The BitAssets on BitShares can be a little hard to understand; this example with fruit might make it easier.

Bitshares is a cryptocurrency exchange. Bitshares (BTS) is like Bitcoin (BTC), but it has some unique characteristics. The exchange allows for debt issued assets of BitUSD and BitCNY as well as others. Let’s introduce this with an example of fruit.

Imagine there is a small group of men who like to play poker every Monday morning at a picnic table outside of the grocery store. These retired men, let their wives shop and they drink coffee pay poker and visit. One morning one of the men did his shopping early a had a bunch of bananas. When it came to his turn, he was out of money so he stuck a banana in the middle, and the winner got a banana. Hmm. Bananas are now currency. The next hand someone stuck an orange into the middle and now oranges are currency. Another time of the guys was hungry, someone wanted to borrow a banana. So he took a piece of paper and wrote I owe you one banana and gave it to the friend. This note traded as a banana threw the game and when his wife came out of the store with bananas, the man paid off the note.

Now let’s say that every one of these retired men trusted each other. They all had the ability to go into the grocery store and buy every banana or every apple in the store. They also soon realized that fruit, could get a little banged up moving around the table all morning, so paper became the preferred way to trade borrow or bet with fruit. Soon it became the custom of this game that fruit was the only currency. This may have been because gambling with money was not legal in that town. The reasons why are not really important.

One day a new man showed up late to the poker game. As he did not have any money he simply wrote “IOU 1 apple, signed Bob” on some index cards and sat down to play. These cards acted like apples and he was able to play. Next Carl came, he wrote IOU 1 apple on cards and played. Each person was able to make a promissory note for apple or oranges and was able to write as many of them as others would take. This being a simple game it had low stakes. As players would leave, they would trade the necessary fruit and exchange cards. If Bob left, people would trade apple for apple cards, so bob got most of his cards back. If he didn’t he just went into the store and bought a bag of apples. Problem solved.

Each of these cards at the table represent a fruit asset. Each of these men know the other men would all buy them lunch, a dinner or a bunch of apples senses this is a low stakes poker game.

Now one day the grocery store moved, but the men continued to play. It did not matter if the grocery store is really there. As long as the men believed in the assets everything worked.

The men would meet every week, and not needing to zero out accounts, they could collect the IOU cards and stick them in the pocket until next week. There is no need for zeroing out every week. One could have a cashier, like you do a casino too.

One day a new man showed up and no one trusted him. They all asked can we trust you. So the guy opened up his wallet presented a $100 bill. Now suddenly everyone knew he could buy fruit as well. They trusted him. His fruit was “backed up” by a hundred-dollar bill.

In this example, I have used fruit. This may seem silly. These men might also be working men. Each of them owns a grocery store or a farm. They need to trade fruit. There could be 1,000 men and hundreds of tables trading IOUS for fruit. That would make this a real fruit market. At the end of the morning, they could go out to the parking lot and sort the fruit, giving people just the amount of fruit they need.

One could also have non-fruit assets. One could have IOU’s for anything available in the grocery store. One could even have IOU’s for money. This might come in handy for trade as sometimes an apple is worth 1.25 and an orange is worth 1.00.

This game could take place on the border of Mexico and the United States. People could have IOU’s for dollars and people could have IOU’s for Mexican Peso’s. They could trade these back and forth. And when a boat from China shows up, we could even let the Chinese people play, of course, they could have IOU’s for Chinese money.

This game could be changed any way you want. There could even be a purpose behind the game. In the above example, we have had low stakes. Simple fruit, we could up the stakes by saying every slip of paper is a box of fruit or a shipload of fruit.

If each of the slips of paper is worth a lot more money I might be worried. It would be worth having background checks, and a secretary or proof of financial backing with the local bank.

To keep things simple lets suppose that they was a 2 to 1 backing rule. If you wanted to write 10 IOUS for apples, -which would be worth $1 each, you needed to put up a $20 bill. Now we have fruit IOU’s backed by money. We could hire a banker to keep the money, until you cashed out. That would be a lot like a casino.

Now let’s get back to BitShares. Bitshares is an online currency. By owning the currency in an online ledger, you can prove you have the money. It is also possible to lock up the money. When the money is locked up you can issue bitUSD and bitCNY. These are IOU’s that represent a set amount of money. The advantage to these is they can trade securely online. They are crypto-money, and we know they are backed up by real Crypto-currency.

The real reason someone might use IOU at a fruit market is to keep the fruit fresh. Do you want to eat a banana that has been handled by a lot of people. The reason to use a IOU for dollars can be convenience. It is easier to transmit online than real money.

Almost all of our financial system comes down to trust. Bank deposits, Fiat, Stocks and more represent trust or ownership in people or places. A bank notes used to represent real gold in a bank vault. It was lighter and safer to carry than the gold.

Crypto traders have realized they wanted a way to trade USD verses various other currencies. In our fruit example, each IOU for a fruit could be IOU for a crypto currency. Each IOU for a bitUSD represents a dollar and each IOU of a CNY represents a yuan. Now we can take the game online. We no longer need to meet in front of a grocery store. We don’t need to cash out every week, we don’t need to know each and we have a secure way to trust they system.

Sometimes as people meet the crypto-currency enthusiasts they think we are a fruit case. And well, maybe you need to explain to them, that we are. BitShares allows people to trade these IOU’s. Now most of the heavily traded IOU’s in the Bitshares ecosystem are backed by OpenLedger, or Crypto-bridge. They are a bit like banks or a cashiers at a casino and will give you notes for real currency or currency for your notes. This keeps the fruit safe. People can also issue assets for other private projects, like fruit they are growing in their yard.

BitShares is a very powerful platform, getting your head around all the capabilities can be a little hard. Hopefully, using fruit, makes it seem a little easier.

Some, I am sure, still think we are all just bananas!