BTW: I am not attacking, just asking question and trying to understand.
So, you are saying that bitUSD is only pegged to the dollar by the market rather than by some central entity like Bitshares corp or whatever. If the expectation is that the market will keep the value of bitUSD equivalent to the $ I can't see how that will happen. The Chinese government and bank is what keeps the Yuan pegged to the $, not the market.
No problem, this is new territory for most of us, we are all learning. I am not sure I understand it fully myself, but I think I have a pretty good idea of how it works. Anyone feel free to jump in and correct me if I am wrong about something.
Exactly, bitUSD is pegged to the US dollar by the market. The expectation certainly is that it will very closely resemble the value of the US dollar. bitUSD will closely resemble the value of the US dollar because people will be able to easily profit from it if it doesn't. The incentive for people to go long or short if someone is trying to manipulate the market will keep it in check. People like money, even more so, they like to make easy money. It will be very easy to see if someone is manipulating bitUSD and someone can come in and profit from that attempt of manipulation. I think going long or short on bitUSD when someone is obviously manipulating the price would be really easy money.
I suppose there is one potential thing that could screw it up, and that is if someone had much more money than the market could bare IE. if the bad actors had more money than the good actors. I think this becomes less of a problem as deep market depth is established, and I don't even think there would be an economic incentive to do so as the market would eventually eat it all up. I'm not so sure about this point though.. I'll have to think about it more, but I am certain when I say it won't be nearly as big of a deal as market depth is established.