Shuai



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Full MemberActivity: 189Merit: 100 NuBits are operating as a fractional reserve. January 16, 2015, 03:00:26 PM

Last edit: January 17, 2015, 01:05:35 AM by Shuai #1



Bottomline: The nubots are insolvent and nubits are operating as a fractional reserve.



In a desperate attempt to make back the huge amounts of money lost due to BTC exposure, the "trusted" custodians have now resorted to widening their nubot spread to 5%, hoping they can make the lost funds back before there is a run on the bank. This is akin to mark karpeles continuing to run Mtgox after it became insolvent due to theft or seizure, hoping to make back the lost funds on the trading fees.



To explain why NuBits aren't safe, but other pegged assets such as BitUSD can be, check this out:



NuBits had noble intentions when they started their coin. The idea of a stable, pegged cryptocurrency is the holy grail to enable wider crypto adoption. They never meant to run the system as a fractional reserve ponzi, but that is unfortunately what has happened as they apparently hadn't prepared for a crash in BTC value. It doesn't matter how you try to rationalize it, the following statement cannot be refuted with anything less than a cryptographic proof of solvency:



NuBits = Fractional reserve



Edit:



To understand why NuBits deserves FUD thrown at them, watch this video at the 2:20 mark: "One nubit will always be worth one US dollar". That right there is a promise. At no point does the video even attempt to explain that there could possibly be risk involved. Given that the trusted custodians can't and won't repay each outstanding NuBit with 1 USD worth of BTC, their team are at best guilty of absolute incompetence, and at worst criminal fraud.



Also Jordan Lee, the "revered creator of NuBits" responded to this thread, but apparently my post "contains too many errors to bother refuting". How convenient, eh? Also check out their hilarious logic of "tiers" of liquidity, to which the best response I can think of is: During the great crash, the "trusted" nubot custodians had millions worth of BTC dumped on them. They did not hedge these BTC as evidenced here: https://discuss.nubits.com/t/possible-solution-to-custodian-loss-of-value-due-to-btc-exposure/1099 Bottomline: The nubots are insolvent and nubits are operating as a fractional reserve.In a desperate attempt to make back the huge amounts of money lost due to BTC exposure, the "trusted" custodians have now resorted to widening their nubot spread to 5%, hoping they can make the lost funds back before there is a run on the bank. This is akin to mark karpeles continuing to run Mtgox after it became insolvent due to theft or seizure, hoping to make back the lost funds on the trading fees.To explain why NuBits aren't safe, but other pegged assets such as BitUSD can be, check this out: http://bitsharesblocks.com/assets/market Notice the data on collateral, the single most important thing when you want to guarantee a peg. BTS took a beating in the crash too, but notice that BitUSD, BitCNY, BitGOLD is still collateralized with more than 200% of their market value. This is the primary market for their collateral: http://www.btc38.com/trade.html?btc38_trade_coin_name=bts Notice the huge orders of non-bot, non-fake buy and sell walls.NuBits had noble intentions when they started their coin. The idea of a stable, pegged cryptocurrency is the holy grail to enable wider crypto adoption. They never meant to run the system as a fractional reserve ponzi, but that is unfortunately what has happened as they apparently hadn't prepared for a crash in BTC value. It doesn't matter how you try to rationalize it, the following statement cannot be refuted with anything less than a cryptographic proof of solvency:NuBits = Fractional reserveEdit:To understand why NuBits deserves FUD thrown at them, watch this video at the 2:20 mark: https://www.youtube.com/watch?v=D_imtRPCKCg . That right there is a promise. At no point does the video even attempt to explain that there could possibly be risk involved. Given that the trusted custodians can't and won't repay each outstanding NuBit with 1 USD worth of BTC, their team are at best guilty of absolute incompetence, and at worst criminal fraud.Also Jordan Lee, the "revered creator of NuBits" responded to this thread, but apparently my post "contains too many errors to bother refuting". How convenient, eh? Also check out their hilarious logic of "tiers" of liquidity, to which the best response I can think of is: http://xkcd.com/670/