I think I'm starting to 'get' Bitshares - bitCNY market cap grows a lot - China moving to DEXes??

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!

The DEX

Bitshares is of course a well known decentralized exchange made by the same person that made the STEEM blockchain. Bitshares is loved by many on Steemit, but I myself have had an unsure relationship with it.

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.

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:

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!

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!

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.

(Art by Roy Lichtenstein)