This was brought up and discussed at length in the cease PPC/NBT operation thread. Most people seems to agree that idealy NBT/USD should be the only pair Nu support but due to initial adoption rate and liquidity NBT/Crypto should be offered. As a redult a tiered bot order book has been proposed to reduce risk (ala “junkcoin”) and hedging is recommended to be used to mitigate exchange rate risk.
I think OP is still a timely discussion in light of increased adoption of Nubits and increased volatility of cryptocoin coin price lately.
Thanks @benjyz for pointing out the importance to separate market maker, arbitrageurs, and the exchanges, and that marketmakers should be allowed to set spreads.
Back to the OP, I suggest we also look into addting Nubits to direct purchase option of payment processors and gateways.
I have been emailing a few processors with no response yet. Our lack of open-source code may be of concern, although I’d only be speculating. It’s a good reminder I should send follow-up emails tomorrow.
Do you think we may convince large USD exchanges to accept NBT/USD pair by paying them with NSR?
I mean to give them a certain NSR amount by just support the pair not be a cusdodian themselves.
I can contact kraken and bitstamp
I personally don’t support the idea of giving nushares to exchanges in return for providing USD/NBT pairs. This is going the easy way and I would vote against it. The exchanges should want to adopt NBT trading pair for its volume.
I do support the idea of independent BTC <–> NBT converters though and I am willing to implement one if I get some reasonable support from the community. If such an online converter provides NBT at 1 USD cost then we don’t need to have custodians present at exchanges at all. The people doing arbitrage would represent NBT on the exchanges. If the peg is lost on some exchange then it becomes profitable to buy/sell from our converter and transfer the funds to the exchange where the peg is lost.
While I agree with this in general, we need a USD pair fairly soon. I’m willing to make an exception for the first exchange to do this for us. For the rest though, we shouldn’t be getting in the habit of paying for support.
Only if bitcoin keeps losing its value, right? I believe bitcoin might start rising soon. Also, I already suggested an alternative. Why would it be worse than paying to an exchange for a special favour?
@Hyena, I think you should go ahead and develop the converter you mentioned. I’m am positive that these sorts of services will play a big part in the future of Nu and to be the first service available will give you a lot of boost in terms of network effect.
Actually my idea for the service is not so much to gain personal profit but to do a favour for the community. I would develop the software and make it as easy as possible to set up for anyone. So, the code would be released under MIT license and perhaps at some point other developers would also contribute. The reason why the code should be made public is that it is compatible with the decentralized nature of NuBits. It would make even the custodians decentralized and independent. Also, I am not interested in running such a service myself in the long term because I don’t intend to become a custodian. I think that I should maybe develop a proof of concept (prototype) rather quickly and see how the community likes it.
Not only, I would also consider exchanges with large volumes fiat (non-USD)/BTC pairs: EUR, CNY, PHP, HKD are easier to track and far less volatile than cryptos. THen we can open up a new array of possibilities : btc38, etc etc.
Awesome. I have most of the infrastructure already developed for such a service but integration with a trading site such as Bitstamp is yet to be implemented. If you want to know what I will be using as a basis for this project, take a look at this service: http://www.cryptograffiti.info/paystamper/
If you go to monitor tab you can enter a bitcoin address you wish to monitor and it will send you notifications whenever a payment is made to that address. I have solved the single-address-payment-receiving problem by differentiating payments by their amounts. Each customer will get a random number of satoshis added to their service fee in a range of 0 - 9999. That way the service can only have 1 receiving address which makes a lot of things simpler.
There’s currently a known bug when you subscribe to some bitcoin address to receive payment notifications: when you don’t check the FREE TRIAL checkbox then you will probably get a message Invalid field: amount (cannot exceed 1000 when trial is TRUE).
I don t think we can do without custodians. Online converters need custodians that maintain the peg in the first place otherwise there is not reference or basis that justifies 1NBT=1USD. Or the system becomes 100% reserve-backed (online converter becomes a central bank that redeems) which is contrary to the Nu premisses. Am I missing something?
Yes you are missing something. Exchanges belong to the old way of thinking. NuBits does not require to be present on exchanges. Sure we can have custodians doing their job on the exchanges but it doesn’t really matter whether they buy/sell on exchanges or at specialized converting services. The whole “reserve backed” discussion is a nonsense. It depends how you look at it.
Exchanges match buyers and sellers and comply with KYC/AML because they interact with fiat. That’s how fiat moves into crypto, besides cash to crypto transactions via e.g. Localbitcoins. In Europe there are also escrow markets for bank-transactions, which are capped at circa 500-1000$.
Without fiat there is no USD to peg against. (thought experiment: what about pegging against gold?) As soon as one wants to transmit fiat over the wire one has to comply with fiat rules. Anything that goes anywhere close to “money laundering” will be shutdown quickly. Definition of ML depends on the scale (otherwise any cash transaction would be ML). Sending 500$ from peer to peer will not be a problem for regulators. Any wire transfer of more than say 100k$ or 1M$ will raise major red flags. Banks need to report large and suspicious transactions, of course also depending on the jurisdictions they are operating in.
One has to be extremely careful in ones definitions and attitudes. For example Bitshares is very lax in its approach, assuming a private company can issue stocks and money. Ethereum spend ca. 500k$ in legal fees to do a legal crowd-funder out of Switzerland (very complex process involving big law firms). I’ve spoken to several lawyers, regulators, etc. and that expertise is needed to understand what the rules are. On the flip side, if one waits for legal certainty on any new innovation, Bitcoin would not be where it is today. For many things there is not even a legal definition. Switzerland was the first to recognize a concept like crypto-equity a few months ago, via a SRO and interactions with the regulators.
They have a company registered in HK…I guess they use that entity within the HK regulations to justify their ability to create their own currency. However in the US, I am not aware on how they are able to comply with the regulations…
The thing is bitshares is a DAC but they are not anonymous per se, which makes them more vulnerable than Nu for example.
Nu in a way creates its own stocks and currency…It is a highly sensitive topic since it is not legal in the US to create another currency different from the dollar.
At the same time, bitcoin is a form of currency but as it is decentralized you need to enact new laws in order to make it legal or illegal because it is difficult to control something decentralized. That is why it is still in the grey zone.
NuBit peg is maintained by custodians who are anonymous for the most part and who operate on different exchanges. Therefore we can argue that NuBit’s peg is produced in a decentralized way. As bitcoin, it is difficult to regulate it within existing laws.
How do you see the legal status of Nu, NuBit and NuShare? For example, must NuBit be regulated by the same rules as bitcoin or the fact that it is pegged to the USD would need additional regulations?
In my description of a NuBits related business idea for the Japanese market, I mention the fact that having NBT/JPY would be very convenient for Japanese users if they wanna buy NuBits easily.
Japan is a neutral country regarding cryptos in general and seems to be offer a better and easier environment for traders that want to deposit cash to buy cryptos.
Which makes me think about the possibility of using other FIAT money than USD to maintain the peg on NBT/USD.
Would enabling NuBot deal with NBT/JPY by feeding it a data feed on USD/JPY contribute to NBT/USD’s peg?
And if the answer is yes, would it be an easy operation, implementation wise?
It is possible that most of the buy liquidity would come from a FIAT different from USD; in other words, we can imagine a scenario in which most of the exchanges that accept FIAT deposit do not deal with USD but rather with EUR, CNY, JPY, Indonesian Rupiah etc…and most of those exchanges accept NBT and would want a NBT/FIAT pair enabled.
Does it make sense?