My vision is quite different from what @desrever has outlined. We can provide the best liquidity for every coin on every exchange. We can aggregate all the liquidity for any particular coin and offer it on multiple exchanges. In order to tap into this liquidity, people will need to buy NuBits. Providing liquidity has worked for us so far, but we can take it much further. The fact that our liquidity has not been accurately priced is not a reason to stop offering liquidity. It is an invitation fix our pricing in the way I described in the OP.
Take Dogecoin for example, whose liquidity is fragmented between BTC38, Bter and Cryptsy among others. With the system I have outlined, a custodian with accounts at BTC38, Bter and Cryptsy can offer as much liquidity as all three exchanges combined, on any and every exchange they operate. This liquidity will be irresistable to traders. All they have to do to access it is buy NuBits. So they will.
The implementation is not simple, but I am certain it can be done iteratively. It is not nearly as difficult as the implementation of Nu. I’m sure that with additional discussions we can clarify the details of the software development that needs to be done.
Talk of phasing this out in favor of our non-existent USD market is presumptive at best. Where is the demand for USD/NBT going to come from? No one is saying because no one knows. What we do know is the market has rewarded us for liquidity provision. Therefore, I argue for doing more of what has made us successful, not less.
I’m going edit the OP to make it finalized motion. I’m confident offering cheap liquidity is the key to NuBits adoption at this stage and that my proposal will dramatically reduce the presently high cost of providing liquidity.
There is still an unmet and growing need for this. You can accomplish by holding only NuBits (except for short periods of time), so there is little exchange rate risk.
Here is an example of a use case: The Bter BTC/NBT trading pair has no buy side liquidity but the CCEDK BTC/NBT has plenty. This is not an overall liquidity problem, so it can’t be effectively addressed by raising interest rates. Rather, what is needed is for someone to take their NuBits and buy BTC at CCEDK. Then this BTC should be transferred to Bter where it is used to buy NuBits. Now, buy side support is balanced between Bter and CCEDK. The person doing the balancing has NuBits just like when they started, minus transaction fees. Shareholders should compensate them for their payment of transaction fees, their time and the use of their capital.
What do you think of my suggestion re payment processors:
These processors/gateways price their commission rates just a tad less than Western Union. It costs from 0.5% to 3% and/or a minimum fee. Sometimes you have to use multiple gateways to get your fiat from your account to the destination. Having used some of these I would be very glad to have my fiat “crypto’ized”, becoming instantly transferable at 0.01 NBT / transaction forever, at the first gateway…
I just changed the hash defining the motion to 65CB60D096508A7FA9ECC2017B38BC3AFEB5663D. I calculated the original hash using the final contents of the text box used to edit the post. I changed it to the hash produced when you copy the content displayed on the webpage, because that is all people will be able to verify.
@JordanLee I would like to use my NuBits to contribute to that balancing. Would you be providing NSR compensations for smaller quantities than 20,000 NBTs such as 5,000 or 10,000 NBTs. ?
I would not be able to provide more than 10,000 NBT.
Your interest in helping is very much appreciated, but to lighten my own workload and decentralize Nu’s functioning I prefer you go directly to shareholders and receive NuBits as compensation via custodial grant.
Is this technically feasible, from an API volume perspective? Imagine an exchange with n order placements/cancellations per second that is being mirrored. A custodian mirroring this needs to keep n orders up to date on another exchange. In other words, one trader needs to place and cancel as many orders as an entire exchange handles, in the same amount of time.
Even this does not protect against loss. An “attacker” could fill orders against a custodian and against the mirrored exchange at the same time, before the custodian could react.
Yes, I am confident this volume of orders can be handled. The limit of what can be handled is at least two orders of magnitude beyond what we will be dealing with. We aren’t talking about reproducing the entire order book from each exchange, just the top of the book. How deep into the book we go will depend on how often the double fill exploit is employed. In the scenario that it is deployed frequently then we will have relatively little liquidity in tier 1, maybe as little as several thousand NBT in the case of a coin with liquidity like PPC. When this liquidity is consumed, the transaction gets mirrored on the other exchange (such as BTC-e) and liquidity is moved from tier 2 to tier 1 and made available at the new current market price. This will only take a couple of seconds on average to replace consumed tier 1 liquidity.
Just a bit more about the vision I have for NuBits in regard to liquidity:
Let’s say I have some Dell stock and I want to exchange it for Google stock. There isn’t any liquidity in that pair, so I trade my Dell stock for a currency, such as US dollars, and then use the dollars to buy my Google stock. In the cryptocurrency world today, that intermediate currency is Bitcoin. If I want to exchange my Dogecoin for Litecoin, I first exchange to Bitcoin. With the plan I have outlined here, we can easily exceed the liquidity offered by Bitcoin for these scenarios. Better yet, our currency is stable, so someone wishing to trade Dogecoin for Litecoin doesn’t have to also expose themselves to Bitcoin if they use NuBits as the intermediary. Our goal should be to make NuBits play the same role in the crypto world that US dollars play in the US stock market.
There is a lot to digest, and I am far from arguing about visions with the very same person who had the vision of Nu. However I have been into (researching) startups for a while now to sense a pivot coming from miles away. Is a common pattern.
A pivot is “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.” link . On a more in depth comprehension, a piovot is a change of strategy without a change of vision ( in basketball terms, the vision is the foot on the ground, the strategy is the rotating foot) .
A pivot is often effective if done properly, and it normally takes several pivots before finding the right one that leads to growth. However, its a big step for any kind of organizations, so no wonder ben is surprised .
Bitcoin was a phenomenal innovation. For the first time individuals could hold an asset without counterparty risk and transfer it to anyone else on the network quickly and privately, if desired. It had some flaws, which include a high cost of maintaining the network and the disassociation of control of the network (given to miners) and ownership of its assets (Bitcoin holders). Peercoin improved upon Bitcoin by dramatically reducing the cost of network maintenance and giving control of the network to the owners of network assets.
Both of these networks contain a critical flaw which Nu resolves. These networks permit the purchase of scarce units used in the networks which function much like shares. If the value of the network rises, the value of these “shares” rise. This dynamic has been critical to the success of these networks as it allows anyone to purchase a stake and benefit from promoting the network. These networks have simultaneously been promoted as currencies but have not functioned well as such. Currencies must have a stable value to be effective, while Peercoin and Bitcoin have exhibited exceptional volatility. Many argue volatility will end with the high liquidity that will accompany widespread adoption. While volatility will decrease with greater adoption, it is unlikely volatility will ever be less than occurs with large cap stocks such as Google or Microsoft. This is still an unacceptable level of volatility for a currency. Let us suppose I am wrong and that volatility will be eliminated in these networks. In that case they would serve well as currencies but poorly as shares, because they would not appreciate, nor give dividends. This would likely cause a selloff of these “shares”, thereby introducing volatility once again.
The critical flaw is that Peercoin and Bitcoin use the same fungible unit for share and currency functions. Shares must have the capacity to appreciate and reflect changes in the perceived value of the network while currency must remain stable regardless to be effective. It is impossible to accommodate these diverse pricing needs in a single unit.
Now, I would like to get it straight: do we still want to pursue the original vision, right?
What Jordan is proposing is to test “NuBits as a tool for traders to exit illiquid market” to reach the “NuBits as a digital currency for the internet” outlined in the whitepaper. Am I correct?
The first step, and we agree, is proving our capability to maintain the peg, and we are doing it right now.
Following steps may or may not be the one proposed here by Jordan. We have already seen other proposals: one is attacking the landing market, right?. And betting. And tipping. and wages. and spam control, and merchants and inflation and bankings and the moon.
Are we really sure we want to spend so much time and energy in pursuing this change of strategy? Is it worth, especially when compared with alternative? Do we have a clear sign of the market asking for it (because thats what generally triggers pivots) ? Did we consider all the alternatives in a in depth comparative analysis (not that I know of)?
I hope do you see my point here.
Egoistically I could just shut my mouth and execute : the proposed approach to liquidity brings technical challenges which are exciting and will guarantee I will be busy with innovative stuff for a long while.
I want to make sure it is done properly. Does that sounds reasonable?
Very good summary of the situation…
I feel that offering liquidity for traders that want to store money as intermediary in between their trades is a necessary step before offering a digital currency for the average Joe on the Internet because nbt is sold first and foremost on the exchanges that are accessed first and foremost by traders.
If NBT was sold primarily say at convenience stores via pre-charged cards mentioning a redeem code that people would input at “nubits.com” to access their nubits, offering liquidity for traders would not be appropriate or logical.
Or perhaps should we create now a “nubitpay” service similar to bitpay that merchants would use to accept nubits. But here again we would need to access exchanges to sell nubits for usds, which implies a sufficient liquidity at least on the buy side.
This is only my opinion though.
I wonder, in this scenario is NuBits unique and perfect for the job because its stable , or because its liquid-ish? I think stability is secondary in this scenario. The liquidity is what makes it possible, therefore we should also update our slogans.
EDIT: let me rephrase
In this scenario, Is the strength of NuBits its stability or its highly engineered (to use an euphemism) liquidity control system?
I might be missing something, but from what I can tell, this proposal will result in wider custodial spreads. Mirroring an order book replicates the natural spread from the mirrored exchange, which is often 0.5% or more.