BITUSD is a cryptoasset based on the BitShare blockchain with a fixed USD value and functions like the normal pre-Satoshi e-cash structures. It uses the symbol BITUSD. The cryptoasset is the first SmartCoin of BitShare. A SmartCoin is a cryptocurrency like bitUSD which is backed completely i.e. 100% by the BitShare core currency(BTS). In other words, there is always a certain amount of BTS behind the bitUSD that is static, cannot be moved or touched. These unmovable coins are locked are used as a collateral and applied in smart contracts. BITUSD will never sell lower than $ 1 of BitShare equity and is an open source and freely tradable asset.
BITUSD is an asset that is not supported or backed by a real fiat currency like US dollar. As mentioned earlier, it can only be supported by the core token of BitShare or BTS. This would again mean that the user must deposit ample BitShares into the contract and will be able to withdraw the BTS only when the bitUSD is paid back.
Typically, the smart contract here is between two human beings but because of lack of trust and for security reasons, embedded with a code. So, the contract to be precise is between a human being and a network that is bonded by a smart contract and carried out in a blockchain.
BITUSD works ideally as a mixed bet investment on the lines of bitcoin’s exchange set-up. Users interested in buying BitUSD tokens signs up a smart contract with a party. The seller may want only a USD valued mode of exchange. So, the buyer must come with an equivalent value of BTS (BitShares). As per the rules of BitShare network, a user will have to pay BTS at the initial contract time and as well must commit to offering the collateral in BitShares equivalent to the bid value. The bitUSD buyer, in fact, is simply putting in 200% of BitShare into a contract that can only be redeemed when there is a repurchase of the bitUSD by a third-party.
BITUSD has not been accepted in its full sense and its value has been coming down. There has been a heavy variance in its market cap. There is a risk involved since if there is a change in the exchange rate between the dollar and BTS, possibilities of it influencing a collateral is there.
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