I’ve been adding questions and answers to our website’s FAQs as I come across them on the forum. What common questions do you feel still need to be added to www.nubits.com/about/faqs?
There are going to be people joining this community in the future that aren’t as familiar with Peercoin as we are. They’re going to end up asking the same question: “Why are NuShareholder dividends Paid in Peercoin?”
In the NuBits press kit, the question is answered in this way…
“We require an asset external to our system to distribute dividends. The purpose of creating NuBits is primarily to meet increased demand for NuBits in a way that prevents the rise of the NuBit price. If we distributed NuBits to shareholders instead of bringing them directly to market, there would be no way of knowing whether shareholders would hold them or sell them, or for how long they would hold them. It wouldn’t permit the network to tightly control the supply of available NuBits, which is necessary to maintain the pegged price.”
This doesn’t completely answer the question that was asked though. It only says why the dividends can’t be paid out in NuBits and why an asset external to the system is needed. It doesn’t explain why Peercoin itself was chosen to fulfill this role. Here is another quote from Jordan…
“I don’t have confidence in the decentralization or sustainability of proof-of-work assets such as Bitcoin, so I needed a well distributed proof of stake asset external to the Nu network. Peercoin is a popular and stable proof of stake asset with a strong community backing it.”
This quote better explains why Peercoin itself was chosen, but I think it can be improved. For example, mention that Peercoin was the original proof-of-stake coin and that Sunny King specifically designed it to fulfill a backbone currency role such as the way NuBits uses it. I think the answer to this question should use parts from each quote. Explain why an external asset is required and then explain why the asset chosen to fulfill this role was Peercoin.
If other people read this answer, they might realize the purpose behind Peercoin as a backbone currency and decide to include it as an asset in their own projects. Here is the link to the interview where Sunny explains his idea of Peercoin as a backbone currency in case you need to link to it…
@Sentinelrv Thank you for the suggestion, I have added a brief description of what you suggested in the first couple paragraphs, along with a mention that Peercoin was the first working implementation of proof-of-stake. The other information about it being a backbone currency is beyond the scope of what we need to provide on a NuBits website. However, I have made sure to put in a direct link to Peercoin.net, so that website should see an uptick in traffic from our website.
Just read it. That sounds great, thanks.
Q. Is Nubits a Ponzi scheme?
A. A Ponzi scheme uses the influx of new investor capital to pay returns to existing investors. This is unsustainable over the long-term and eventually collapses when the flow of new capital stops. Nubits, in contrast, are not an investment and do not promise a return or profit opportunity. Their sole purpose is to serve as a crypto-currency with a value exactly equal to the US Dollar: 1 NBT = 1 USD.
Nubits are purchased on exchanges with real fiat currency, a large percentage of which is held in reserve. This reserve is available to convert Nubits back to fiat, less the exchange fee. Not all the fiat funds remain on the exchanges, however, and for this reason the Nubits liquidity system is similar to fractional reserve banking. All fiat currencies (USD, EUR, CNY, GBP, JPY, CHF, etc) are maintained by central banks using fractional reserves. Some economists claim that any fractional reserve system is a Ponzi scheme, although these statements are controversial.
Q. There are many services available that allow one to send and receive the equivalent of USD using blockchain technology with very low fees. They also claim to eliminate the price volatility of holding Bitcoin. Why should I use Nubits?
A. All these services require some element of trust. Fiat funds that back your digital assets are held at a trusted third-party. IOUs or other covenants may be in place. Third parties expose you to the possibility of fraud, hacking, loss or privacy, or government intervention. When you own Nubits, you transact directly with your trading partner just as you would in a Bitcoin transaction. You are in complete control of your Nubits and no third party is involved. Switching back-and-forth between Nubits and fiat currency can expose you to the risks of fraud and default at the exchange, but such exchange is not necessary if buyer and seller agree that 1 Nubit is always worth 1 USD.
Q. BitUSD is a crypto-currency that is pegged to the USD. How is it different than Nubits?
A. BitUSD is based on a complicated derivative system that runs on the Bitshares platform. It more closely resembles a commodity trading on an options or futures exchange than a currency. BitUSD is essentially re-packaged exposure to the price of Bitshares and, unlike Nubits, there are no USD present in the system to maintain the peg. Instead, BitUSD relies on market makers – individual speculators taking long and short positions – to provide liquidity and maintain its price relative to Bitshares. This is necessary because the Bitshares price fluctuates on the crypto-currency exchanges. If the price of Bitshares becomes excessively volatile relative to the USD, however, this may negatively impact the stability and liquidity of BitUSD.
Nubits and BitUSD are both very new and should be considered experimental.
What about this?!
Q. Can Nushares holders really affect the Nu future or is it up to Jordan lee and other developers to decide?
A. Nushares (the minting power) can vote on an informative motions that developers or others suggest, so the Nu commiunity espicially the developers know for sure where the consensus goes, So anyone uses a client with an unaproved modifications in the protocol risks to be on his own fork.
Ok may be it needs to be rephrased, but i think it deserves to be in the FAQ.
Sorry I do not understand this. What about the interest from NuBits parking?
You could consider parking an investment, but it lacks the large variable usually attributed with crypo investments.
NuBits will not change in value even if you park them. You just get more NuBits. NuBits themselves are not a traditional investment. They’re intended for spending and saving.