXA.USD placed my BitShares account.
   During this time I'm exposed to Exchange A counterparty risk.
   I might then offer EXA.USD for BitUSD in a market whose depth is a function of Exchange A's popularity.

Now I'm in BitUSD and can trade deeply against holders of BitUSD referred by all exchanges
   to obtain deep markets in assets offered for sale by users referred by all exchanges.
   During this time I have no counterparty risk - just blockchain systemic risk.

When its time to leave I might decide to exit through Exchange B (because they have a debit card I like)
   I trade BitCNY against EXB.CNY in a market whose depth is a function of Exchange B's popularity.
   During this time I'm exposed to Exchange B counterparty risk.

So 99% of the time I'm completely inside the BitShares blockchain, and exposed to exchange risk only for a few seconds while I'm "just passing through".

This doesn't bother the member exchanges, because they have a stake in the fees from all my transactions while I'm nice and safe inside the blockchain and doing transactions among a bigger economic pool of users and assets and services from all exchanges.