Bitcoin fell about 30% in what seems to be a correction (or the end of times?). In such a case do you “hodl” on to Bitcoin or do you cash out your money to fiat? What if I told you it is possible to keep your investment in cryptocurrency while keeping it pegged to USD (or CNY, or Ruble or even Gold or Silver!).
Bitshares has what it calls “Smartcoins”. These are Price-Stable Cryptocurrencies whose values are pegged to the US Dollar, or the Japanese Yen or even Silver. How this works is, that almost 2x worth of their value in BTS (Bitshares) is kept as collateral. So, if you buy 1 bitUSD (that’s the smart coin for USD), it has at least 2x of its value in BTS locked as collateral. But who pays these BTS to be locked? That is the person who “borrowed” this bitUSD into existance. Yup, the smart coin needs to be borrowed into existance by locking a certain amount of BTS as collateral. That person can then sell you the bitUSD. More about this in another article.
So, long story short, you can convert your Bitcoin or other cryptocurrency that’s going down, into bitUSD or any other smart coin, and that way you have your money safe in a stable currency. But what’s even better is, you’re still in crypto! bitUSD or bitGOLD etc are just like any other cryptocurrency. Even better, they are in the Bitshares blockchain, which means you can send your bitUSD to your second cousin on the other side of the world, and it’ll reach him in just 3 seconds, for just a few cents in transaction fee. That’s a bonus, because lately Bitcoin was charging you $50 for that transaction!
To open a Bitshares account, and get started, check out this previous post: How to Buy Bitshares
Once you’ve registered your account on Bitshares, click on your account name at the top right to open the drop down menu, and click on Deposit.
In Transfer Service, select Openledger. We’ll be using Openledger to deposit BTC, and we’ll get OPEN.BTC in return which is an IOU for Bitcoin. So later we can exchange 1 OPEN.BTC for 1 BTC. Openledger is a 3rd party that has issued OPEN.BTC tokens on the Bitshares blockchain.
Make sure the Gateway tab is selected and in the Coin drop down, BTC is selected. The Deposit tab should be active.
You will see a Bitcoin address to which you can send your Bitcoins. Once you send your bitcoins here, in a few moments you will receive OPEN.BTC equivalent to the BTC you deposited. You can go over to the exchange by clicking on Exchange.
Once you’re on the exchange, you will see a list of currencies on the right side. Make sure you select the OPEN.BTC tab, after which you will see all currencies that you can trade using OPEN.BTC.
Lets say you want to convert your Bitcoins to bitUSD. Click on the bitUSD row to open that exchange.
On this screen you can Buy bitUSD. Congratulations, you have just converted your Bitcoins to a price-stable cryptocurrency! You can do the same with many other national currencies like CNY, JPY, EUR, Ruble, as well as commodities like GOLD and SILVER.
Once you’re ready, you can convert it back to Bitcoin or any other cryptocurrency like Ethereum, STEEM, Dash, EOS or Litecoin etc. For most of these other cryptocurrencies, you will be given their OPEN.* version, example OPEN.ETH for Ethereum. As I’ve mentioned before, this OPEN.ETH will be a token on the Bitshares blockchain, as an IOU from Openledger. You can easily go to the Withdraw menu and withdraw it back to your Ethereum or Bitcoin wallet. Just make sure you have selected Openledger in the Transfer Service drop down and the Withdraw tab.
Finally click on the Withdraw Now button, to see the Withdraw window where you can enter details about the amount and address.
Do verify the fees mentioned. The first fee is the normal transaction fee of the Bitshares network, 0.22941 BTS in this case, and the second Gateway fee is what Openledger will charge you to send Bitcoin. This is a portion of the mining fee.
This is a wonderful way to keep your cryptocurrency safe during a bear market or correction. Or instead of withdrawing back to your Bitcoin wallet, you can keep your crypto in the Bitshares network. This way you don’t have to pay the hefty miners fee on the Bitcoin network.
This article was originally posted at my website BareCrypto.com, do check it out!