Quote from: bytemaster on October 01, 2013, 04:14:16 PM

Quote from: giantcrab on October 01, 2013, 04:02:45 PM

Quote from: bytemaster on September 02, 2013, 08:49:50 AM

Now I believe everyone can agree that if this were a real bank and the bank stock has a non-0 value that each and every transaction would be valid and 'safe'. The USD note's from the bank would have a market value of about 1 USD and the purchasing power would be defended by the bank which would honor its IOUs. There should be no doubt that the USD would track real USD even though the bank never had any USD on deposit, only offsetting ledger entries and collateralized loans.

There are many difference between here the bank and Bitshare system, the bank issued USD notes with nominate price and it will honor its IOUs, but how about BitUSD? Its price will be solely determined by the market force and how can you say it will track the real USD?

I dont think BitUSD can track real USD only because of market force unless some connection between BitUSD and real USD is built, market is such a world that many factors have impact on BitUSD/USD exchange rate, most probably the BitUSD/USD exchange rate will behave like bitcoin/usd rate it will go up and down without a stable equilibrium.

In another word, why should BitUSD track USD and BitGold track gold? Can their name lead to a market consensus?

To enable BitUSD track USD, market makers is needed at the early phase, the market maker can do something like to sign a contract with some estore to purchase their BitUSD at a proper price, or even provide futures contracts to stabilize the price of BitUSD, some time later when a stable connection between BitUSD and USD has been built the market maker can escape and we can still expect the track relationship remains.

BitUSD will track USD in the same way as prediction markets track any arbitrary concept. I recommend you study how prediction markets, derivative markets, or 'side-bets' work in practice. Every actor in the market has financial incentive to tie BitUSD to USD by 'betting' on where the future consensus will move. The only logical way to bet is to assume everyone else will eventually bet with with consensus toward USD.

No market makers are ever needed. In fact, there is no need for BitUSD to ever be exchanged with USD for the system to have value. Think on this last point a bit and you will gain many insights.

In prediction markets, derivative markets, or 'side-bets' work in practice, actors will benefit when their forecast meet what really happen, otherwise they will lose.

In the IEM project that are designed to predict election, actors who correctly predict the election result will benefit. This is the base to generate a meaningful prediction result.

The price of future contracts is always highly correlated with the price of spot goods, because at the mature date the long side will be delivered the spot goods!

How about BitUSD? your logic is that The only logical way to bet is to assume everyone else will eventually bet with consensus toward USD. But why? Can BitUSD exchange with USD at a fixed rate? or who make BitUSD tie to USD will be rewarded? No. Actually there is no link between BitUSD and USD except the name, the only way to win is to forsee the price trend of BitUSD correctly, no matter how the BitUSD/USD rate will change. Isnt it absurd to suppose that the market will make one thing tie to USD only because you name it *USD?

However things like market making can make this tie happen, and then can lead BitUSD to act like USD in payment and deposits, then Bitshare system will be more meaningful then Bitcoin

Charles, thanks for giving so many explanation.

actually I have read out some great idea from BitUSD design, you know, Bitcoin is decentralized, but only for issuing, the issuing quantity is still determined centrally. However according to the designed creation process, it seems BitUSD can be regarded as a currency that are decentralized not only for issuing, but also for determination of issuing quantity, do you agree?