Openledger is a gateway on top of bitshares. This means that openledger must put up 2-3(?) times collateral to offer the open.whatever asset, same applies to bitUSD. This is in contrast to USDtether which has no guarantee of being backed by any asset. If everyone were to rush on the USDtether, its price would collapse and everyone would lose their money. If you have open.BTC or bitUSD on bitshares/openledger and the price starts to fall out of fear and a rush to sell, it would have to fall 2-3 in order to deplete openledger's BTC reserves (held in equivalent BTS)/bitshares reserve of BTS. This is the age old debate between fractional reserve banking and austrian economic theory. With fractional reserves you deposit $10 into a bank and the bank lends out $100, but the bank only actually has $10. If everyone rushed to pull out the $100, the bank would collapse and everyone would lose their money. With bitshares you are guaranteed a sort of safety net in the event that shit gets temporarily out of control. Your open.bitcoins are stored in your bitshares/openledger wallet. In the event you want to withdraw from the trading platform to an actual bitcoin wallet, openledger must match your open.BTC to BTC 1:1. Does any of this make any sense?
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It does. Thanks.
I guess when we deposit our funds on a traditional exchange we take it for granted that they don’t just sell it to someone else then hope they can replace those coins we we demand their withdrawal.
I was a bit wrong. With open.btc and other open.*assets from Openledger, they are simply IOU's from OL the company. So, they say that have 1:1 bitcion for each open.btc, but that's on them to live up to. The bitUSD, bitGOLD, bitCNY, and other bitAssets are part of bitshares and must have at minimum 2X the value of that asset in bitshares locked in a smart contract. Sorry for the confusion with openledger.