NuBits (NBT)

NuBits (NBT) was created by Jordan Lee, the same person that founded the market-lacking Peershares.

Peershares is essentially an asset that feeds off of the Peercoin network, bringing with it a variety of features to offer small businesses and company startups. The fundamental purpose behind NuBits is to correct fatal flaws that occur within the Bitcoin and Peercoin distribution networks as described by Jordan Lee:

“The critical flaw is that Peercoin and Bitcoin use the same fungible unit for share and currency functions. Shares must have the capacity to appreciate and reflect changes in the perceived value of the network while currency must remain stable regardless to be effective. It is impossible to accommodate these diverse pricing needs in a single unit.”

The analogy between Bitcoin and gold is very clear. Bitcoin has a fixed money supply and no inherent centralization. The price of Bitcoin, the cost of mining, and the available supply are all determined by the free market. In Bitcoin, there is no concept of “shares” versus units of currency. This is because Bitcoin is not a business venture; it is a resource. Thinking about owning shares of gold — as if gold were a business like Amazon or Apple — is obviously strange. You just own gold, and you just own bitcoin. It makes sense to own shares of a mining operation or other Bitcoin-related business, but bitcoin itself is just a currency.

There are two main principals behind NuBits, which are NuShares and the voting process achieved by a decentralized community. NuBits (the currency) is regulated by holders of NuShares, who take ownership of the Nu network. NuShares holders can vote to increase or decrease supply in order to stabilize NuBits’ price. Supply can be decreased by “parking” NuBits in return for an interest payment when funds are un-parked, and the supply can be increased by voting to mint new coins and award them to elected NuBits custodians.

The primary goal of NuShares owners is to maintain a NuBits price of 1 USD. In the case of hyperinflation of the U.S. dollar, NuShares owners can vote to peg NuBits to a different currency or a basket of commodities. By creating more coins to keep prices down, and increasing interest rates for parking to restrict supply and keep prices up, Jordan Lee and the NuBits team hope that they have found the solution to cryptocurrency volatility.

If Bitcoin is a close approximation of gold, NuBits is on the other end of the spectrum – a close approximation of a central bank. The apparent difference is that NuShares works on a distributed model and allows all NuShares holders to vote on the actions of the NuShares “central bank.” Time will tell how democratic and decentralized the NuShares organization actually turns out to be.

Buy-side Liquidity is the term derived for the NuBits being pegged to 1 USD at any given moment. This is best described in the official whitepaper on the NuBits website:

“Custodians provide the sell side liquidity as they place NuBits granted to them for sale. This leaves the buy side, the side where liquidity supports the price at one USD. While the market will naturally have a buy side, it may be thin, particularly when demand for NuBits is in decline. A pool of liquidity is needed to stabilize the price, to assure holders of NuBits that they can exit a large position at will and it is also needed to provide the signal to raise interest rates before the price has a chance to drop below one USD.”

As NuBits goes further in-depth on buy- and sell-side liquidity, it becomes more obscure to the average user. Aside from this, there is another portion of the currency that relies heavily on the end user, which is pool tracking. Pool tracking is a mechanism to keep the currency decentralized by granting users “custodian” status for each person or organization providing liquidity.

‘The NuBit address they receive a grant at will be used to sign messages. A new RPC called liquidityinfo will be implemented. The purpose of calling the method is to have the Nu client propagate the order information through the entire network of Nu clients.”

Cryptocurrency today may be the closest thing to a truly free market that has ever existed. One of the great benefits of this is that there is plenty of room for experimentation and there are no limitations on the actions of innovators. Bitcoin was certainly an experiment; one that might have some warts, but has succeeded wildly by any measure. NuBits is an experiment in the same vain, and now that Jordan Lee has brought it into the world, it seems obvious that it is an experiment that had to happen sooner or later.

The markets since launch has seen very positive growth, with NuBits breaking the top 15 of all market capitalizations, and at time of writing is sitting at the number 11 position. The markets are currently pegged at $1 USD, achieving the goal of NuBits’ initial intention.

There is a lot to debate about the virtues of the NuBits/NuShares model, but at least right now the project is accomplishing exactly what it set out to do. Whether the currency continues to function well – and whether the stated goal is a worthwhile one – will make for interesting spectating and speculating in the coming months.

source: http://www.coinssource.com/crypto-coins/nubits/

NuBits (NBT)