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PSA regarding BitUSD

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loon3

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I posted this in the comments of the most recent Bitcoins and Gravy episode that included the Peertracks interview, but I think it deserves it's own post...

After listening to the interview, I decided to go over to the Bitshares Talk forum to try and better understand the implementation of Peertracks and the Bitshares Music DAC.

Prior to doing this research, my basic understanding was that the BitUSD used on Peertracks was the same as the BitUSD used in BitsharesX. This is not the case. Each chain (Bitshares Music and BitsharesX) has it's own internal market to establish a USD asset peg.

There is currently a plan being discussed on the forums to merge all Bitshares DACs (BitsharesX, Vote, DNS) into one SuperDAC so that BitUSD is fungible between all of them, but according to Cedric, Bitshares Music will continue to operate as a separate chain.

Peertracks BitUSD != BitsharesX BitUSD

Even though both are pegged to USD, there will be a separate market rate for each which could cause significant slippage if trying to move BitUSD between chains.

Posted on October 23, 2014 at 11:59 AM

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• irnhnve

  

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  Just out of curiosity, what do you think of BitUSD by BitsharesX? If it uses a delegated proof of stake as a concensus mechanism where 101 delegates verify transaction, isn't it just a similar version of the current system the fed has in place where a select few control everything?

  Posted on October 23, 2014 at 1:44 PM
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• Cryptonaut

  

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  @irnhnve isn't it just a similar version of the current system the fed has in place where a select few control everything?

  that's exactly what it would turn into if it ever became mainstream and take over everything (basically, the bitshares version of the dream of bitcoin being the main world currency). 101 isnt that many people, and in the system you have to actively vote for them. So basically it would be a bunch of people ("parties") campaigning to get elected as delegates, and also because it's proof of stake, they would also need to have a lot of money right? Rich person popularity contest, pretty much same thing (maybe somewhat improved) as to what we already have. No thanks.

  Posted on October 23, 2014 at 2:53 PM
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• irnhnve

  

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  @cryptonaut

  @irnhnve isn't it just a similar version of the current system the fed has in place where a select few control everything?

  that's exactly what it would turn into if it ever became mainstream and take over everything (basically, the bitshares version of the dream of bitcoin being the main world currency). 101 isnt that many people, and in the system you have to actively vote for them. So basically it would be a bunch of people ("parties") campaigning to get elected as delegates, and also because it's proof of stake, they would also need to have a lot of money right? Rich person popularity contest, pretty much same thing (maybe somewhat improved) as to what we already have. No thanks.

  When I was listening to Daniel Larimer's speech in the last podcast it sounded like he was presenting the concept as if it was the best solution currently available. I don't know why anyone would think this is a good idea. At least with proof of work mining you can always start a mining operation on your own with enough capital investment but in DPoS you're kinda screwed if you aren't one of the 101 delegates.

  Posted on October 23, 2014 at 3:16 PM
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• loon3

  

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  @irnhnve

  @cryptonaut

  @irnhnve isn't it just a similar version of the current system the fed has in place where a select few control everything?

  that's exactly what it would turn into if it ever became mainstream and take over everything (basically, the bitshares version of the dream of bitcoin being the main world currency). 101 isnt that many people, and in the system you have to actively vote for them. So basically it would be a bunch of people ("parties") campaigning to get elected as delegates, and also because it's proof of stake, they would also need to have a lot of money right? Rich person popularity contest, pretty much same thing (maybe somewhat improved) as to what we already have. No thanks.

  When I was listening to Daniel Larimer's speech in the last podcast it sounded like he was presenting the concept as if it was the best solution currently available. I don't know why anyone would think this is a good idea. At least with proof of work mining you can always start a mining operation on your own with enough capital investment but in DPoS you're kinda screwed if you aren't one of the 101 delegates.

  I think the concept of pegged assets on blockchain collateralized by the token of the chain is a pretty novel idea.

  The use of DPoS to verify transactions is necessary to achieve a 5 second block time to minimize slippage and allow the pegged asset market work properly. My opinions on Proof of Stake have changed a lot over time and I think DPoS is an improvement over the Proof of Stake implementation in NXT.

  Posted on October 23, 2014 at 4:44 PM
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• Eylrid

  

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  I wouldn't worry about the delegates, they can be voted out. I would worry about the stakeholders because they have the power to determine the delegates.

  As for parties I wouldn't worry that much about that either. In traditional government elected officials decide on the entire gamut of issues. They can only be replaced once every so many years. It's hard to tell how well they are actually doing their jobs.

  In Bitshares delegates have a narrow roll: create blocks. If a delegate goes bad they can be replaced quickly. It is easy to verify how well a delegate is doing their job. Are they following the right protocol? Are they producing blocks on time? Are they creating unnecessary forks? Are they excluding transactions? Do they confirm transactions quickly?

  I wonder if it's even possible for a currency to keep control truly decentralized. Bitcoin mining is controlled by a small handful of pools. I don't think that central control or semi-central control of a currency is a bad thing if there is strong currency competition. As long as there is competition the people in control of a currency have incentive to act in the best interest of the users, especially if they are the biggest holders of the currency. I don't think that a single global reserve currency is a good thing.

  Another thing to think about is whether someone can get a piece of power without permission from any of the people who already have it. With proof of work that means setting up and running a mining operation. With proof of stake that means getting coins. As long as the coin is publicly traded you can always get at least some.

  It would be possible for a person or group of people to get 51% of the coins and hold onto them. In that case there would be no way for anyone else to get enough coins to have any power. If a stake holder has to repeatedly vote, and each vote costs them some amount of shares, then a 51% share would eventually get reduced if they weren't buying back what they spend to vote.

  Posted on October 23, 2014 at 5:32 PM
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