DaoStreet Ventures: Transparent Silver Markets

The AI does not hate you, nor does it love you, but you are made out of atoms which it can use for something else.

—Eliezer Yudkowsky, Artificial Intelligence as a Positive and Negative Factor in Global Risk

My journey down the rabbit hole of DAOs has instilled in me profound hope (and fear) for the future. But enough abstract navel-gazing...

Today I would like to introduce a concept DAO. The bitshares address "nelson-hunt" likes silver... a lot. (http://open-explorer.io/#/accounts/nelson-hunt)
nelson.jpg
I would not want to stand between this man and his silver.

Background: In real life Nelson Hunt and his brother liked silver (and feared growing global market instability) so they decided to buy some. They bought over 100,000,000 physical ounces but were not satisfied with that. They decided to buy even more silver futures contracts on the Commodities Exchange market in Chicago. They bought so much physical and paper silver that people started to get nervous. "Did the Hunt Brothers know something that other investors did not know?" was the question around financial markets at the time. Eventually the US Government got involved and the Hunt Brothers were forced to relinquish their silver positions. Some people think that the centralized marketplaces responsible for price discovery on silver are highly controlled. This would be "illegal" if ever proved. I do not know whether that is the case - although I do recognize strong points on both sides.

Back to Bitshares: Bitshares is a global decentralized asset exchange that offers tools to gain synthetic exposure to any conceivable asset. Consider this the COMEX 2.0 (https://wallet.bitshares.org/#/market/SILVER_USD). The bts account "nelson-hunt" was created to test the price discovery mechanisms for silver. In an efficient market, the price for any good or service should be roughly equivalent across venues. This is justified by the concept of arbitrage. If an asset were trading for a premium in some venue then an enterprising trader would buy in the cheaper venue and sell in the more expensive venue - ultimately flattening any price discrepancies and resulting in price equilibrium.

The last trade on the bts exchange for silver was 23 bitUSD/bitSilver. This is a 50% premium to the published price on traditional commodities exchanges - Screenshot 2018-06-09 12.09.58.png

The bts address "nelson-hunt" will acquire bitSilver every weekday at 1600 E.S.T. If limit orders are used then bids will be published to those showing interest in this project. Otherwise market orders will be used to pick up bitSilver at the lowest asking price.

This is a rough draft concept so I welcome all comments and look forward to working with silver stackers and making this "experiment" into a reality.

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very useful. if I may know, what causes it to go down and ask for the price of an item?

It's a long story. But since contracts traded on the COMEX are merely promises to deliver silver in the future... one could sell more promises than they could possibly deliver. In fact this happens already. Every day more contracts for silver are traded than the real amount of silver that exists above ground. This is the definition of a "con"fidence game.

is this a game market?

isn't every market a game?

Really sir you so great man.
You my most choice....

Could you explain to me why would anyone buy "silver" with a 50% premium over spot?

My friend I have a long and a short response.

Short: At the present there are fewer transactions on crypto exchanges than the Comex because of technical difficulties and a lack of education/interest in it. When 1000 bitSilver are traded/24 hours the price can be expected to be more volatile than when hundreds of millions of ounces worth are traded on the Comex.

Long: What makes you so sure the "spot" price is the true price for silver? What if the efficient price of silver is much much higher? We already see that to a degree with the inevitable premium on physical silver. Few people in their right mind would let go of their silver for the published "spot" price. The real assets themselves are hardly exchanged. The Comex price is an expression of "paper" against "paper".

The objective of this project is to discover whether there is another price equilibrium for silver.

I liked your last phrase and I will follow your articles. I think that the objective of this project is extremely important and can be a paradigm change.

Then you understand the most critical part. I look forward to having you along.

Very interesting article. Is there a correlation between the dropping STEEM/SBD price and bitshares?

Yes - steem and bitshares (and most other cryptos) share a strong relation with Bitcoin. If BTC goes down in any trading pair then "alt-coins" will tend to decrease as well (often more severely)

That's bad in a kind of way. Thanks anyways.

What makes you say this? Correlation between assets is a natural objective fact, not just in crypto but in all assets - all things are related at some level.

If you want to make money when BTC decreases then there are assets that are less correlated, even negatively correlated (like the topic of this post - silver is unlikely to move significantly in response to BTC price drop).

Hope that helps.

Okay. That makes sense. However, I was hoping that every drop in BTC wouldn't adversely affect other cryptos. Now, my pending payouts keep plummeting towards zero, which is bad.

true - but when price decreases and you hold bitUSD and SBD then you can get even more steem/btc for your value

Yeah that's true. I keep saving up for the better days to come.

What happens to the "existing" Cryptos, when the United States comes out with its own U.S. Crypto-Coin...???

what happens to anything when it faces government competition? it will die or get stronger :)

U.S. Crypto will remain Stable, while all the others will tend to Fluctuate and more than likely be Measured by the U.S. Crypto... I need to do another post on U.S. Crypto-Coinage, even though it doesn't even exist yet...

Bitshare still look a little foreign to me, I was exposed to the world of crypto just few months ago.

It would be great if I can get more information about it.

But, it seems nice with the prospect of the price going up.

A very good post @john-robert, talking about Bitshares, it makes me a little confused, because I have not understood more clearly about Bitshares, and I have much to learn more about it. And talking about Crypto, I see now that Crypto seems to be growing for the future, as we see now very many countries that already support Crypto. I am still confused to invest, I have a little SBD in my account, and I want to invest, what do you think is good for us to invest. I've tried to buy Bitcoin, but there are opinions Bitcoin people will come down for the future. That's what makes me confused. Thanks for sharing @john-robert...

I think steem and bitshares are both good. But if you want exposure to the whole crypto market then an index like twentix (twentix.info) would be a good tool for you.

Really, I think, I have to learn first about twentix.info, honestly I have never heard of twentix.info before, this is a new science for me. And I also want to get to know more about Crypto. Therefore I really like to read posts that explain about Crypto, I want to learn more about Crypto, I do not have knowledge about Crypto. Thank you very much @john-robert for this excellent information... :)

in this week I just heard a hunted business, I do not want to rush to invest or stock exchange, over time and my belief in an investment, I just started jumping, maybe hunt has a different knowledge from other experts and he believes self to do just that.
I personally do not want to take immediate risks on what I will do, better be patient and seek basic information to do it all.
thanks @ john-robert for the development of hunt information

an investment of time in learning is the best investment you can make.

Post yang luar biasa bagus sekali ,dan juga bermanfaat buat semua pengguna steem ,saya sangat suka post bapak ,salam steem pak

This is a little enigmatic for me, could you dilineate more

I know something of them that you said. But I should know about the silver buying information that you said that anyone can buy this product with 50% premium. Thank you very much for posting about steemsilvergold @john-robert.

Thank you for your continued support of SteemSilverGold

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