I think I'm starting to 'get' Bitshares - bitCNY market cap grows a lot - China moving to DEXes??
![BASE HEADER bitshares bitcny.png](https://steemitimages.com/DQme7FWZ6qWP8FyiW4uunGtuYqoa7kYSM14CX98pai8F24n/BASE%20HEADER%20bitshares%20bitcny.png)
I've always loved the concept of decentralized exchanges and indeed do try to trade there when I can. However, Bitshares and me have had a love/hate relationship of sorts. I'm glad to report that I finally have found an angle that works for me: I now 'get' Bitshares!
![dividerline cartooney2.png](https://steemitimages.com/640x0/https://steemitimages.com/DQmVmKeFJZVR7A2hRwk6wYM5DiphcFJ8RmxvYpc8FWvhmNP/dividerline%20cartooney2.png)
The DEX
![bb768539b6b5c78bc358b0ee1721054e.png](https://steemitimages.com/DQmbjmD6UvZZQv8Z4N3Ze6TgrsyeVWPvD2x4Yg6s88aivPE/bb768539b6b5c78bc358b0ee1721054e.png)
I tried multiple DEX-like options, among which Bitshares, but always found it very cumbersome. The UI wasn't really great and it wasn't extremely user friendly. On top of that, all the altcoins that I wanted to trade lacked liquidity - it seemed like only a handful of markets had enough buy and sell orders to be able to actually call it a market. Since I don't trade fiat/BTC this wasn't very interesting to me. Besides, BTC can be bought anywhere easily as it's the base currency on every exchange basically.
At first glance this made it seem like the only interesting things on Bitshares were the actual Bitshares-specific tokens. Like OBITS, which gives you part of the profits of the OpenLedger interface to Bitshares. It is appealing to me, as I love profit-sharing tokens. There are a bunch of other tokens too, but most of them can only be traded on the Bitshares network and seem almost 'locked ' into the Bitshares ecosystem.
I didn't really get it, honestly, why people were hyped up about Bitshares. Besides, if it was so great: where are all the buyers and sellers for my markets?!
But I think I have found an angle, and reason to love Bitshares now that is convincing enough for me to consider buying some BTS.
![dividerline cartooney2.png](https://steemitimages.com/640x0/https://steemitimages.com/DQmVmKeFJZVR7A2hRwk6wYM5DiphcFJ8RmxvYpc8FWvhmNP/dividerline%20cartooney2.png)
CHINA
That angle and reason is called China. Instead of explaining why I came to this conclusion, let me share something that I discovered yesterday:![bitshares cny chart.png](https://steemitimages.com/DQmYYN7nnGDKTQSLZssATwfXGtkApwgex13hKm1GDNoQwmG/bitshares%20cny%20chart.png)
What you see above here is the market cap chart for bitCNY. BitCNY is like BitUSD and is essentially a token that's pegged to the Chinese renminbi/yuan. As you can see on the chart the market cap of bitCNY has gone through the roof this past month and a half or so.
What this means is that there are more bitCNY than there were before december. It grew from about $6 million worth of bitCNY to $80 million worth of bitCNY in a month. But since it's pegged to fiat currency which is more or less stable, this means essentially that more bitCNY were created and are now circulating.
Then I asked myself: Why are there more bitCNY on Bitshares?? Because more Chinese people are trading on Bitshares.
The way bitUSD or bitCNY is created is much like the Steem Backed Dollar (SBD). BitUSD is not really backed by real dollars, but it is backed by an amount of BTS tokens. To create $1 bitUSD, somebody needs to lock up $2 regular dollars worth of BTS tokens. This guarantees that the token is backed by value and creates a significant backing. The price would have to drop more than 50% before there would not be enough funds to back it.
And it all makes sense too! I was looking at Bitshares from my own perspective. Looking for an altcoin exchange, something like Bitshares felt lacking severely to me. But the Chinese are not looking for an altcoin exchange: They just want any exchange where they can buy crypto, and preferrably Bitcoin! As you may likely know, China clamped down on crypto big time a few months ago and Chinese citizens have faced serious problems trying to trade Bitcoin. Only a few days/weeks ago Binance shut down their service entirely for any IP addresses coming from China, too. Bitshares offers a way to still trade crypto, and the Chinese government can't do anything about it! Could it be that the Chinese are discovering Bitshares as a way to trade...?? It certainly looks like it!
![dividerline cartooney2.png](https://steemitimages.com/640x0/https://steemitimages.com/DQmVmKeFJZVR7A2hRwk6wYM5DiphcFJ8RmxvYpc8FWvhmNP/dividerline%20cartooney2.png)
THE TOKEN
The fact Bitshares is enjoying success and traction among Chinese traders is great obviously, but what good will it do me and why should I care about the BTS token?Well, it turns out that bitCNY (or bitUSD or even bitGOLD) is created by locking up BTS. Like I said earlier, you need to lock up about $2 worth of BTS tokens in order to gain $1 worth of bitUSD. So the more bitUSD or bitCNY is created, the more BTS tokens need to be locked up as collateral!
Essentially this means that as Bitshares grows and more traders join, who desire bitUSD/bitCNY (just like we use tether on other exchange), more and more BTS needs to be locked up in order to create those!
That's when I suddenly saw the light: Of course! Bitshares isn't for me. It's for those other people who are disallowed from trading crypto. And China especially with it's millions of inhabitants! They aren't looking for the latest crapcoin - they want Bitcoin! And as more of them join Bitshares, more bitCNY needs to be created to support them and this means more and more BTS is locked up and taken off the market. With the supply of BTS dwindling due to being locked up (can't sell it if it's locked up!), this means the price of BTS must go up because the supply of them decreases.
As more Chinese people join Bitshares, the price of BTS must therefore go up!
![dividerline cartooney2.png](https://steemitimages.com/DQmVmKeFJZVR7A2hRwk6wYM5DiphcFJ8RmxvYpc8FWvhmNP/dividerline%20cartooney2.png)
Now, $80 million worth of bitCNY is not a world changing number in the grand scheme of things. Still, I would not discount a gain from 6-7 million to 80 million in a month so easily. If China's crypto crackdown continues, I think the amount of Chinese people discovering Bitshares will only increase.
Perhaps it's much like how Bitcoin doesn't "solve" banking issues in the western world, but it does solve it for those unbanked people. A similar situation could apply to Bitshares: to a westerner with access to a plethora of exchanges it's unclear what the benefit really is, but to those who have no access to crypto exchanges, Bitshares could be the solution.
I think it's time to start considering finally getting some BTS.
![footercartoon new5.png](https://steemitimages.com/640x0/https://steemitimages.com/DQmRMndUYFqxoxwcTkTR4JAADzH6o43QhSS1WM17wP8uD1C/footercartoon%20new5.png)
ah now I know while I follow you, damn good reasoning skills. Isn't BTS also from same creator of STEEM and EOS or am I on drugs?
Yes, you are right! They are all made by Dan Larimer
Bit shares $0.32 - maybe you are right
Even cheaper now! :)
What is great, you can transfer your SBD easily with Blocktrades to your Bitshares account and buy bitCNY. The interface is easy to use when you get used to it, only the learning curve you need to make.
Yes, that's pretty cool to be able to trade there directly from Steemit!
But I won't be buying bitCNY myself! That'd be like holding fiat, except tokenized.... fiat is so boring! :)
Yes, convenient if you buy goodies in China ;)
I've always been bullish on Bitshares and I am expecting decentralized exchanges to become very popular in 2018. Just have to give it time, Bitshares is ahead of the DEX game.
Yes, DEXes are the future for sure!
I just wish they would update the UI into something nicer! I think they are working on it though.
And if they could work out some way for my Ledger Nano S to sign in, that would be amazing
Another great post :) Can't fault the logic either and BTS is cheap. Hmm
Yes it looks like the price is pretty good now! Not as good as the $0.05 price I was eyeing a while ago but I doubt it will go back there :)
I did recently read about the BTS backing bitUSD. It is a much better idea than tether because it is backed by a smart contract holding the BTS. I’m definitely going to keep it in mind as an option next time there is a flight to safety needed.
It is a good idea as long as the asset it is pegged to remains stable!
I did some reading up and apparently they have had other assets which were pegged (for example to precious metals) and if one of those dips more than 50% then the BTS backing it will be insufficient to cover it. But this is very unlikely to happen to the dollar of course
I think the backing contract gets cancelled if the the backing currency dips 50%. The backer then gets their BTS back. Someone then needs to fund a new contract with $2 worth of BTS.
Thanks for the 411 @pandorasbox.
I have a bunch of bitshares yet this is news to me. I do appreciate the work you put in to uncover this. It makes me very very happy to read it.
BTS appealed to me because of the DEX. At some point, I feel many people will be banned around the world from buying crypto. Hence, the need for something decentralized. Going after the exchanges is the only place that governments can realistically combat cryptos....they cant stop them so they have to go after the on/off ramp/
You're very welcome! And thanks so much for your support!!!
Yes I agree DEXes are awesome and the future. What held me back was the unfriendliness of the UI. I just didn't see this competing with other exchanges which are more easy, offer better prices, more liquidity and markets, etc.
But now that I've realized that Chinese people are seeking refuge in Bitshares, I am seeing the light finally!
I also think it's a very interesting development if this continues.. it's going to be interesting to see how the Chinese government deals with a decentralized network, and if they can do anything about it. In a way it could be a 'test' to see how well crypto can stand up against 'the system'. And china's system is formidable.. so if it works there, it will work anywhere.
I am going to hypothesize China will not be the last government to take this step.
And that might well be one of the major advantages to BTS....any country that "bans" crypto can be gotten around simply by getting on BTS.
Definite food for thought.
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Your articles are definitely helping me wrap my head around these @dan projects. Thanks!
oh , that confirms even more strongly what I'd already found out about Bitshares, I recently got myself a lifetime membership, plus some extra SBD... might just put it in BTS :)