Author Topic: The economic explanation for why I'm so ridiculously excited/scared about BTS  (Read 5645 times)

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Offline CLains

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Love the timeline, we truly need to think big!

Even at a lousy 50 million market cap, 20% inflation gives us 10 million dollars to spend on development and marketing: Do people really think we can't raise market cap by 20% with 10 million dollars?

For better or worse, this seems to me the only way..

Given that a DAC is a sort of organism..

Deflation-centric views center on conserving energy and trying to avoid spending. This refers to the internal dynamic of the DAC as an idealized, perfect balance sheet.

However DACs also have external conditions that determine its growth and death, such as competing DACs and core development. These are radically outside the scope of the idealized balance sheet.

Unless the DAC can dynamically spend resources to address such issues, it will not last in the marketplace.

Offline santaclause102

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That (OP) was a  bit a crazy but I liked it :)
There are a few things which also apply here why companies do not get infinitely big you did not mention:
1) The most obvious one is: competition. If barriers to entry are not infinitely high a second company can always form and offer lower prices / better quality if the one big company begins to offer low quality products are high prices to increase profits.
2) Innovation and diversity: There is never only one way to do things. A different basic structure of an organization might make it more effective to serve certain markets better than the one big company. Not every innovation can be copied since it might contradict the fundamentals. Example: You can just either do approval voting OR delegation voting...(not a perfect example...)
3) Complexity leading to inefficiency: Although slate voting and specialized slate formation agents make hiring and firing pretty efficient it will still be pretty complex at scale.
4) At scale network effect might not be really big if the services provided by the DAC do not rely on each other or do not have overlapping user bases.

Another really lousy scenario is that delegate campaigning ends up as a money race.
That is why we as a community / we as shareholders should refuse any vote buying from the beginning so it doesn't sneak in over time and get a serious habit of what is appropriate for deciding who to vote for. Culture (a commonly shared basis of habits and thought patterns) / voting culture matters here because it is not super evident how to decide best for a delegate and shareholders decide like other shareholders decide (=are not always rational).

I like to see counter arguments against my crazy conclusion, but I actually think I have pretty good answers to these points.

1) open source as a requirement means that we can fork any innovative features, and metcalfes law means that anything applied to our network will have higher value than on its own. In the end a developer will have much higher economic incentives to join us rather than compete with us.

2) I've been thinking very hard about this because it would make sense for it to be true, but I literally cannot come up with any example other than the same one as you, the delegate voting mechanism, which I think is inconsequential.

3) the economic incentives to develop even further on the slate voting mechanism will be insane, there will very soon be millions of dollars up in their for anyone who will do that. I think that if the smartest developers in the entire crypto industry get together and work on this it will not really be a problem in the long run.

4) all services use money. We can take over a freaking bakery and it will be profitable for us, because it will continue to run as before but will now also be a POS for all bitshares financial services.
1) What I meant was that there will never be only 1 service provider since that one WOULD increase prices if it would be the only one.
Another argument in this direction is: If this organizational model is so vastly sucessfull there will be an insane amount of incentive to create a similarly big competitor, the rewards are extraordinary. So capital and innovators (partly from within the one big DAC) will form another one simply because they can gain more by building a competitor from the ground. The insiders will take their knowledge with them...
2) Also can't think of an example... But business reality teaches us that products and markets are vastly more diverse (which allows profits at all) than what text book economics say.
4) The backery is a good example. It would not make sense for a hughe DAC to buy up a backery. Because the DAC shareholders would have to be better in deciding who to employ than the current owner who knows the (local) bakery industry and its people.

Offline Method-X

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Worth translating this into Chinese and posting in the Chinese forum to help everyone see the bigger picture!  I'd tip 100BTSX to whomever does that.

+5% I'll match that tip as well.

Rune: check out http://nullstreet.com - I made that site as an outlet for obsessed Bitshares people.

Offline jae208

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I have no doubt that Bitshares will be very successful over the long term. We tend to overestimate what we can accomplish in a year and underestimate what we can accomplish over the course of many years.

If the SuperDAC can become a sort of monopoly in the crypto world much like Google is a monopoly in search perhaps we could do as Google does and buy up innovative start ups and developers.  8)


PS

If you can't tell I admire Google and I think as of right now they are probably the only company in the US maybe in the world with such bold visions for the future.

I'm still of the opinion that a secretive division of Google (GoogleX?) is responsible for the creation of Bitcoin. I read that they were interested in creating Google Bucks sometime during the Great Recession and obviously they didn't. Perhaps they didn't create Google bucks because of the regulatory hurdles and because they might have created an open source distributive alternative to Google bucks. They also have ties to the transhumanist community and Ray Kurzweil. Plus they understand the power of open source as the Android operating system had a late start compared to apple and it has completely eclipsed Apple now. Anyways, sorry about side tracking this thread and rambling.  :P
« Last Edit: October 24, 2014, 05:57:51 am by jae208 »
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Offline BitshatKing

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Don't compete with us, join us! 
It's more profitable for everyone.
But if you choose to complete with us,
well,
we would be forced to compete with you,
to protect our stakeholders' hard-earned network effect.

So come,
add your biological and technological distinctiveness to our own.

:)

YOU IS HERRO!!!!!


Offline Stan

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Don't compete with us, join us! 
It's more profitable for everyone.
But if you choose to complete with us,
well,
we would be forced to compete with you,
to protect our stakeholders' hard-earned network effect.

So come,
add your biological and technological distinctiveness to our own.

:)
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline Rune

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That (OP) was a  bit a crazy but I liked it :)
There are a few things which also apply here why companies do not get infinitely big you did not mention:
1) The most obvious one is: competition. If barriers to entry are not infinitely high a second company can always form and offer lower prices / better quality if the one big company begins to offer low quality products are high prices to increase profits.
2) Innovation and diversity: There is never only one way to do things. A different basic structure of an organization might make it more effective to serve certain markets better than the one big company. Not every innovation can be copied since it might contradict the fundamentals. Example: You can just either do approval voting OR delegation voting...(not a perfect example...)
3) Complexity leading to inefficiency: Although slate voting and specialized slate formation agents make hiring and firing pretty efficient it will still be pretty complex at scale.
4) At scale network effect might not be really big if the services provided by the DAC do not rely on each other or do not have overlapping user bases.

Another really lousy scenario is that delegate campaigning ends up as a money race.
That is why we as a community / we as shareholders should refuse any vote buying from the beginning so it doesn't sneak in over time and get a serious habit of what is appropriate for deciding who to vote for. Culture (a commonly shared basis of habits and thought patterns) / voting culture matters here because it is not super evident how to decide best for a delegate and shareholders decide like other shareholders decide (=are not always rational).

I like to see counter arguments against my crazy conclusion, but I actually think I have pretty good answers to these points.

1) open source as a requirement means that we can fork any innovative features, and metcalfes law means that anything applied to our network will have higher value than on its own. In the end a developer will have much higher economic incentives to join us rather than compete with us.

2) I've been thinking very hard about this because it would make sense for it to be true, but I literally cannot come up with any example other than the same one as you, the delegate voting mechanism, which I think is inconsequential.

3) the economic incentives to develop even further on the slate voting mechanism will be insane, there will very soon be millions of dollars up in their for anyone who will do that. I think that if the smartest developers in the entire crypto industry get together and work on this it will not really be a problem in the long run.

4) all services use money. We can take over a freaking bakery and it will be profitable for us, because it will continue to run as before but will now also be a POS for all bitshares financial services.

Offline santaclause102

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That (OP) was a  bit a crazy but I liked it :)
There are a few things which also apply here why companies do not get infinitely big you did not mention:
1) The most obvious one is: competition. If barriers to entry are not infinitely high a second company can always form and offer lower prices / better quality if the one big company begins to offer low quality products are high prices to increase profits.
2) Innovation and diversity: There is never only one way to do things. A different basic structure of an organization might make it more effective to serve certain markets better than the one big company. Not every innovation can be copied since it might contradict the fundamentals. Example: You can just either do approval voting OR delegation voting...(not a perfect example...)
3) Complexity leading to inefficiency: Although slate voting and specialized slate formation agents make hiring and firing pretty efficient it will still be pretty complex at scale.
4) At scale network effect might not be really big if the services provided by the DAC do not rely on each other or do not have overlapping user bases.

Another really lousy scenario is that delegate campaigning ends up as a money race.
That is why we as a community / we as shareholders should refuse any vote buying from the beginning so it doesn't sneak in over time and get a serious habit of what is appropriate for deciding who to vote for. Culture (a commonly shared basis of habits and thought patterns) / voting culture matters here because it is not super evident how to decide best for a delegate and shareholders decide like other shareholders decide (=are not always rational).
« Last Edit: October 23, 2014, 10:13:03 pm by delulo »

Offline donkeypong

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The potential is there for this vision to occur, no question. The scariest thing for me is governance. With all the great work that I3 and the independent DAC developers have done, there hasn't been much of a focus yet (at least not a visible one!) on delegates and decision-making. I'm not saying they haven't thought of this, but most efforts have been in other areas, understandably.

Obviously, the worst case scenario is that some bad interest gains enough voting power to take over the whole thing.

Another really lousy scenario is that delegate campaigning ends up as a money race. Building name recognition requires advertising, etc., and it all gets out of hand. In other words, becoming a delegate becomes out-of-reach for the average person, rather like getting elected to the U.S. Congress. Try as we might, can we develop something that functions better than a U.S. election, where (I think most of us believe) the politicians say whatever we want to hear, but are bought-and-paid-for by moneyed interests?

Keeping things free and open is good. Restrictions should be minimal. I am absolutely opposed to any term limits, for instance, which have turned out to be the best friend of special interest groups. And there's no way I'd automatically fire (term out) a dedicated developer who has chosen to make this a career. Delegates, whether they be individuals or someday become FOrtune 500 companies that employ armies of devs, marketers, and the like, will only get my vote if they remember this is a public service.

What we really need is a good place for decision-making. Maybe that's the forum or maybe not. Are we comfortable using these threads to advance a proposition? For example, Delegate 68 proposes that we buy a large insurance company and turn it into a DAC. Does Delegate 68 just start a new thread with that proposal? Is that good enough for us? Maybe so.

Are we going to get spammed with proposals from delegates? Would it make sense to limit a delegate to a certain # of new election propositions each year?

If we build it, will they vote? In the current beta version of BitShares X, the voting mechanism is terrible. I'm sure it has taken a lot of thought and work so far, and I thank those who have created it. This thing really is revolutionary. But it's clunky and it needs to be far more functional.

Voting should be a high priority with the user interface. If we're making decisions, we'll need more than 9.5% support, 8% of which is probably AGS and I3 shares. Currently, that's enough to elect a delegate. I know it's a poor example, because delegate votes are so split; what I really need to use is participation/turnout rate, but I don't have access to that (though I've heard secondhand that it's quite low). I also wonder if there should be a dialog box that opens to announce a new proposition for voting or a running ticker with governance news, etc., somewhere in there.

Going forward, the governance will only work and we'll only be able to sell this idea, if there is strong participation in voting and governance. This has been a great start. There's far more work to be done in that area. Very exciting...and scary.

Offline matt608

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Worth translating this into Chinese and posting in the Chinese forum to help everyone see the bigger picture!  I'd tip 100BTSX to whomever does that.

Offline James212

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 +5% Great stuff Rune!  Thanks for enlightening me on the concept of the delegate-dev/employee.  This is something I never considered.  Very powerful idea!
BTS: theangelwaveproject

Offline Rune

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I wonder if this thread will be absolutely epic in a year...

Actually I've probably jinxed it now :P

and let's not forget possible biological evolution of the human brain structures as a result of adaptation to network knowledge.... might take a few generations though?

As neuroscience student this is what I'm hoping to work on. I'd like to see a system that allows the decentralized network to interface and establish trust neurally, rather than through clunky text, screens and passwords.

Offline tonyk

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Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline kisa

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I wonder if this thread will be absolutely epic in a year...

Actually I've probably jinxed it now :P

and let's not forget possible biological evolution of the human brain structure as a result of adaptation to network knowledge.... might take a few generations though?
« Last Edit: October 23, 2014, 07:41:05 pm by kisa0145 »