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RE: What makes the bitUSD better than nuBits
Thanks for this post @xeroc, it has opened my understanding that bit more. Though I don't understand how it can be economically viable to give twice the collateral for a loan, even a zero interest loan.
Think of it like a home equity loan (HELOC). Let's say you have a $500k home and you take a $250k loan on it and you get cash. You can now spend, save or invest the cash. You don't have to pay interest to a bank either. That's how bitUSD/Smartcoins work.
Banks should require a lot more collateral to create new money, but they don't so there are greater systemic risks in the modern economy.
The collateral requirements are this high because the crypto currency BTS is highly volatile and we need to ensure the peg even if the price drops by more than 30%. I assume that once the internal markets become more liquid, the committee might be able to reduce the maintenance collateral ratio for some assets, but I don't see this happening in the near future.