Nubits and a Unique Selling Proposition

NuBits
#1

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What is Nubits Unique Selling Proposition

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As an outsider looking in I need to ask the question: “What is it that Nubits offers that other cryptocurrencies don’t and is it value for money?” In marketing speak this is can be translated as: “Does Nubits Unique Selling Proposition (USP) offer me value?”

I recently read a comment by someone outside the Nubits community who summed up Nubits as being the only Ponzi scheme in history that offers zero percent on funds invested. This is indeed where Nubits has been and this view clearly must be changed if it is to be rebooted.

So what exactly is Nubits USP? As far as I see it there are three aspects that need to be considered in terms of its competition i.e.:

  1. a stable cryptocurrency,
  2. a store of value,
  3. a hedging currency and
  4. a payments mechanism.

As a stable cryptocurrency

In the past transactions have been against BTC and so this has made its stability of use to NBT users predominantly as a hedging currency. If this is to change then a fiat gateway is required.

Store of value, let’s take US NBT as an example

As US NBT is pegged to fiat USD it offers nothing in terms of store of value that a USD wouldn’t with the exception of the benefit of being a cryptocurrency.

A hedging currency (say against BTC)

Without a fiat gateway this is currently Nubits ONLY USP. Further, charging USD 1 cent per transaction for the risk involved is so menial as to be offering the service for free. In other words, if this service is to be continued then the fees must equate to the risks being taken by Nu plus a profit margin.

A payments mechanism

Circle is currently a more developed means of using a cryptocurrency to make payments based on fiat to fiat currencies and so Nubits would operate best for cryptocurrency to cryptocurrency or fiat to cryptocurrency conversions. That is not to say that a fiat to fiat payment mechanism is pointless, it just means that at present this can’t be Nubits USP.

In summary Nubits USP as a stable cryptocurrency needs to be moved way from just being a hedging currency and more towards a store of value. The payments mechanism aspect can be a third priority.

Fiat gateway enhancing Nubits as a store of value

This maybe more expensive in terms of maintenance costs when compared to using BTC but much cheaper when considering the BTC volatility risk. For the gateway any regulatory or compliance issues should also be considered e.g. Can regulators confiscate some of the USDs held by Nu if they believe they originated from illegal gains? If so, unless tethered then I imagine the Nubits held against the USD would be almost impossible to recover (not sure but that’s my feeling).

Interest paid for peg defence

Any interest paid in Nubits for parked funds held for peg defence reasons and with a high interest rate has a smell of Ponzi scheme about it. And given market perception right now perhaps consideration should be given (at least until Nubits recover) to paying interest in Peercoin.

If the revenue model is correct then reserves will not be depleted like before (and leaving the peg exposed) meaning that parking Nubits for high (some would say desperate) rates of interest should hopefully never a requirement.

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Revenue model - Let’s look once more at the four aspects of the Nubits offering and see how a revenue stream can be implemented:

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As a store of value

If possible an interest rate should be offered for parked Nubits that is at least similar to that which could be obtained at a bank. The interest costs would need to be covered by the revenue model and preferably paid in Peershares.

A stable cryptocurrency

Transaction fees on fiat NBT conversion. If the gateway charges are based on the transaction amount, then Nubit charges will need to be too to cover this.

A hedging currency

I concur with @cybnate that if a user is holding Nubits for speculation purposes only then they should be charged for holding Nubits in liquid form. Parking should be rewarded and consideration should be given as to the term of the parking e.g. < 7 days = a charge, 7 days < 30 days 0%, > 30 days 1 % etc. For < 7days the concept is similar to a negative interest rate. The rationale is that short term speculation is what would most likely cause the peg to come under pressure and should be discouraged if at all possible.

BTC/NBT conversions should attract a transaction cost that is based on its size (bigger the size the bigger the risk) and the volatility of BTCs at the time of conversion. Users will likely be prepared to pay more to get out of BTC in high volatility periods and Nu needs to cover this risk by modelling the fee like the selling of a BTC put option (if there were such a thing). This fee could be reduced significantly should the user be prepared to park their Nubits immediately (say for a month). In this case the BTC’s held could be converted by nubot into fiat if at all possible and back again in a month’s time should the user which to position back in BTC.

As a payments mechanism.

Fiat - transaction fees with a view to Circles pricing model.
Cryptocurrency – based on the costs to Nu of a conversion plus a margin.

I will take a closer look at Cybnate’s daology as there is quite a lot to digest and may overlap.

So Nubits USP is now “a stable cryptocurrency rewarding longer term holders while forming the basis of a hedge against other cryptocurrencies”

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[Passed] A Report on Peg Abandonment and How to Proceed From Here
#2

That was good for laugh, unfortunately it is very true. So maybe it was not a Ponzi after all :sunglasses:

Appreciate your posts and insights. Will update my proposal this the weekend once I have a better picture of the costs and work what needs to be done to implement it. So it would be great to have some more feedback and thoughts which I can take aboard. We might have to implement in steps as the development required might be too expensive to do it properly in one go. But I prefer to have the model in the protocol as much as possible.

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#3

Sounds like what NuDroid has been doing – take crypto payment and store it in NBT, and converted back to crypto when to be spent.

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#4

Thanks Cybnate. Here is the link if you haven’t already seen the article. I look forward to checking out your proposal in more detail. Cheers.

#5

Have seen that one. Forgot about it, created a lot of fuzz in our community as it came from a direct competitor.
I would say, we tried, we failed and we learnt a lot hopefully. Backbenchers knowing it al better are easy to find, their pegged currency scheme was also not so successful, softly said.

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#6

Wikipedia:

A Ponzi scheme (also a Ponzi game or a Ponzi)[1] is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

Ponzi schemes occasionally begin as legitimate businesses, until the business fails to achieve the returns expected. The business becomes a Ponzi scheme if it then continues under fraudulent terms. Whatever the initial situation, the perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme.[2]

The scheme is named after Charles Ponzi,[3] who became notorious for using the technique in 1920.[4] The idea, present in novels (for example, Charles Dickens’ 1844 novel Martin Chuzzlewit and 1857 novel Little Dorrit each described such a scheme),[5] was actually performed in real life by Ponzi who with his operation took in so much money that it was the first to become known throughout the United States. Ponzi’s original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors’ money to make payments to earlier investors and himself.[2]

Questions:

  1. In Nu, who is Charles Ponzi and has made a fortune out of investors?
  2. who are the defrauded investors and who are the investors that have received the extraordinary returns?
  3. where are the extraordinary advertised promised returns?

I am interested in this conspiracy theory, but a good presentation with data and evidence has to be presented, in accordance with the legal meaning of the ponzi scheme, to make this case.
Still I agree, we must focus on generating revenues.

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#7

Thanks for the reply. I think you know that in no way was I referring to any fraudulent behavior just the nature of the one way direction of funds required to support the model which is subjective on my part and a few others inside and outside of Nu. These days the term has been loosely used for this but you are of course correct, and yes revenue generation is key to make Nubits sustainable.My apologise for the loose definition.

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#8

Absolutely –
No offense at all
The more we talk about it the more we can dispel that theory

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