So far nubits hasn’t yet experienced a time when bitcoin price rallies by an order of magnitude. Being a bitcoin holder, I know that should the price rally to say 5000$ per BTC I am going to convert up to 50 bitcoins into nubits, perhaps temporarily to outsmart the market. Obviously I am not the only person who would be interested of buying nubits during that time. A bitcoin rally like that would generate a sudden demand for millions of new nubits. It could also generate an equal supply some time after the rally when traders wish to get back into BTC.
How is nubits prepared for such times? Who holds the funds generated from nubits sales and for how long are they going to be held before NSR buybacks begin? My concern is that if we’re going to use these funds for NSR buybacks then old nushareholders might dump their nushares at a high price and later when NSR are created to satisfy the excess NBT supply there won’t be any nushare buyers. Is this paranoia justified?
The peercoin FLOT motion is passing soon. Then we can hedge into ETH or DOGE or something. Your whole fear comes on the concept that we will have to sell NSR to buy back NBT when the BTC price falls. So you’re concerned with a BTC dump, not a BTC pump (specifically you’re worried about a pump and dump). In such a case, we will move BTC into other alts. If the entire crypto economy fails, only in that case should we be truly worried and only in that case should we have to massively dilute NSR to survive.
But PPC and other alts move with BTC. There really seems to be no escape from the cryptos for use and for others we are the escape. But where do we escape? NSR seems like quite a good refuge in a sense that it doesn’t blindly follow BTC and it seems to have its own independent price. But it’s still a crypto.
But let’s say I am a very rich man and I have a lot of physical gold and I believe in the nubits. So nubits gets in trouble due to excess supply and all cryptos losing value. As a result, nushareholders vote up park rates A LOT. Since I have a lot of gold that didn’t lose its value I am going to sell my personal gold and buy all those excess nubits from the market. I will instantly park the nubits to gain the profit. Does this make sense? Is it a plausible defence mechanism for nubits to rely on wealthy believers and in their personal deep pockets?
I don’t think that will happen. Instead, that wealthy person will doubt that we could keep the peg without them and will wait for us to dilute. Then, they will buy up the company.
But anyway, you’re talking about a complete crypto crash. Yes, in that case our small crypto startup will suffer greatly, as will every one of our competitors. Short of some vital flaw in the blockchain technology, I just don’t see this happening anytime soon.
And then there’s the NuSafe concept. We will eventually be able to hedge into something like physical gold using similar mechanisms. Of course, this requires us to collateralize using other cryptos, but we can make the collateral much higher than expected decrease of value. Ultimately, if every crypto black swans all at once we’re screwed, but so is everyone else.
I guess we will have to experience such a rally first to see how we perform. I think that the profit from a big crypto rally outweighs the potential of loss due to massive selloff of nubits after the bubble because a during bubbles all cryptos will receive a lot of new attention. some of that attention will go to nubits.
I mean think about it this way, during a btc bubble, what will the ppc/btc price do? Because that’s where we will be buying and selling. Let’s pretend we turn off nsr buybacks for the moment and just consider the ppc reserve. So during a btc rally, we will overflow btc and fill our ppc reserve. Let’s pretend our ppc reserve never fills completely during the rally. Now, when the btc price starts falling our btc reserve will run dry and we will be expected to sell ppc for btc. So the question comes down to whether or not the ppc/btc ratio pumped and dumped with btc. If it did pump with btc, then the ppc/usd price must havr gone through the roof. For that reason, we most likely would have hit ppc overflow.
Basically, using this method our economy will seek out alts that are moving against btc and will use them to hedge the market. It’s not going to work if the whole economy crashes, but we’re supposed to be long on crypto so i dont think this goes against our investment philosophy.
I personally don’t think Bitcoin will have another large rally. The coin is so plagued with problems now that I don’t think there will be enough people stupid enough to pump the price. I could always be wrong though.
Whether BTC has a rally or is going to drop from here: Nu should be prepared for both.
NuSafe can help!
I think the next coinbase reward halving will be hard for Bitcoin in terms of volatility.
We should have NuSafe ready and tested soon.
The flaws will be sorted out and cryptos are not yet mainstream. Once they are mainstream we can start saying stuff like “I don’t think there will ever be another ATH” but in the meantime it is very possible that we see more bubbles.
you got it backwards. when btc rallies people buy it and our btc reserve will be sold. but your idea is rigt. alt prices usually shoot up against btc at the end of a btc bubble when btc is perceived too expensive. it’s the same logic we diverse into alts.
When btc goes up we overflow. For example, if we have 1 btc and it is worth $15 and we have 100 nbt in circulation, when btc increases to $30 we have $15 overflow. We use that overflow to buy alts (including nsr) so when btc goes back down again suddenly we are in deficit and have to mortgage our altcoins.
The way i see it:
if we have 1 btc and it is worth $15 and we have 100 nbt in circulation, when btc increases people dump nbt and buy that 1 btc from us for say 16 nbt. we have 84 nbt in circulation and 16nbt + 0 btc in reserve.
What? I thought it’s quite obvious that the balance of liquidity in the walls has been driven by btc price movement for a while. I don’t have data ready to show though. We sold tons nbt during early November crash phase of btc bubble and the proceeds went to buyback pool.
edit: for example Jan 15 btc price tanked. this followed
I can underline that experience.
The week from 2016-01-15 to 206-01-22 had a lot of volatility and each time the BTC price surged, the buy side was in danger to run dry while each time BTC took a dip, the sell side was getting low.
It kept me very busy.
As long as NBT/BTC is an important trading pair and NBT trade volume there is created mainly by traders, it might stay this way.