>Once the market has reached a consensus that BitUSD should be valued the same as a real US Dollar no one will be able to trade against that consensus without losing money. Thus the value of BitUSD today is based upon the prediction of what market participants will value BitUSD at in the future. There is only one rational way to speculate, that the consensus will hold, and that creates a self-enforcing market peg.
In other words, basically bitusd is supposed to follow usd because it has 'usd' in its name. It's beyond ridiculous.
No it's pegged to USD because it is backed by BTSX. BTSX does have value. It's an experiment, but it might just work. Perhaps this guy can explain how it works a little better than I have:
The only way a dollar peg can work is when there exists an entity (it doesn't matter what it is, it can even be an alien civilization) with very big amount of dollars, ideally infinite. When the pegged currency gets too cheap it has to spend dollars to maintain the peg.
There's no long-term reason for anyone to spend their dollars to maintain bitusd peg.
The short-term reason is a modified pyramid scheme: as long as the cost of maintaining a peg is less than the influx of new money from people buying into btsx because of currently working usd peg (and perhaps others), it will be maintained by major btsx holders.
No. It's pegged to nothing.
>Once the market has reached a consensus that BitUSD should be valued the same as a real US Dollar no one will be able to trade against that consensus without losing money. Thus the value of BitUSD today is based upon the prediction of what market participants will value BitUSD at in the future. There is only one rational way to speculate, that the consensus will hold, and that creates a self-enforcing market peg.
In other words, basically bitusd is supposed to follow usd because it has 'usd' in its name. It's beyond ridiculous.