How are NuBits created?
One case is when NuShare holders grant NuBits to custodians that pledge to use the NuBits in a particular way, such as raising funds for dividend distributions.
Doesn’t it mean to create money just to reward shareholders?
To which extent is it healthy, economically wise?
Generally speaking, though I understand that the whole system changes dynamically, which economics theory did the original authors subscribe to when they wrote the white paper?
Future plan include to develop other currency pegged the Yuan, Euro and inflation adjusted USD.
Would it be based upon the current block-chain? requiring yet another extension
Yes, additional tokens would be carried using the same Nu block chain that we’re running today. Yes, it would require a new “currency” to be added to code so the support was there, but the system was designed in such a way that it can be added in a relatively straight-forward manner.
Thanks for your answer Ben.
That is mentioned at the end of the white paper:
After the initial release of Nu, it is possible that additional currencies will be added. Nu is designed to permit this with very few code changes. For instance, a new currency pegged to one euro per unit could be added. A currency where the peg rate is altered to adjust for inflation or deflation is also possible, creating a stable currency that retains purchasing power over the long term. The protocol enforces that each currency is not fungible with any other, meaning inputs and outputs must be of the same type and cannot be mixed. The same mechanisms used with NuBits (custodial grants and parking) will be used to stabilize the price of other currencies. Voting for custodial grants and parking yield curves will be completely independent of NuBits. Shareholders can simultaneously place votes for as many currencies as they like.
It should not require to create an auxiliary block-chain, unless there’s some bloat from the issuance of USD?
Hello! I am new to the NuBit community.
I have a question. Who exactly is doing the minting/proof-of-stake work? Who is securing the network, holders of NuBits or NuShares?
Is there a way where I can help support the network (like make a 24/7 node)?
Edit: Also, how do I buy NuShares? Can I get NuShares by minting or can I buy them from an exchange?
Welcome aboard!
The block chain is secured by PoS/minting, like you found out.
Holders of NuShares do the minting.
Making a 24/7 node (that doesn’t mint) helps distributing transactions and sounds like a supportive idea!
If you are interested in becoming a NuShares holder, please look here:
and here:
sitting here typing out a reply and MoD snakes me…
hmph… 
C’mon old man, what else did you expect? 
The next one is for you, I’m off 
Thank you for answering my question. I have a few more.
In the whitepaper, the author comments on the shareholders of NuShares doing certain things like voting and such. But how do we know that the shareholders will increase the interest rate in a time of need? How do we know the shareholders will grant more NuBits when necessary? What is the incentive for the shareholders to help the network?
Also, how are shareholders making money (what is the benefit for them?)? When they mint, they only make 40 nushares more, and the nushares have no value. When do they get paid the dividends?
Also, how do we know that the custodians will help the network? What if they run off with the money?
Is there a transaction fee when people send their Nubits to someone? Is there a network fee?
Lastly, what is the benefit of me buying Nubits? I pay more money and spend more time to actually buy NuBits than actually paying for an item with regular USD. Meaning, when I buy NuBits from an exchange, I still have to pay a 0.2% fee; when I use USD I don’t need to pay a fee. Can you explain to me a scenario when NuBits would be useful?
Sorry for asking a lot of questions. I am just a little skeptical of how the Nu network works.
Hi Lako, I’m going to try to answer some of these.
In the whitepaper, the author comments on the shareholders of NuShares doing certain things like voting and such. But how do we know that the shareholders will increase the interest rate in a time of need? How do we know the shareholders will grant more NuBits when necessary? What is the incentive for the shareholders to help the network?
To protect and increase the value of their shares, as well as keep the stream of dividends coming. The same reasons people would vote in any company that has shares, voting, and dividend payments.
Also, how are shareholders making money (what is the benefit for them?)? When they mint, they only make 40 nushares more, and the nushares have no value. When do they get paid the dividends?
Shareholders get dividends when custodians pay them out. Shareholders vote a custodian and create NBT for them, the custodian puts the NBT into circulation ( by selling them ) and the money earned goes to shareholders. See KTm’s proposal, which I think is the first and only live custodian that will be paying out dividends currently.
As you can see, when $720k worth of NBT has been sold by this custodian, he/she will pay out $72k to shareholders. The more shares you own, the bigger dividend you would get. Nushares will have value. They already do in fact.
Also, how do we know that the custodians will help the network? What if they run off with the money?
As the whitepaper notes, a custodian would probably show their interests align with shareholders by proving they are a large shareholder them-self. But imagine NuBits was as big as Bitcoin. There would be hundreds, thousands of custodians asking for money for this or that, eventually someone is going to run off with some NBT or otherwise fail shareholders. In most cases it wouldn’t be the end of the world, but it’s going to be up to shareholders to pick custodians wisely, especially if it’s for a large amount of NBT.
Is there a transaction fee when people send their Nubits to someone? Is there a network fee?
I think the fee is currently 0.01 NBT per kb, same as Peercoins. This fee is destroyed as there are no miners.
Lastly, what is the benefit of me buying Nubits? I pay more money and spend more time to actually buy NuBits than actually paying for an item with regular USD. Meaning, when I buy NuBits from an exchange, I still have to pay a 0.2% fee; when I use USD I don’t need to pay a fee. Can you explain to me a scenario when NuBits would be useful?
The same benefit as using any cryptocurrency, except you can rest knowing your value will stay the same. I’ve already used NuBits to my advantage. I needed money for something, however a lot of my money was in Peercoins. The value of PPC kept changing, mostly downward, I had to constantly recalcuate how much my coins were worth and how many I’d have to spend to do what I needed to do. So I just bought some NBT with it. Boom, done. No more worrying. No having to turn it into USD on some exchange and risk it being stolen. No sending it to my bank account. Just a lighting fast NBT withdrawal to my wallet and I was all set.
Hi everyone!
I am a confirmed newbie to the NuBits community. I have searched the whitepaper, the entire forum, and the FAQs, and I cannot find a straightforward answer to these 4 questions.
Question 1: I do not have enough BTC to buy 10,000 NuShares on Bter, so I will buy substantially less, perhaps on the order of 2,500 to 5,000. I know that I won’t be able to vote on motions, but will I still receive dividends?
Question 2: Are dividends paid out on a regular basis, as they would be on a traditional stock? If so, is the periodicity regular, like every two weeks? I understand that dividends are paid out by custodians, but do dividends get distributed evenly based on the number of NuShares you have (so would a person holding 5,000 NuShares get exactly half the dividend of a person with 10,000 shares)?
Question 3: Dividends are paid out from excess funds from keeping NuBits pegged at $1.00. Is this correct? Please tell me if my understanding of this is correct based on this example. I imagine a simple scenario where the price of 1 NuBit = 1 BTC = 1 PPC = $1.00. The price of 1 BTC and 1 PPC go down to $0.90, so people move from BTC and PPC to NuBits, which would tend to drive its price up. So the custodians put more NuBits on the market to drive the price of NuBits back down to $1.00. Since the custodians probably bought those NuBits at less than $1.00, and just sold them at slightly more than $1.00, there was a profit made. That profit is partially distributed to NuShareholders. Is this basically correct?
Final Question: If this is top secret information, no need to answer. Has anyone received NuShares dividends? If so, how much are we looking at per NuShare?
Hi Rodchi,
First off, welcome!
Most of your questions about dividends depend on each custodian’s individual proposal. The first NuBits custodian was KTm, and you can read the details of their proposal here: Proposal to Operate a NuBits Grant to Provide Early Stage, Dual-Side Liquidity and Shareholder Dividends
I’ll take your questions in turn:
Yes, unless the dividend payment is so small that the custodian specifically excludes you. The dividend threshold for KTm’s proposal is 0.01 peercoins.
This depends on the dividend custodian’s proposal. So far, there have been no proposals for regular dividends.
Not quite correct. In general, dividends are paid out from funds generated by creating new NBT and selling them on the open market. The white paper at https://nubits.com/about/white-paper explains this in more detail.
No dividends have been paid out yet. When they do, all shareholders will receive their dividends in proportion to their shares.
Again, welcome to the forums!
Thank you for the rapid response Chronos! You answered all of my questions.
hi guys. i see that nubits and nushares have pos support. but what is the annual inflation for both of them?
NuBits don’t have a PoS reward. They are created when NuShares holders vote to grant a custodian fresh NuBits. Meaning they are created as needed in order to maintain the peg when demand increases.
NuShares however operate similar to Peercoin in that they are used to mint blocks and earn rewards. Minting a block allows you to vote as well. The block reward for NuShares is a static 40 NSR. With one minute targeted block times this turns out to be around 20 million NSR per year.
oh i see. then there is a difference from ppc since one can get the whole pos nushare block or get nothing at all!
about nubits, then the “stake” in the wallet has no meaning?
Yes the stake label on the NuBits view will be gone in the next version. It’s a vestigial label at the moment.
Hi everybody! I have just know all the Nu scheme two days ago and I cant stop reading about it, it is fascinating to be honest.
I have a doubt hopefully you will be able to solve:
I understand that a Custodian receives newly minted NuBits when the Custodial Grant is approved. Then these NuBits are placed in exchanges to keep the $1 peg. If there is a demand of NuBits, this Custodian will receive, for example, BTC (if the NBT were sold for BTC).
Now my doubt is about how the custodian handles these BTC. I would think they should be used to create buy walls to help maintain the peg system. However, I have seen that some percentage of these BTC (which %? who decides this percentage?) become dividends to distribute between shareholders? Is not this somehow irresponsible? What would happen in the case the same people that bought NBT with their BTC decided to sell the NBT to get BTC again. There would be less liquidity, right?
let me know if I got this right or I am missing something.
Thanks!
The percentage is decided by shareholders. Dividend rates are currently very conservative because the network is young and shareholders want to make sure that there is no danger of the $1.00 US peg slipping.
Drifting off course for a second, there is a concept of “aggregate demand” that is used in discussions on the forum and on our website in sections like https://nubits.com/about/price-stability that is useful to think about.
Pretend there is worldwide demand (over long periods of time, such as weeks or months) for 100 NBT. Also pretend there are currently 100 NBT in circulation as the active supply. Demand equals supply, and the peg is easily maintained at $1.00 US.
Day-to-day however, the demand might fluctuate slightly. Some days the demand might be 102 NBT, other days the demand might be 98 NBT. This is where Liquidity Provider Custodians are useful. They provide buy-side liquidity to purchase those 2 extra NBT when demand is only 98 NBT, and sell them when demand is at 102 NBT. LPCs in effect cancel out the short-term variance in demand that is not representative of the true aggregate demand, and help maintain the peg tighter at $1.00 US.
What happens if long-term aggregate demand declines from 100 NBT to 99 NBT, and the active supply remains at 100 NBT? This is a problem, because now long-term demand is less than supply. This is where parking rates are useful. They incentivize users to purchase that extra 1 NBT surplus supply, and it is a winning transaction for a user as long as they believe demand will eventually rise to 100 NBT or greater again. There are also two other ideas being discussed on the forum (variable transaction fees, and NBT-for-NSR burning) that will be able to reduce the active supply down to 99 NBT. These price stability mechanisms will work in combination to ensure the peg remains at $1.00 US as long as possible.
My main point is that in a fractional system, full reserves of USD are not needed. Right now the Nu network is holding a ratio of about 90% coverage on NuBits; banks in the US federal system often operate at 10% coverage. As Nu grows and discovers clever ways of implementing variable transaction fees and currency burning, the risk of a peg collapse will be reduced further.
Thank you so much for the reply
How is the percentage decided by shareholders? You mean by voting to a determined Custodian Grant proposal which includes this figure?
Is there any place I can check these rates?