RE: Using BitShares to Underwrite Risky Asset Backed Currencies

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RE: Using BitShares to Underwrite Risky Asset Backed Currencies

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jiva34 (59)in #bitshares • 7 years ago (edited)

I guess it is inevitable that some form of "reserve" banking will enter the cryptocurrency world. Already there are crypto credit cards. But isn't this opening the door for the way the world already got into so much trouble with debt? Seems safe enough in the way you are presenting it. But these things have a way of being a foot in the door.

7 years ago in #bitshares by jiva34 (59)

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stan (71) 7 years ago

Debt for consumption is generally bad.
Debt for producing something of value is generally good.
That's what puts the "capital" in capitalism.

And in this case, it can enable many poor nations that have great wealth in natural resources to become players in the global economy.

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thought.rush (33) 7 years ago (edited)

I'm only an armchair expert, but this is not really banking... nor are there 'reserves', fractional or otherwise. In Stan's demo, there is no product at the outset. Lets assume an orcharding scheme - say, sandalwood.

In point 1: "Explain these steps to your customers" your are responsible for a prospectus to notify your customers about auditing arrangements, expected sandalwood yields and time to yield, sandalwood delivery terms, sundry risks like pests and climate change, yada yada due diligence.
In point 4: "Borrow Heros by locking up the BTS in escrow". By using escrow, the BTS is backed 1:1. No fractional reserves, otherwise we'd be as crooked as the banksters. And the customer already knows they are betting against the price of BTS in addition to the risks already explained in point 1, the prospectus.

There is no argument this is financial engineering, but its orders of magnitude simpler and less opaque and less contrived than that which overheated the US housing market. In answer to your question: ["isn't this opening the door..."] well, no. This scheme is nothing unusual, if the prospectus is exposed correctly. Objectively 'bad' ideas abound. This scheme is balanced on trust, less delicately than perhaps fractional reserve lending is. Certainly less punishing on the sandalwood harvester, than a traditional big-bank securitised loan, because:

the BTS are already in escrow
the BTS are not an occupied domicile (mortgage) or means-of-production (secured by your pickup, orchard, tractors, etc).
This is seed money, venture capital, crowdfunding, whatever - it's not a securitised loan.

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jiva34 (59) 7 years ago (edited)

Thank you. In the search of a more honest monetary system, this certainly has appeal. The crooks and malevolent schemers will always be with us and spend their days and nights misusing what intelligence they have to divert whatever system for their own aggrandizement to the detriment of the whole. Stan is coming from the right place. Thank you for your thoughtful comments.

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