Re: XBTC <--> BTC Gateway

All,

I've been discussing with busoni who operates Poloniex the possibility of Poloniex basically issuing and underwriting the value of 1 XBTC = 1 BTC.

I have already issued 21M XBTC (divisible, non callable). It isn't locked because I'm getting an error locking it but this will be done prior to any sale of XBTC.

The idea is that Poloniex will create an service which will buy and sell XBTC to BTC at a fixed value of 1:1. The fee will be kept low + tx fees.

Pros
* Frictionless trading against XBTC
* More choice in the way the DEX is utilized

Cons
* Further centralized risk on Poloniex

If the idea goes forward, I'll transfer the asset to himself so there will be no more XBTC in circulation than what he sells.

How does everyone feel about this?

I'm going to attempt to instigate more feedback on this.

I'll explain one big advantage of the above. If Poloniex proves to be trustworthy, then a XBTC will have and maintain the same buying power as a BTC.

This means you can trade XCP for XBTC without using btcpay. You can totally avoid the troll orders because XCP and XBTC can be both held in escrow.

This will hold true for any Counterparty asset vs BTC.

This is a great idea! It's great to see such an excellent use of the protocol.

Just so Poloniex can prepare for the worst: Even if he underwrites XBTC with BTC, it is possible that he could end up taking a loss (e.g. the price of XBTC plummets and it will be in his best interest to buy back XBTC below parity). I would strongly suggest that he make a CFD and short the price of XBTC to hedge against the devaluation of XBTC. In this case, if BTC/XBTC < 1, he can make up for it with profits from his CFD.

led_lcd, I will PM you with some more details.

There is a possibility Poloniex will go bankrupt or its software fails, like MtGox. What will happen if such thing occur?

This is the largest risk. The price of XBTC would collapse.

Keep in mind, this idea is not to avoid using btcpay. It is merely an alternative. For small notionals, XBTC could be very handy.

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.